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New Technology Yields Fewer Employees for SMBs

By | 02.04.12

New Technology Yields Fewer Employees for SMBs

For most industries, new technology is typically a good thing, especially considering that it makes accomplishing once-complex tasks much easier and more efficient. However, such technology also means that new businesses are getting off the ground with nearly half as many employees as they did a decade ago. According to some analysts, this change, which actually began before the economic recession, may be permanent.

Statistics Yield Difficult Times for Employees Looking for Work

According to a recent Kauffman Foundation study, employers are now launching start-ups with an average of 4.9 employees, which is down from 7.5 employees in the 1990s. Additionally, 2009 data showed that new independent businesses only created 2.3 million jobs, about 700,000 fewer jobs than the annual average in 2008. Because small businesses have generated about 65 percent of net new jobs over the past 17 years, the steady declines in start-up size could explain the slow economic recovery following the previous recession in 2001.[1]

Online Services Create Less Demand for Employees

Instead of purchasing the tools and employees necessary to run their companies, small business owners are now renting, sharing, or outsourcing resources through online services and Web-based tools. In many cases, business owners claim to use just a few employees to accomplish what used to require dozens of people. In fact, according to the National Small Business Association, most small companies now purchase supplies, pay bills, and manage their payrolls with Web-based services.

According to a recent survey of more than 500 small firms by Zoomerang, an online polling firm, an increasing number of businesses are using shared, network-based applications, or “cloud computing,” for everything from data storage and email to customer service, financial services, and administration.

While advances in technology are certainly useful for small business owners in the sense that they provide the opportunity to do much more with fewer employees, these advances are not always so beneficial to potential employees looking for work. However, the ability to accomplish daily tasks easily and efficiently is one of the most important facets that helps small business owners achieve their goals in the midst of a difficult economy.


[1] http://online.wsj.com/article/SB10001424053111903927204576570622331620408.html?mod=WSJ_Technology_LEFTTopHeadlines

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