Empowering Small Business: The Impact of Technology on U.S. Small Business (Second Edition)

Takeaways

• Small business is all-in: 95% of U.S. small businesses use at least one technology platform, with high-tech usage correlating with growth in sales, employment, and profits.
• Many already using AI: Almost one in four small businesses have adopted Artificial Intelligence (AI), leading to improved performance in marketing and communications. AI users saw a 12-point increase in their likelihood of profit growth over non-AI users.
• Weary of regulations: Despite the benefits of technology, about half of small business owners express concerns over potential tech regulations and the increased costs and litigation stemming from out-of-state regulations.

The latest edition of the U.S. Chamber’s Empowering Small Business report underscores how various technology platforms play a critical role in helping small businesses navigate challenges—like workforce shortages and inflation—and how small businesses that embrace technology outperform their peers and are more optimistic about the future. Companies are also looking at emerging technologies like AI to add to their arsenal of digital tools to compete and expand their business.

This continues a trend revealed in the inaugural edition of this report released in 2022 that showed how technology helped small businesses support about 100 million jobs and contribute $17.7 trillion to the U.S. economy during the pandemic, with 86% of small businesses saying tech was their “lifeline.” 

"Small businesses continue to be nearly universal in their adoption of a wide range of technology platforms. Slightly more than in 2022, 95% of small business owners in the U.S. report using at least one type of technology platform in the running of their business."

• 87%
  Amount of small businesses that reported increased efficiency due to technology platforms
• 1 in 4
  Amount of small businesses using artificial intelligence

Policy Recommendations

Without the right policies in place to encourage a virtuous cycle of technology development and adoption, small businesses could lose their ability to adapt and confront the new challenges of the 21st-century economy. C_TEC offers the following recommendations to policymakers to ensure America’s small businesses realize their potential through digital tools and platforms.

• Enact smart national data privacy legislation. As noted in this report, most small businesses are concerned about having to comply with out-of-state technology regulations. With 7 in 10 small businesses stating that limiting access to data could be harmful to their operations, it is vital that Congress pass a national privacy law that protects all Americans equally and preserves the benefits of a modern digital economy.
• Get AI regulations right. With nearly one-quarter of small businesses already using AI and seeing value from it, Congress should ensure that the United States remains competitive and promotes innovation while mitigating risk. In March 2023, the U.S. Chamber of Commerce’s Commission on AI Competitiveness, Inclusion, and Innovation released a report highlighting the need for a risk-based approach to AI regulation and not one-size-fits-all bans, pauses, or rules.
• Upskill the digital workforce and education. Thegovernment must promote a 21st-century workforce that includes small business owners and invests in Science, Technology, Engineering & Math (“STEM “) and computer science education to prepare the next generation of digital tool developers.
• Prevent overexposure to liability.In 1996, Congress enacted Section 230 of the Communications Act, which generally prevents interactive computer services from being liable for the activities of third-party content. Since 1996, the internet and data-driven economy have thrived. Congress should reject calls to outright repeal this landmark law.
• Use fair competition policy. Some contend that America’s longstanding antitrust laws should be used to specifically target America’s technology sector. Congress should refrain from passing competition legislation that singles out companies for enforcement and deprives the companies' due process.
• Promote the gig economy. As outlined in the report, small businesses using third-party delivery platforms have benefited in terms of growth, employment, and revenue. Governments should avoid unnecessarily imposing limitations on flexible work arrangementsor preventing app-based delivery companies from communicating valuable, flexible earnings opportunities to the public.
• Connect all Americans. Broadband access is foundational for small businesses to use most digital tools and to connect with consumers across the country. To complement private sector efforts, policymakers must make targeted investments in high-speed broadband in unserved areas and must appropriately address broadband affordability for low-income Americans. To maximize these investments, policymakers should streamline permitting requirements and should avoid costly regulatory mandates such as public utility–style rules for broadband and domestic content requirements.
• Modernize and digitize government. Eighty-two percent of small businesses believe that the government should invest in IT modernization to help streamline and improve important small business needs like permitting and professional licensure. By investing in upgraded IT, the government will provide better service to constituents and save money in the long run.

Methodology

To measure the effect that a diverse range of technology platforms has had on small businesses and the economy, the Chamber Technology Engagement Center (C_TEC), working with Teneo Research, conducted a nationwide survey and econometric analysis of the U.S. small business ecosystem. We found that technology is a driver of economic success for small businesses and that policymakers must encourage an environment that enables all businesses to succeed with digital tools.