20 stories for 20 years: A changing digital landscape

Since the start of the pandemic, entrepreneurship has undergone a rapid transformation. E-commerce surged, social media became a central marketing tool and now artificial intelligence is reshaping how we do business. Many of these trends were already emerging before COVID-19; however, the pandemic accelerated them as daily life moved increasingly online.

The pandemic pushed small businesses into the digital age faster than anyone expected. Some were able to pivot quickly—launching online stores, expanding their social media presence, or streamlining operations with new tools—but others struggled to keep up. 

While tech giants and large corporations had the resources to adapt quickly to the digital shift, many small businesses were left behind. To help better understand the evolving playing field, Small Business Majority launched a comprehensive digital transformation research project in partnership with Wells Fargo to uncover what small businesses need to thrive in this new era and ensure they aren’t excluded from the opportunities found in a changing economy.

We wanted to learn what types of businesses continue to be left behind in the digital transformation, and why; identify what specific pain points and barriers still exist for businesses that have made the transformation, or for those that were already digitally fluent pre-pandemic; and use our research to inform better service delivery and educational content for partner stakeholders, as well as policy change.

Through surveys and focus groups with entrepreneurs throughout 2023 and 2024 we found that nearly all small businesses were using some form of digital technology, but how and to what extent varied widely. Many business owners were adopting tools like accounting software, point-of-sale systems and cybersecurity protections, while others relied primarily on social media. Meanwhile, less than 1 in 10 business owners had no online presence at all. 

Small business owners quickly capitalized on artificial intelligence: Two-thirds of small business owners reported using some form of AI, though adoption was much higher among businesses earning more than $100,000 a year. This points to a growing digital divide—one that risks leaving behind smaller firms and under-resourced entrepreneurs who lack the time, capacity or funding to invest in these tools.

In order to achieve a successful digital transformation, small business owners not only need to know how to use technology, but they also need reliable internet access. More than half of entrepreneurs said they need additional training to keep pace with evolving tools.

Digital literacy aside, broadband access remains uneven. Through this research and our work in rural communities, we found that there are gaps for under-resourced entrepreneurs—a gap that reflects broader inequities. Additionally, even when access exists, speed and quality are often lacking, leaving many business owners frustrated with connections that don’t meet modern standards.

Business service organizations and resource hubs like Venturize and Verizon Small Business Digital Ready can fill education gaps when it comes to digital literacy, but we need policies to address broadband access. For example, the 2021 American Jobs Plan aimed to improve our country’s infrastructure, and had great small business support. Our sign on campaign surrounding the legislation garnered hundreds of signatures. America’s small business owners need to see this investment and others like it come to fruition in order to ensure our economy can thrive to its fullest potential. 

“As a rural business owner, I spent about six months relying on a hotspot for internet connection, which was expensive, capped and unreliable. Access to reliable broadband was a deciding factor in my decision to move to Delta, Colo., and luckily federal funding initiatives have made rural places like Delta livable for business owners like me who need broadband to run our businesses,” says Jessi Burg, owner of Outgrow Your Garage PBC. 

As technology continues to advance, small businesses will need tailored support to fully participate in the digital economy. By identifying these gaps, we can better understand where solutions and policies are needed to ensure every entrepreneur has the opportunity to compete and thrive.