Tranzitioning the Great Recession

Over the last couple of weeks, we've been exploring the massive restructuring of employment occurring today -- how traditional, full-time jobs with benefits are disappearing, while various forms of self employment are rising.  Confirming these trends is this report by CBS News, indicating that one third of all people working today are  freelancing.

So what's driving these changes?  In a word -- technology.  Technology has changed the employment landscape in two profound ways:  It has virtually eliminated geography as a consideration for many jobs, and it has drastically lowered the cost for many services that only the largest firms could previously afford.  Let's explore these two in more detail:

Technology's Impact on Geographic Location

In the old days, only local telephone calls were free.  Then came deregulation, and long distance prices began to fall.   That was followed by the new cellular services, which allowed people to become untethered from their land lines.  Then came the Internet revolution, which brought a similar expansion of coverage to the transmission of data, at ever reducing costs, mirroring what had happened with voice communication.

Together, these changes have allowed people to communicate from wherever they are, at a very low cost, with feature-rich voice, video and data sharing.

Technology's Impact on Costs

In the old days, it cost a ton of money to start a business.  You needed to buy or lease significant space to house all of your employees, plus you needed to purchase a phone system to support your staff, plus you needed desks and chairs and computers, etc.   Then you needed to hire people just to support the infrastructure you just bought.

When all was said and done, you could easily blow through tens of thousands of dollars just to start a small company.  On top of that, you needed to cover the ongoing monthly overhead costs associated with maintaining all of these business related assets.

Today, that entire paradigm no longer applies.  We now live in a world where geographic location is no longer a consideration, a world where every conceivable business activity has been sliced and diced and bundled and made available at a cost that anyone can afford. (this is one reason that many Venture Capitalists are not providing large amounts of seed money to startups these days.)

To get an idea of the scope and scale of changes we are talking about, here's a small sample of services that have drastically changed due to technology:

Phone Systems - 20 years ago, I was a partner in a small firm that had about 12 employees.  It cost us over $10,000 just for the phone system we installed.  Then we added voice mail and an automated attendant (i.e. press "1" for sales, "2" for service), which cost another $10,000.  Today, those same features plus many more are available for less than $20/person/month.  By using a service like Phone.com, today's company can hire people from all over the world, and have calls automatcially routed to them wherever they are via an automated attendant.

CRM Systems - 20 years ago, systems like these were out of reach of most small to mid-sized companies.  Those that had them used proprietary systems that were very expensive, both to install and maintain.  Today, through services like Salesforce.com and Zoho.com, you can get a full-blown CRM system for a low monthly fee.

Video Conferencing - Some of the early attempts at Video Conferencing required a dedicated video conference room plus a satellite uplink -- very, very expensive.  Today, almost anyone can video conference from their PC with free software from Skype.com.  More sophisticated versions are also available from business service providers like Zoho.com.

Fulfillment Services - In the old days, if you wanted to sell a physical product, you needed to lease a warehouse, staff it with people who could pick, pack and ship your products, and tie it all together with software to manage the process.  Today, you can simply outsource this entire function to third party fulfillment companies like DotComDist.com.

Bottom line, today you can get almost anything you need for your business on demand, for a small monthly fee.  Best of all, these services are fast and easy to implement, and scale easily as you grow. Next time, we'll look at how these changes are impacting the marketplace, and what you can do to capitalize on the resulting opportunties.  As always, comments welcome and encouraged.

Tranzitioning.com is a blog by Jay Fenello, principal and founder of BizPlacements.com, an Atlanta-based
Business Brokerage and Placement firm that helps people buy and sell small businesses and franchises.