This is What the Small Business Model of the Future Looks Like Smaller companies need to be digital-first to succeed.
By Frank Wazeter •
Opinions expressed by Entrepreneur contributors are their own.
Ten years ago, I remember standing in a large corporate board room of one of the world's largest pet product manufacturers explaining this new thing called "Facebook". There really shouldn't have been a reason for me to be there. I worked for a small local fish store that a year prior was virtually unknown outside of extreme hobbyist enthusiasts. But it was what happened between 2010 and 2011 that got me in that boardroom. My small company created a following on Facebook, which at the time measured around 40,000 followers and a YouTube viewership of over 1 million.
We can't even imagine a world without the internet literally available 24/7 in our pockets anymore. What that means is that the biggest single asset any small business has is its access to people through the internet. Small businesses can foster connection through followings on social media, visitors on a website and even through the people who look up to the business as a thought leader or industry expert. Powered by the internet, social media and influencers have turned marketing and product offerings and owner priorities upside down. The business model of the future is here and with it comes an all new way of doing small business.
Small businesses require innovation and fast adaptation
As a small business we had to be innovative. We had to be the speedboat and move fast. If we weren't pushing the envelope with technology and our influence on the internet, then we'd be having more conversations about needing to find money for payroll to keep a team of 15 safely employed. Innovation and creativity was a requirement for us.
The larger manufacturing company could simply throw more manpower, money and resources at any problem that came up due to the economy or changing times. They're not required to innovate until one of their other large competitors also decides it's time to innovate.
Guess what? Innovative and creative thinking is still a requirement in successfully scaling a small business of any kind. Combine that with the fact that the internet has only exponentially grown since then, and you have the recipe for an all new business model: the media-first approach.
Small businesses have the one undeniable advantage of being more personable. Oftentimes, the owner has the power — if not requirement — to directly connect with most of the customer base. People buy from small businesses because of the people who run small businesses. In other words, people buy from people.
On the other hand, the internet as a whole still provides the single biggest equalizer to the business playing field that exists today and has arguably ever existed in history. Despite the fact that there's undeniably more competition for attention on social media than ever, it's crazy to think that we're still in the early stages of the fast-paced, internet-driven world. Facebook is still only barely 17 years old as of this writing. That's not even old enough to be considered an independent adult in the United States.
Related: Innovation: Small Businesses Live It, Big Businesses Buy It
Social capital is the business currency of the future
Social capital, also known as the amount of people you can reach with your message as an entrepreneur, is worth more than its weight in gold. We've already witnessed the rise of a whole new industry of influencers, thought leaders and content creators across platforms as varied as Instagram, YouTube and Twitch. Someone with thousands, or even hundreds of thousands, of followers instantly has a credibility level higher than that of someone who has little or none, regardless of actual skill level or product quality.
The problem most content creators and influencers have is that they don't have a tangible product or service to follow up their posts and videos. Instead, they rely on sponsorship, advertising, donations and affiliate marketing. Usually, small businesses have a lack of social presence that draws in an audience and creates social capital. Internet social capital seems to be weighted so heavily and become so normal that not having a web presence of some kind actually delegitimizes a business. What kind of business are you if you don't even have a website or a basic social media presence? Not having them instantly erodes trust in the eyes of the average consumer.
So if social capital is the chief asset that a company has and people of influence have real reach, then what does that mean for business models?
The main focus must be around providing value and being a content creator in order to build a legion of loyal, raving fan customers who can consistently feed the business again and again with sales and the companies that simply focus on selling their product are going to be left behind and seen as less valuable.
Think about it. If you're in the market for a service, who would you rather do business with? Who do you trust? The person with a larger following and has put out consistent content educating and entertaining people about what they offer, or the person who simply gives a sales pitch?
Related: How to Build a Social Media Community: Content and Collaboration
The business model of the future is to be a content creator
Companies who are market leaders aren't going to be treating social media and their digital presence simply as a marketing strategy or secondary promotional piece. In a world that emphasizes access to information, expertise, leadership and constantly craves entertainment, your first product in your company must be media. Becoming an influencer, a thought leader or industry expert with a larger social media following is the product. Your business's actual product or service is simply a secondary means of monetization that can change and adapt as the times change and adapt.
After all, in a modern navy, even battleships are long outdated and outmoded. They're too slow, lack maneuverability and firepower to pose any real threat. They've been replaced by aircraft carriers and speedy cruisers. In business, you're seeing large corporations that act like battleships falling by the wayside, being out classed by aircraft carriers. Steve Jobs evangelized a generation of hyper loyal Apple fans. Elon Musk created a legion of loyal followers for Tesla and SpaceX. John Legere transformed T-Mobile from acquisition target to acquirer. These are aircraft carriers.
Without a loyal following, my 2011 self would've been just another small business selling fish tanks. Your business also must be a speedboat — economics demands it.
