The Marketplace Fairness Act, sponsored by Democratic Senator Richard Durbin of Illinois and Republican Senator Mike Enzi of Wyoming, would, for the first time, force Internet retailers to collect state and local sales tax. (Many states already force some retailers to collect sales taxes, though their rules don't apply equally to all online merchants.) It would also create a streamlined way for those companies to collect sales tax across 9,600 state and local jurisdictions.

Companies like eBay and anti-tax activists like Grover Norquist of Americans for Tax Reform complain that the bill is just too complicated, although both have other reasons for opposing the measure — chief among them being the way it would formally end the Internet's (admittedly somewhat frayed) status as a tax haven.

The bill's detractors claim it will create massive confusion. The bill exempts online retailers who earn less than $1 million in annual out-of-state sales, although retailers like eBay are pushing to raise that cap to $10 million. EBay also complains that the bill's collection mechanism — which would require states to provide companies with software to help them calculate taxes in various jurisdictions — will significantly injure its many retailers and, by extension, eBay itself.

Amazon, by contrast, has thrown its support behind the bill. Since it already collects sales tax in many of the states where it maintains warehouses, the e-commerce giant would benefit if its competitors had to do likewise. The measure would also reduce any competitive disadvantage Amazon might face as it builds out its distribution network in pursuit of same-day delivery to major urban centers.

The bill now moves to the Republican-dominated House for an inevitable battle. But as the New York Times' Jonathan Weisman notes, "...the bill would now go to the House Judiciary Committee, not the tax-writing House Ways and Means Committee. That itself could ease the bill’s passage."

Is an Internet sales tax an idea whose time has come, or just more government overreach? Take our poll above, and let us know your thoughts in comments.

That’s exactly the issue facing Pertino as it prepared to launch its cloud-based network launch last fall.

Where To Find Qualified Beta Testers?

Pertino’s concept was to build a cloud-based global network, requiring no specialized hardware or virtual private networks. The company envisioned a network affordable enough for small and midsize (SMB) companies with the security and performance of an enterprise network.

How the heck do you beta test a product like that?

Pertino CEO Craig Elliott turned to the Spiceworks.com community of more than 2.4 million IT professionals, centered around the company's free, ad-supported IT management tools for SMBs.

Elliott and many Pertino employees were already Spiceworks members, and they started with a 20-company private beta program that grew into “a community-exclusive public beta” involving 250 “Spiceheads.”

Spiceworks’ co-founder Jay Hallberg says three to four years ago the Spiceworks team was “dreaming big that someday we’d have a company launch within Spiceworks.” Pertino turned out to be that company.

Beta Testing Feedback Is Essential

While the usual point of beta testing is to find out if your product is good enough to launch, most initial offerings end up requiring signficant tweaks. “If you’re not thoroughly embarrassed by the first product you release," Elliott says, "you’ve overthought it, and you’ve come to market too late.”

Beta testing in Spiceworks enabled knowledgeable IT professionals to actually use the product and offer Pertino “incredible, first-hand feedback and insights,” says Elliott.

Todd Krautkremer, Pertino's VP of marketing, explains that, “Since so many members of the Spiceworks community work IT at small and mid-sized businesses, it was a way to treat SMBs as consumers… The Spiceheads provided feedback in real time [that] shaved months off what the normal development timeline would be.” Beta testing in Spiceworld gave Pertino “validation and the ability to go back to the drawing board based on the feedback,” Krautkremer adds. If you can’t make it in the Spiceworks community, how can you succeed in the broader market?

Speed Wins

Pertino didn't worry about launching its “private” beta to such a large community. ""In the world of open-source tech,” says Krautkremer, “to rest your laurels on defensible IP is not a recipe for success.” Patents can't protect you.

Instead, seizing the market as early as possible is the best way to become a dominant leader, says Krautkremer. It’s not necessarily being first to market,” Krautkremer continues, “MySpace was there before Facebook.” To win, your idea has to be novel and simple, and you have to pursue it aggressively.

So far, that approach is working for Pertino. The company publicly launched its product in February: "6,000 people downloaded it on day one,” Krautkremer says, and more than 300 Pertino networks were built.

Beta Test Tips

Sharing what he learned from the Spiceworks beta, Krautkremer offers tech companies 4 quick tips:

1. Use the freemium model: make it easy for potential customers to try your product.
2. Keep it simple: “Click, click, done wins. Click, click, click, done loses.”
3. Eat your own dogfood: use and test your own product.
4. Get to market first and then grow fast.

Oh, and find qualified beta testers to provide useful feedback before you make your product publicly available.

Google has started systematically upgrading the Google Places Dashboard. The Google Places Dashboard is the backend dashboard tool local business owners and local marketing experts use to build, manage and maintain their Google+ Page for Business and the business information that appears on it. The new Google Places Dashboard matches the newer Google+ look and aesthetic and adds new features and functionality.

Google seems to be taking its time upgrading its business listings management tools and migrating the information and tools from Google Places to Google+ Local. Outwardly, to consumers, the switch from Google Places to Google+ Local happened nearly a year ago. Since that time, local business owners have wrestled with both Google Places and Google+, while attempting to manage and optimize their online business listings.

Google Places Dashboard Update Highlights

New Design And Layout: Google has modernized its look with the push of Google+. The Google Places Dashboard now is consistent in design and layout with most of Google’s other products. Most of Google’s products now have the “Google+ look.”

Like Google+, the navigation options have been moved to the left side of the screen. The management of the Google+ Local page and AdWords Express ads has become easier, as the new dashboard provides separate tabs for both. It appears, however, that Google is doing away with the tab for basic stats and analytics.

Better Integration Wth Other Google Products: The new Google Places Dashboard includes a tab to allow business owners to manage their Google+ Local pages. This tab makes it easier for local business owners to gain access to the social features of Google+, such as sharing posts, photos and videos. If you do not have a Google account, you will not see the Google+ Local page tab on your Google Places Dashboard.

The previous Dashboard did not include direct integration or access to Google+ Local pages. It allowed a user to update standard business listing information, but there was no way to post to Google+ from the Google Places Dashboard. There was also frequently a delay before business information edits made on the Dashboard appeared on the Google+ Local page.

Faster Updating: Google has said that the new Google Places Dashboard promises faster updating. It has gone so far as to say that most modifications made through the new GPD will appear across the Google suite of products (including Google Maps) within 48 hours.

There are other new features in the new GPD that are not directly addressed in Google’s announcement of the new dashboard. Another dramatic change is the inclusion of service-based businesses without a physical location in Google+ Local pages. This allows business owners (like plumbers) without a physical address to now take advantage of the online exposure that a Google+ Local page can offer.

The new Google Places for Business Dashboard is a welcome upgrade to the previous version. Only time will tell if the upgrades make a real difference in helping local business owners take advantage of Google+ Local pages and gain the online exposure and local search results they want.

Google+ Local Needs Reviews?

That's the only explanation I could come up with for the awkward, uncomfortable and bizarre Google+ Lounge on the second floor of the posh Time Warner Center on Columbus Circle just off Central Park.

The Google+ Local Lounge, which is just a half-heartedly cordorned-off area of the second-floor lobby, has some card tables, some folding chairs, some brightly colored stools, a few Chromebooks and a handful of preternaturally cheerful Googlers (or contractors, who knows?) encouraging passers-by to sit down right there and start writing reviews on Google+ Local.

Some folks, including me, clearly just wanted a comfortable place to sit for a few moments, but one of those scarily perky attendants told me that they often get dedicated reviewers who come and bang out 40 reviews.

"They get caught up and don't realize the time," she said.

All About The Prizes?

Or maybe they were all about trying to win the cheesy premiums Google was giving away. Post those 40 reviews and you get an umbrella - a big draw on the rainy Tuesday when I was there. But I could only manage to do one (Museum of Modern Art: great collection but looooong lines and indifferent customer service), and all I got was a Google+ sticker.

Other prizes included Google-branded t-shirts, socks (15 reviews each), gloves, headbands, pens, cups and even what looked liked swizzle sticks.

Will this be enough to help Google+ Local catch up to leading local-review sites like Yelp? I doubt it. No matter how many Google Lounges there are, they can't possbibly give out enough tube socks to make a difference.

But if I get caught in the rain near the right mall, you may suddenly find 40 new reviews attached to my Google+ account.

All images by Fredric Paul

You would think that after the devastation of Hurricane Sandy and last month's brutal East Coast snow storm, more and more people would start to take disaster preparation seriously. While that may be true for "preppers" taking shelter in the event of an impending apocalypse, it's not so much the case for small businesses.

A survey of 600 small business owners conducted by Alibaba, Vendio and Auctiva in December of 2012 illustrated their preparedness in the event of a natural disaster, and the results were not too promising. 

Among some of the more alarming statistics collected is the fact that 74 percent of American small businesses do not have any disaster plan, while 84 percent do not have disaster insurance. In the event of a power outage, 71 percent of the respondents admitted to lacking a back-up generator.

Not all of the information revealed through the survey projected a negative outlook for future disaster scenarios. Two stats that were positive - as well as indicating how tech-savvy small business owners are today - were that 62 percent of respondents said that they could operate their business via mobile phone, while 30 percent said they store their information in the cloud.

For all those out there worried that the next big super storm might descend on your business, heed these warnings.   

You may have read a lot of articles last year about why the so-called "freemium" model doesn’t work for most consumer-oriented companies. And it’s true that offering a base-level product for free to gain visibility and marketshare and then converting a subset of users to a paid, premium version is not a viable strategy for every business.

However, depending on the product you’re offering, the freemium model can work well for business-to-business (B2B) companies, and especially well for B2VSB (business-to-very-small-business) companies.

(See also Why Free Is Bad: Businesses Should Be Happy To Pay For Key Services)

Here are six questions to ask yourself if you are entertaining a freemium model for business customers:

1. How big is the target market? For a freemium model to work, you need to make sure your audience is extremely large, since typical conversion rates range from 3% to 10%. According to the Small Business Administration, in 2009 there were almost 28 million small businesses in the United States. (The SBA defines a small business as one with fewer than 500 employees). Let’s say your business captures 2% of all the small businesses as free accounts, and 3% of those convert to paying customers. That’s almost 17,000 paying customers. Based on your business model is that enough to sustain and grow a profitable business?

2. What is the value of a free customer? By offering your product for free, you run the risk of cementing that value in the minds of customers. The flip side of this is that when you’re trying to build a brand and a user base, the freemium model makes it easier to get exposure, a base of quality leads, the potential of high virality and a built-in sounding board for essential user feedback.

3. How does your product impact the daily lives of your users? Do your users recognize that your product makes their work life more productive, more efficient, more organized or more informed? If so, converting from a free version to a paid version will be a natural progression.

4. Does your product help grow your customer’s business? If your product offers some kind of analytics or metrics that can be used to measure an aspect of the health of the business (i.e., sales, efficiency, productivity savings or gains), then it’s easier to align your product with the growth of the company and easier for a small business to justify spending dollars on it.

5. What is the best conversion metric – transactions or users? Both models have pros and cons. In many cases, users like the transaction model because it’s often pay-as-you-go. However, sometimes a transaction model can be perceived as nickel-and-diming the user. A user license is another common conversion metric, and it may be easier for your customers to swallow as they try to justify the budget to convert from a free account to a paid one. If it makes sense, you can may be able to combine both models (i.e., offer X number of transactions per user license).

6. What is the difference between the free and paid versions of the product? Don’t cripple your free version to the point that it offers minimal value. Remember, your customer’s first interaction and impression will likely be with your free product, so make sure that your free offering is useful on its own terms and not just an obvious stepping stone to a higher-level paid version.

Freemium models should be based on your specific business realities. If the math of the freemium model looks like it will work for your business, your product and your audience, give it a try.

 Image courtesy of Shutterstock.

(This post is sponsored by SDL-SM2, a social-media analytical tool for small- and medium-sized businesses and small agencies.)

Tracking and measuring social media is no longer just a nice-to-have for businesses – it’s now a core essential of any modern marketing plan. And that’s true for giant multinational corporations as well as small businesses, agencies, researchers and even social-data hobbyists.

Yes, They Really Are Talking About You

If you're new to social media monitoring, you might think no one's talking about your business at all. But that's probably not the case. More likely, they’re talking plenty, you just don’t know about it.

Fortunately, it’s easier than ever to listen in with SDL SM2, the entry-level, self-serve product offering from the SDL Social Intelligence Division. SDL SM2 offers automated sentiment analysis of more than 60 billion social conversations on YouTube, Facebook and Twitter as well as forums, blogs and wikis going back to 2007 - in your choice of more than 50 languages. It includes customizable and shareable real-time dashboards and the ability to segment the data with category rules. You can even export social media data into Excel or SPSS for further analysis.

Social media monitoring isn’t just an academic exercise. It’s all about helping you achieve your business goals: strengthening your brand, staying relevant to customers and driving revenue.

Monitoring social data is critical because it:

• Provides both current and historical information
• Can help predict consumers’ behavior 
• Delivers pure, customer-generated feedback
• Offers unique insight into competitor activity and perceptions
• Produces deep understanding of customers - beyond their relationship to your brand

Where Does Social Media Monitoring Start?

Typically, identifying the Who and Where of social media conversations about your brand and market is a great place to start. The next step is to drill down into word associations and sentiment analysis: What words are people using to describe your products and services, and what are the values associated with those words? And to fully understand where your brand stands in the market, you need to know what people sareaying about your competitors.

What does all this mean in practical terms for your business? SDL SM2 makes it easier to identify your most likely prospects. By understanding where they spend time online and what they like to talk about, you can tailor your marketing to be more efficient and effective. And you can get this information without running expensive, intrusive and time-consuming surveys, questionnaires and focus groups.

SDL SM2 is available at affordable prices via credit card on flexible month-by-month payment terms with no long term commitment.

For more information on Social Media Platforms for Small Businesses, check out SDL's Cheat Sheet Inforgraphic.

With fresh, wide-eyed faces, collaborative accommodations, and name tags galore, the YouTube space feels more like a college campus than a production facility. But that's the point. Welcome to Day One of the inaugural incubator class. Welcome YouTubers. (Up till now, the space was used only for occasionally workshops, with the likes of Rainn Wilson and Amy Poehler.)

Through The Looking Glass

It's got a Charlie and the Chocolate Factory feel that you can't shake. The 41,000-square-foot facility smells, looks and feels like money - it's backed by Google, after all, and subtle reminders and signage are everywhere. There's a 6,000-foot catwalk circling the building, a fireman's pole for quick access to the ground floor, and 2 million feet of fibre-optic cable running under the floor. 

Above the check-in desk hang 48 video screens stacked on top of each other to form a jumbotron, playing a continuous feed of video. There are arcade games in one corner of the cavernous atrium, piles of food sitting in an adjoining open kitchen. The oldest visible person can't have been born before 1980. Most look like they were hatched in the '90s. 

Everyone wears name tags, even staffers, who seem just as awed by the fancy digs as the stream of young creators who check-in and get their name badges like worker bees or students on the first day of school. Because that's what today is: Day one of the space's first incubator class.

Some 25 teams of YouTube "partners" are the first test batch of what can be legitimately dubbed the newest accelerator in town. Except this one doesn't give you any money, or claim ownership of your final product. Instead, it offers the tools to make more professional productions, and strategy to build and grow audiences-- while linking with creators on a profit share. When it comes to money, it's becomes hard to pin down just how much they share as YouTube is reticent to make numbers public.  According to online searches, partners make in the neighborhood of $2 to $5 per thousand views on their videos and about $0.01 per thousand channel views. But when asked to confirm these numbers, Google spokespeople responded that they don't make public financial details with partners. "The ad rates (are) different for many reasons, so that's not accurate. YouTube doesn't share those various rates (again that depend on many factors) publicly. The rev share is always 'majority goes to the partner' and that much is consistent and public."

Most people won't make enough to quit their day job, and critics have said that this model is exploitive. For most people, that's probably true. But not this group. These are very much the outliers, handpicked by YouTube based on audience size and diversity. 

The space's first resident, Freddie Wong, boasts more than 4.3 million subscribers and 785 million video views on his channel. There's big money on the table for Wong. And he's taking it.

YouTube is letting Freddie build a new soundstage for season two of his scripted series, Video Game High School. And it didn't even have to spend a penny. Neither did Wong. He raised the money through a Kickstarter project and private investments.

Specs

There's a a 1,500 square foot sound stage geared towards live music, a 47-seat screening room, three freshly painted green-screen rooms, an editing bay, live feed control rooms, a Next Lab to help audience development, and a "back lot" filled with rentable cameras and equipment. And there's a palpable do-it-yourself, entrepreneurial feel that pervades the entire building.

"My mom should be able to walk in here and make a YouTube video," explained Kathleen Grace, the space's manager of production and programming. 

The hours are 9am to 9pm, 6 days a week (on Sunday, they rest). 

Partner Talk With Freddie Wong

Freddie Wong slides down the fireman's pole and walks over. He sits at a long table opposite from me, adjusts his glasses, musses his long hair and apologizes for intermittent coughs. He's getting over a cold. 

Wong says online video is at a turning point. He says it's moving from short and viral to more long form, higher-production-value content. At the same time, keeping creative control and direct access to fans is pushing the medium farther and farther away from the traditional video distribution system.

The involvement of Wong with YouTube, and his distaste for the studio system, is evidence of that. "As a creator, to be able to take [content] direct to our audience is something you've never had before," Wong says.

How to bring media direct to the consumer with a fiscal model that works for both sides, is the big unanswered question. Wong admits the money side is still a work in progress, but when asked if he would take a rich deal with a big-name production company or television studio, he shakes his head emphatically. "What's actually being offered?" he questioned.

Wong says it's not all about the money, and creative control is a major factor. That's why he wants to stay in this space, with YouTube. He's predicting major gains for his upcoming new season, and his partnership with the online video giant. 

"We're kind of like the guinea pigs," he says smiling, about his four-man team. "If you can handle us, you can handle anyone."

Photos By Adam Popescu.

We knew it all along

We were liberated from the fall that's all"

- The Who, "Won’t Get Fooled Again"

With Washington festooned over the weekend with banners and parties alongside the serious national dialogue about the issues of the day, we all understand that the world has changed significantly in the last four years. It has become a more distributed, inter-connected place in every aspect of our society.

The chiaroscuro of the Cold War has completely disappeared - and we're now seeing a complex and nuanced combination of emerging economic and military powers.

And there are key parallels in information technology with significant implications for IT buyers.

The Cloud Has Already Won

Four years ago, people were still debating the NIST definition of Cloud Computing. Indeed, in 2009, Gartner declared Cloud the most hyped technology in the world.

Today, you'd have to be hiding under a big rock – trying to avoid the HarBowl, perhaps – if you do not realize the IT Stack has irrevocably flipped from client-server/Web to Cloud. Talk to any entrepreneur, and the big argument is not whether to rent the IT infrastructure from an Infrastructure-as-a-Service (IaaS) provider (e.g., Amazon or Rackspace), but what possible reason could someone have to burn precsious capital on buying their own servers and routers.

IT is a huge industry. At a projected $3.7 trillion in 2013 (according to Gartner), IT would be one of the five largest economies in the world, behind Japan but ahead of India. As Dan Lyons wrote last year, industry combatants focus on the potential of a $1 trillion transfer of wealth from the large legacy tech vendors to the new upstarts. So the money is there.

The unanswered question, though, is what happens to the hows, whys and whats of IT acquisition? How do you buy enterprise technology in the era of the new stack?

Let me break it down into 5 key elements:

1. The New Boss

Traditionally IT decision making is made in small, vertical slices of the stack. Network buyers procure networking components, storage buyers acquire disks and flash, and functional leadership drives application acquisition with their IT partners, etc.

That is changing rapidly as business decision makers (e.g., line management) set the rate and pace of operations and require IT to respond accordingly. As we learned at Nicira, in the Cloud era, this has led to the emergence of a new category of IT elite called Cloud Architects, who are responsible for making all the components come together.

It has led to an increased focus on both proprietary and open source cloud architectures that enable applications quickly and reduce the intense, overwhelming micro-focus on the cloud’s subcomponents. Rapidly enabling applications that support business processes will eventually drive all IT decision making. My advice: Look out for the cloud guy. He is the new power broker.

2. Bandwidth And Processing For Nothing, And The I/O For Free

In the client-server era systems model, hardware and software were custom-built to work together to enable a specific performance envelope. While specific, targeted use cases will always remain, increasingly Moore’s Law holds sway.

The x86 platform in servers, flash in storage and merchant silicon in networking increasingly dominates the bottom, infrastructure layers of the stack. IT buyers are getting the horsepower at scale by riding this curve and looking to vendors who pull their value through software.

It's the death of proprietary hardware and the emergence of smart software in IT. Remember this when your tech sales guy comes calling and brags about his chips.

3. Why Buy When You Can Lease?

There has been a ton written about Software-as-a-Service (SaaS) replacing packaged software, so I wont' bother repeating it. But what happens when Web-scale infrastructure is rentable by the hour (and as Amazon has shown, prices drop along the way)? Without having to deal with real estate, power and cooling, enormous computing power is available by the hour. Determining the differences among the providers – i.e., how well suited are they for your applications - will be your next research activity. Build your IT plan/budget around renting, not buying.

4. There And Back Again, A Content Tale

Cloud-based collaboration environments like Box, DropBox and Google Drive are dramatically revamping how companies store and manage data - as well as how they collaborate both within and across corporate boundaries. The ease-of-use of these platforms compared to traditional software packages like Microsoft SharePoint make them a reality in your business whether you like it or not. Your employees already use them - even if they never bothered to tell you. Developing a content management strategy that accounts for these applications and what should be in the cloud and what should be on premise is critical, right now.

5. Any Way You Want It/That's The Way You Need It

Finally, all of your applications have to work on any screen, anytime. Remember, it was just four years ago that folks said the iPhone was not ready for business. At the time, people were thinking about smartphones the way radio executives thought about television. In 2013, IT buyers should consider only those applications that work across platform and screen categories.

Today's businesses need to move faster than they did four years ago: competition and globalization leave them no choice.

This creates friction with existing vendors, who have to deal with the reality of slower development cycles, predictable revenues and profits for shareholders, etc.

As buying behavior changes, though, the fast will eat the slow, including the IT buyers, who will see their influence wane if they cannot keep up with the competition cycle or lose influence as user-driven shadow IT takes over. The smart guys will be listening to The Who:

“I'll tip my hat to the new constitution

Take a bow for the new revolution

Smile and grin at the change all around me

Pick up my guitar and play

Just like yesterday

Then I'll get on my knees and pray

We don't get fooled again”

Roger Daltrey image courtesy of s_bukley / Shutterstock.com. Pete Townsend image courtesy of Joe Seer / Shutterstock.com.

Late last year Google Apps for Business eliminated its free version (see Google Dares Businesses To Switch To Microsoft Office). You might think this is a bad thing for small business owners. Everything free is good, right?

Wrong.

There are big downsides to getting things for free that are poorly understood and rarely considered, and upsides to paying for the things that really matter — especially for small businesses.

First, let’s look at some downsides to free:

1. Free things are never really free. When we don’t fork over dollars for products or services, we think of them as free. But we always give up something. When it comes to online services, that something is usually personal data or content you’ve created — think Facebook and Instagram, whose privacy policies obscure the line between what you own vs. what they own. For consumers, that might be an acceptable bargain. But for small businesses that trade may be unacceptable.

2. Free services don’t serve you. Free services can't provide great customer service. You know this to be true if you’ve ever sent an email to a free service to get help. Imagine relying on one of those free services to run your business!. What happens when you need help, and you need it now?

3. Free services for small businesses don’t last. Free services for small businesses come and go. Google Apps used to be free, now it isn’t. Free services don’t last for the small businesses because the market is so challenging to reach and serve. My guess is that understanding the market challenges is the key to why Google Apps for Business going paid is a good thing for small businesses.

Why Serving Small Businesses Is So Hard

According to the census bureau, there are 30 million small businesses in the U.S. That sounds like a massive market, but it’s less than a tenth of the U.S. population of 311 million. If you’re going to try to reach small businesses with mass advertising, fewer than 1 in 10 audience members will likely be a small business owner, making the process woefully inefficient.

Worse, unlike enterprise customers, small business owners are incredibly hard to find — literally. With the rise of telecommuting and home-based businesses, a growing percentage of small businesses have no “front door” for salespeople to find. So it costs even more to reach them.

Third, when you do find them, small business owners are demanding. They are busy doing real work, so they expect their “stuff to work” too. They also tend to have heavier usage patterns than consumers and when they need help, they need it right away.

Finally. compared to enterprises, small businesses are much more likely go out of business.

Why Paid Is Good = Innovation & Service

But why should small businesses care about their vendors' problems? Why is it a good thing for them that Google Apps For Business went paid? How are small businesses going to benefit by paying for something they used to get for free?

The answer: innovation and the arrival of services tailored to meet their needs. Just think of how many things small business owners run on Word and Excel and you get a sense of how under-served this market really is.

Reaching the small business market is an expensive and risky proposition. As we’ve just seen with Google, "free" just doesn’t work in a market full of clients who use your service heavily while demanding great customer support. Great service people cost money. Need proof? Google now provides 24/7 phone support for its paying business customers.

Google Apps for Business going paid makes serving the small business market more attractive - for everyone. As long as all Google Apps were free, smart entrepreneurs and competitors were inclined to avoid investing in innovation for small businesses for fear Google could step in and wipe them out with a free service.

How "Free" Stifles Competition

In the dot com era, companies were terrified to do anything that Microsoft might be interested in, and venture capitalists would stop a hundred businesses before they could start with one simple question: “Why won’t Microsoft do this?”

Similarly Google has scared people out of doing things, because thanks to the significant advantage created by its search business, the company can afford to lose money on other activities, starving the competition and limiting innovation.

Fact is, Google can always return to the free model, but it’s a good signal that it has started to charge for things. Wall Street will be happy, and small business owners should be too. That's because I expect Google’s paid model to give entrepreneurs the confidence to step in and start innovating more for the small-business market.

This innovation will encourage services tailored for the long-underserved small businesses of the world. Sure, those services won’t be free, but they will be affordable, just as Google Apps remains affordable at $50/year.

Just as important, these new services won't come with all the downsides of "free." In exchange for services they need, businesses will trade dollars, not their data or their content.

I'm hoping this signals the start of a new era, one where for the first time ever, competition, innovation and choice are healthy in the small business market.

The good news is that it won’t just be businesses that benefit. We will all benefit because small businesses are the engine that drives the U.S. economy - when we give them the tools they need to succeed, we fuel that engine to take us all into a brighter, richer future.

Image courtesy of Shutterstock.

As the hype continues, smug enterprise IT departments will whip out their thick wallets and plunk down serious coin for multi-cluster hybrid cloud Hadoop systems that can figure out the worldwide effects of a butterfly wings' flapping before brunch and knock out the Ultimate Answer to Life, The Universe, and Everything before afternoon tea rolls past.

Meanwhile, poor and tattered small business IT managers will look enviously on this feast of big data as they huddle out in the cold, shivering as they wrap themselves in tiny spreadsheets and Quickbook invoices.

Big Data Doesn't Have To Be That Way

Its easy to get that impression when thinking about Big Data, but the reality can be far different: While enterprise-level datasets can be costly and difficult to manage, there's no reason analytical and visualization techniques can't be applied to small- to medium-sized business (SMB) datasets - on an SMB budget.

Plugging small businesses into big data is not a new idea (see Intuit CEO: Big Data Can Be The "Great Equalizer"). Perhaps the most popular approach to solving the problem includes "Big-Data-as-a-Service" options.

There are two large obstacles to taking on big data methodologies, according to Amit Bendov, CEO of Tel Aviv-based SiSense. The first is breaking past the barrier of cost. SAP HANA appliances, which Bendov holds up as an example of what he's talking about, can handle about half a terabyte of data, with a price tag of $500,000. That may work for the enterprise, but is nowhere near realistic at the small business level.

The second obstacle is the notion of complexity: Right now, the impression is that you have to have full-blown data-scientist talent on the payroll in order to figure out your own data. That's hogwash: "I know my business very well," Bendov said. "I don't need statistical languages to figure out what the data means. I just need to see the data."

SiSense Tries To Solve The Problem

Bendov's company is in the business of making that happen. Working with a customer's existing data stores, SiSense will pull the data into a columnar database that's either hosted by SiSense or held locally by the company. Customers can then use whatever tools with which they're familiar - from Excel spreadsheets to SQL-based databases - to mine the data for the information they're seeking.

General-purpose hosted data services like SiSense or sector-oriented vendors like LeisureLink in the hospitality industry represent a new front in the Big Data cycle: taking the expense and complexity down several levels so smaller businesses can get at least some of the benefits of data analytics without the pain.

It's not a bad idea: by acting as the middle man to handle the hard parts of Big Data management, these vendors are essentially running Big Data co-ops.

But there are risks with this approach. While SiSense has a local-hosted option, some vendors do not… so you'll need to decide where your comfort zone is with storing critical company data in the cloud. You will also need to decide if your data actually has enough value to recoup whatever costs you will have to outlay if you work with these vendors. That's a bit of a Catch-22 for many smaller companies, since you may not know your data's value until you can pull it together and mine it for useful information.

The best option is to shop around with various vendors, perhaps carrying in a subset of your data and seeing what can be done with it - and at what cost. Perhaps most importantly, this can also give you a sense of how much of a learning curve will be involved in getting up to speed with a new service.

Big Data options are out there for businesses of all sizes, just be sure you understand the benefits versus the risks.

Image courtesy of Shutterstock.

Over 20,000 e-commerce stores are opened every week in the United States. Most of them will fail. And most of those that crash will have one thing in common – they neglected to tap their best audience.

Turns out that it's not what they are selling, but to whom they are selling, that matters most.

Finding Your Best Audience

It has long been understood that social phenomena – fashion, a new band, a viral video – spread through relationships. In fact, Malcolm Gladwell talked about influencers in his seminal book, The Tipping Point. Influencers spot and adopt trends and through their adoption influence others in their social sphere to do the same. (Further schooling about the spread of ideas through early adopters can be found in Geoffrey Moore's Crossing The Chasm.)

The common thread in these teachings is that ideas are best cultivated by planting a few seeds in the right fields. Only certain fields are receptive to a given seed, with the exception of weeds, which no one wants. So you can’t just scatter seeds to the wind and expect them to take.

What does that mean for the 20,000 e-commerce stores that open each week? It means the first, most important, markets are their own social circles. These are the fields in which they should plant their first seeds.

People who know you – who trust your judgment and care about your success – are your early adopters. These may be friends, family, your broader personal network or professional acquaintances. But you should have a strategy devoted to tapping this market and enabling them to spread your message.

Why Is Your Social Network So Critical?

Today, it is so easy to buy almost anything. Search for your product or service and you’re likely to find millions of results. How do you cut through the clutter?

A primary differentiator in a purchase decision is the customer’s feelings toward the merchant or brand. When you can buy anything anywhere, the relationship with the merchant matters.

Major brands spend millions of dollars to simulate a relationship with consumers. But with your own social and business networks, you already have an authentic relationship.

It’s an important asset, so taking advantage of that authentic relationship is the most powerful first step to success in your own e-commerce business.

Of course, you can simply open your store and hope that people find you. That’s what everyone else does. And that’s the problem – you’ll be lost in the great mass of options. 

Instead, you should have an affirmative market strategy, one in which you’re reaching out to a core group of people that know you, and trying to set a viral chain in motion. If you make those people happy, they’ll spread the word to their networks and you’ll be on your way.

How To Reach Your Best Market

Fortunately, it’s never been easier to reach your best market. As the wide variety of choices has made connection between a buyer and seller increasingly more important, various social-media tools and social behavior have made it much easier to reach people and tap that connection.

Consequently, a couple simple steps can get you in touch with this important market and should be part of your strategy.

1. Get Personal With Social-Media Tools. There have been few areas in marketing that have created more confusion than how to use social-media tools. There are certainly benefits to blogging and accumulating Facebook fans, but those are very hard to trace, and if they lead to transactions at all, it is usually over a long time.

Still, the tools are quite valuable for reaching large numbers of people you know. In a few strokes you can reach a whole network. The average Facebook member has 256 friends. That means your message can be in front of 256 people, and depending upon their response, their friends, almost instantly.

2. Say Something New. It is said in retail that the product stays the same, so the audience must change. Unless the audience stays the same, in which case the product must change.

In tapping your social network, a relatively constant audience, you’ll need to continually change the product. That can be an actual change of the product – let’s say you expanded your inventory by adding new products or added some products that complement your services business (an IT-service company that is now selling electronics, perhaps).

Alternatively, perhaps there is something new to say about your existing products – an upcoming holiday or change of seasons makes an existing product relevant in new ways. The important thing is, when you’re tapping a constant audience over time, you must say something new and of value to that audience.

Your goal is to build awareness first from people who know you, trust you and have an interest in your success. Leveraging your broader social network and tap your best source of customers. If you live up to your promise with this group, they will help you spread your message to the rest of the world.

Image courtesy of Shutterstock.

One key reason is that small business optimism is already rising. According to the Fall 2012 Bank of America Small Business Owner Report, more than half of small business owners project sales will grow in the next year, and almost one-third plan to hire. Just 7% expect sales to drop and only 3% plan to lay off employees. And entrepreneurs typically believe they're local economies are doing better than the nation as a whole. (That can't be true for everyone, of course, but it still speaks to increasing optimism.)

That's not all. Some 45% of business owners in a recent Kauffman survey believe consumer demand will grow in 2013. Record sales over Black Friday weekend sales suggest consumers have "frugality fatigue" and are ready to spend again. Consumer debt is falling, the housing market is improving, and even the job market is showing signs of recovery-all of which could increase consumer spending by 3.5% by late 2013, according to Moody's Analytics. With pent-up demand for everything from housing to personal services to travel, there will be plenty of opportunity for small businesses who aren't afraid to seize it.

As always, though, technology trends will make a big difference in determining which businesses will be most successful. Here's what to look for:

1. Death of the desktop? Mobility will increasingly change how we do business. Already, according to The Mobility Edge: CDW's 2012 Small Business Mobility Report, 36% of small business IT managers say some of their employees have replaced a desktop or laptop computer with a smartphone or tablet. An additional 20% predict even more employees will do so by 2014. Adoption of tablets in the workplace is projected to grow a whopping 117% by then, while smartphone adoption at work will surge 33%. Smart entrepreneurs will tap into mobile's potential to work faster, more efficiently and more effectively.

2. Understanding your tech options will be critical. While small businesses recognize the opportunity technology presents, they're often confused about how best to implement it. In a Techaisle study, 54% of small and midsized businesses say their technology "pain points" have increased in the last three years, and that they're most mystified by cloud computing, virtualization, business intelligence, remote managed services and marketing automation.

3. Competition for talent will get tougher. It's never been easy for a small business to compete with big-company salaries, perks and bennies, and in 2013 it will become even more difficult, as employees are eager to search for those greener pastures. That's especially true for technology experts, so small businesses will have to find other ways to meet their tech needs.

4. Outsourcing will become an even better option. Freelancers and contractors, on the other hand, will be easier to find. MBO Partners' second annual State of Independence in America study projects the number of independent workers (contractors, consultants, freelancers or solo-preneurs) will grow from nearly 17 million to 23 million in the next five years. That will make it easier to hire the talent you need on a temporary basis.

5. SoLoMo goes shopping. Social/Local/Mobile is becoming the standard way to shop. People shopping on their mobile devices, "showroomg" (use their phones to compare in-store products with prices online), and use local search to find retailers and social media to find products. In a new study from the Advertising Research Foundation, nearly one-third of shoppers said social media affects their choice of brands; meanwhile, a survey by YP says 40% of consumers use local search daily. Making sure your website is optimized for mobile viewing and (if appropriate) developing a mobile app are the bare minimum of what you need to do in 2013.

6. Connected millennials - and their moms - matter more than ever. Much of the change in shopping behavior is driven by two key consumer groups: Millennials and moms. Both groups are constantly connected, rely on their friends' opinions (as well as those of social rating and recommendation sites) and aren't shy about sharing their own opinions of your business online (and in person). In 2013 it will be more crucial than ever to monitor and reply to what's being said about your business online.

7. Social means more than Facebook. Facebook and Twitter are still the big names in social media, most used by both consumers and businesses. But 2013 could see a shakeup from newer social sites as Pinterest, Tumblr and other visually oriented social media grab the attention of Millennial and younger consumers. And don't rule out Google+: The site's unique visitors grew by 80% in 2012, says a report by NM Incite.

What are we missing? What do you think will matter most in small business technology in 2013?

It used to be that unless there was an emergency or you worked at certain kinds of jobs - at an airline perhaps, or a Chinese restaurant - big holidays like Christmas meant you were off the hook for work. But in today's 24 x 7, always-connected world, many digital workers can't seem to tear themselves away from work even for one day. Whether or not they're really needed.

I am guilty of this very pathology, and odds are, you are too. 

Who Was Working?

I put the question of working on Christmas to Twitter, and found plenty of kindred spirits - especially among writers. LA Weekly Web editor Jake Swearingen wrote “[b]ecause dipping Internet traffic means you gotta hustle up PVs [page views] even more than usual.”

Declan Skews, a writer in the UK, tweeted some truth about our 24-hour news cycle: “The flow of information never stops. It's easy to fall behind if I don't read a lot everyday (and write at least a little bit).”  

Fredric Paul, ReadWrite's own managing editor, admitted to checking his email, and so did Jenn Sheppard, the publisher at the nonprofit Florida Trail Riders. Sarah Bennett, who runs the hyperlocal news site Long Beach Post, wrote that if she doesn't check her email and "write the stories, no one will!"  

It isn't just writer types: Alex Clote, the co-founder of Cloze, a start-up filtering your electronic communications, wrote he "carved out an hour to catch up after Santa came" because "even on a holiday there are responsibilities."

What Were They Doing?

Working on the holidays has become so common, business intranet service Bitrix24 found 17% of its users (which service employees from companies from like Xerox and Toshiba to Volkswagen and Vogue Magazine) checked in or did some light work on Christmas Day (and 12% did so on Christmas Eve).

According to Bitrix24, holiday working tasks broke down this way: 47% sent instant messages, 11% shared documents and 9% engaged in “task tracking.” Owners of mobile devices were more active than the average Christmas worker, with Android users beating out iPhone users by a small margin: 21% of Android users clocked in some light Christmas work, compared to 19% of Apple faithful.  

Knowledge workers clocking in over the Holidays were led by North Americans: 22% of users tracked by Bitrix24 were in the United States, 20% in Canada, and 17% of our cultural cousins in the United Kingdom did too. Only 6% of Italians bothered checking their emails.

Why Were They Working?

The big question, of course, is why are so many folks logging in when they're supposed to be logged off?

For some people, the answer is that they had no choice. Something truly had to be done that day. For many others, though, work might be an escape from too much family togetherness. And for various reasons, some workers might not celebrate the day or have anything better to do. But the biggest reason is that it's become so darn easy to work on holidays and other supposed personal time. Given our smartphones and mobile devices, we can work almost anywhere, any time.

For me, as a writer covering the intersection of technology and society, I can’t just shut off that part of my brain just because it is a holiday. Besides, I actually like working, and given the numbers it's clear that many others feel the same way. 

Image courtesy of Shutterstock.

These half-dozen technologies are the ones small businesses were most involved with in 2012:

1. Social Media Surged

In a survey by VerticalResponse, more than one-third of small business owners wished they could spend less time on social media (nearly half spend 6+ hours per week). But they can’t, because that’s where the customers are. A recent report by NM Incite found Internet users spend more time on social networks than on any other type of website. 2012’s breakout star, Pinterest, showed a whopping 1,047% increase in unique visitors — so if you haven’t gone there yet, you might want to. However, Facebook is still the top site, used by 90% of entrepreneurs, according to VerticalResponse, and 152.2 million unique visitors, according to NM Incite.

2. Consumers Went All-In On Mobile

The rabid adoption of tablets over the 2011 holiday season gained even more momentum in 2012. Smart retailers took advantage of the tablet’s leisure-time nature to create customized mobile shopping experiences for couch-surfers. On Black Friday, IBM reports, mobile sales topped 16%, up from 9.8% last year, with the iPad dominating. Small businesses also took advantage of mobile marketing to reach customers on their smartphones. The Pew Internet & American Life Project reports 56% of mobile users go online with their phones and 50% use them for email; both figures more than doubled compared to two years ago. Some 84% of small businesses that used mobile marketing found it increased new business, a Web.com and Lab42 study found.

3. Mobile Dominated Business

In 2012 savvy businesses of all sizes incorporated tablets into the workplace as presentation tools, payment devices or simply to entertain customers (for example, providing iPads for customers to place orders or entertain kids in restaurants). In The Mobility Edge: CDW’s 2012 Small Business Mobility Report, 75% of mobile users report mobile devices have become “critical” to their jobs, and 67% say without mobile devices, their businesses would be less competitive.

4. BYOD Arrived

Bring Your Own Device has long been business as usual for cash-strapped startups, but in 2012 the trend took hold at companies of all sizes. Since many job seekers consider being able to bring their own device a workplace perk, BYOD could even give your small small business an edge in competing with bigger companies whose IT managers don’t like BYOD.

5. Crowdsourcing Continued

Technological changes sped the growth of crowdsourcing, a boon to many small startups, this year, the Dell Evolving Workforce reports. Contractors and even customers increasingly contributed to small business solutions, doing everything from coding to innovating new product and service ideas.

6. The Clouds Rolled In

2012 was the year cloud services went from mysterious to mainstream—or as SMB Group put it, “as normal rather than cutting edge.” More and more, small businesses and startups turned to cloud storage and solutions to streamline operations and save money. At the same time, consumers’ increasing comfort level with the cloud opened up a whole new world of startup possibilities.

What mattered to your small business most in 2012?

Image courtesy of Shutterstock.

Smith bases this idea on a new study released by the company on Friday. Called "The New Data Democracy: How Big Data Will Revolutionize The Lives Of Small Businesses and Consumers," and conducted by Emergent Research with "a mix of research and forecasting" (wishful thinking?), the study contends that "the emerging availability of data and analytics… gives small businesses and consumers greater access to cost-effective, sophisticated, data-powered tools and analytical systems."

Data Is A Raw Material 

According to Smith, "Data is becoming the newest raw material for business, equal to or greater than capital" in its ability to drive growth. Access to this kind of data has largely been confined to large enterprises, but if it can be shared, it will let "small businesses and families make smarter decisions" and help "level the playing field," Smith told a small group of journalists and analysts on Thursday.

That's critical, because more and more critical decisions and risks are being pushed down to consumers, covering everything from retirement planning to healthcare, Smith said. "Data helps us navigate that." 

Intuit, of course, has access to vast amounts of data from its 60 million customers, and wants to be in the business of helping its customers use that data to their advantage. "We try to use all available data that our customers give us permission to use," Smith said. If Intuit can put that data in their hands, Smith said, it's like "Moneyball for the small business owner… creating a power shift from big business to small business."

Or at the very least mitigating the trends going the other way.

Big Data Really Has Helped Big Business

According to Steve King, partner at Emergent Research, which conducted the research, "Big data has un-leveled the playing field. Big business has definitely gained a competitive advantage" from Big Data. "We are in a period where big businesses are at an advantage."

""Big data is definitely going to kill some small businesses," King told ReadWrite. Small businesses that don't get with this will be severely disadvantaged, "especially firms reliant on location or opaque pricing. They're going to get hammered."

On the other hand, small companies that do manage to take advantage of big data will have an advantage compared to other small busineses, and be better positioned to compete with big businesses, King said.

For consumers, King said, data helps empower us to deal with critical decisions in a more organized way. "More and more people are going to be able to take advantage of this in a positive way," King said. Many consumers, King predicted, will take advantage of big data by proxy, via "digital concierges" like Siri, as well as "the personal services they use, which will become smarter, more efficient, and more personalized." Not just in shopping, but also in healthcare, for example, where big data tools will lead to better diagnostics and better choices of where and how to treat various conditions.

The key to this rosy future, of course, is getting these big data tools to small businesses and consumers in ways they can understand, afford and use. Intuit is well positioned to do that, and has a number of related projects in the works. (See Inside Intuit: How A Software Kingpin Is Remaking Itself For Mobile & Services.) And plenty of other companies will no doubt try to do the same thing. (See How "Big-Data-as-a-Service" Can Help Smaller Companies Compete.)

Making Big Data Easy Won't Be ... Easy

But it won't be easy. Big data is inherently complex. That's why it's only now being properly used in even the largest, most sophisticated organizations. And even they don't always understand how to use it properly. (See Utilities and Other Industries Not Ready for Big Data, Say New Oracle Reports.)

That small businesses and average Joes will come out on top in what Smith called a "data revolution" is by no means assured. Fortunately, King said that unlike small businesses, consumers who don't participate won't end up as "losers," they "just won't benefit as much."

Photographs by Fredric Paul.

I quickly checked (it was still early morning on the West Coast, where we’re located) and sure enough, instead of the usual array of small-business content I was greeted by an unfamiliar image of a Middle Eastern-looking man, Arabic lettering and a video about the glories of Allah. I blinked, gulped more caffeine and reloaded the page. No luck — the image was still there. “We’ve been hacked,” I muttered, still not believing what I was seeing.

Weeks Of Agony - Months Of Work

Then followed two weeks of agony and struggle as our Web-hosting company worked to deal with the situation, while also helping their many other small-business clients who had been hacked as well.

It seems someone had placed malicious code on our site that lay dormant for months -- and only popped up that morning. “It was like cancer,” recalls my business partner, who dealt with the situation. “To make sure [the code] was really gone, we had to clean out all of the files we had loaded since the initial hack.”

Months of work was wiped out — and every time we thought it was fixed, the hack popped up again. I was repeatedly embarrassed; it seemed every time I would tell someone (including the company that originally told me about the hack) the site was fine, within minutes the hack would reappear. We then had to delete and reload more files, more times than I care to remember.

We Were Lucky!

Believe it or not, my company was one of the lucky ones. David Maman, founder and CTO of database security company GreenSQL, said our hack was the “old-fashioned” kind.

“Five or 10 years ago, the purpose of hacking was defacement,” explained Maman, an international expert in computer security who has founded seven tech companies. “It was very obvious when you were hacked — a friend would call and say ‘Hey, what’s going on with your website?’ Today, with a successful SQL injection hack, there will be no sign that someone has retrieved your entire database.”

How can you be hacked without knowing it? If it can happen to Sony and LinkedIn, he said, it can certainly happen to your small business.

Tech Startups Especially Vulnerable

Ironically, tech startups — with their low budgets, long hours and cocky techies coding day and night on their personal laptops and mobile devices — may actually be more vulnerable to hacks than less tech-oriented businesses.

Changes in the nature of business have affected how hackers operate, said Maman, “Everything is about online today, and almost every [business] is providing some type of online service or app. As a result, the line between internal and external data is blurred, and all of your information is exposed.”

You might think you have nothing to worry about if you aren’t selling products or collecting card data online. Think again, he says, who explains that most hack attacks today are completely automated. “They don’t even know who you are — they just check websites for vulnerabilities, and if they find them, they will attack.”

In fact, ecommerce companies or other businesses that collect customer credit and payment data may be less at risk of hacking because they must be PCI (Payment Card Industry) compliant. “These regulations are actually beneficial,” said Maman.

What if, like so many small business owners, you simply provide a free app or service? All you’re collecting from customers is their registration information, which could be as simple as their name and email — so what do you care if it’s compromised?

“Data is the new currency,” he warned — and that includes any type of data, not just financial information.

Maman explained that hackers may manipulate customer data to inject malicious code that serves up competitors’ information instead of your own, penetrates the customer’s computer, or worse.

“It’s not about losing information — which may not be worth that much — but about harming your customers, hurting your brand and destroying your reputation.”

If a customer’s computer gets infected after using your service, are they likely to return? Worst of all, you won’t even know your business has been hacked until it slowly withers and dies as customers fade away.

What To Do If It Happens To You?

“If in the past it was a big taboo to let customers know that you’ve been hacked, today it’s not,” he said, citing LinkedIn as an example. “Letting your customers know won’t hurt you — it will show that you’re being responsible.”

Ask them to change their passwords on your site and on any other sites where they use the same password. Apologize; then explain what measures you will take to make sure the hack won’t happen again.

Beef Up Your Defense

Those measures should include three key steps:

1. Secure your coding. “Most of the basic attacks, and even some of the more advanced ones, are due to unprofessional coding,” said Maman. “There’s a lot of information online about how to secure coding.” Educate yourself and take the steps.

2. Harden your computers at the operating-system level, applications level, server level, network-access level and even the individual customer level. Hardening essentially means eliminating unnecessary software, restricting access and otherwise blocking everything that is not essential. “Hardening documentation can be found online,” he said.

3. Use free and open-source software. Security doesn’t have to cost a lot for a small business. “ModSecurity is a free, open-source Web application firewall,” said Maman. “GreenSQL Express is our free database firewall.”

Most of all, pay attention to security. Without the money for a dedicated IT security staffer, your team needs to be even more responsible than big-company employees about what’s running on their devices.

Don't worry; security doesn't have to be a business killer.

“People think of IT security as a hassle, a lot of work and a waste of time,” he said. “That’s not the case. Just one day’s work can increase your security level 100%.”

Image courtesy of Shutterstock.

In reality, Skype In The Workspace is a fancy bulletin board designed to help small businesses connect with each other to provide live question-and-answer sessions -- via Skype, naturally. In a sense, the bare-bones service is simply fertile ground to grow new contacts from an entrepreneur’s existing list of Skype contacts, providing an automated way to search out new contacts and connect.

Skype In The Workspace Coming Out Of Beta

Skype In The Workspace exits its six-month beta Thursday, allowing the world to sign up and seek out new connections. Five hundred businesses offering more than 140 services tested the platform, Microsoft said.

Microsoft sees big potential for the service: The Small Business Administration counted 27 million small businesses in 2011, while Skype boasts 280 million active subscribers. It makes sense that at least some of them will want to connect with each other.

According to Ural Cebeci, a product marketing manager at Skype, the Skype In The Workspace platform allows entrepreneurs and small businesses to overcome limitations of geography, connecting online with people whoe they may not have otherwise met. The tools are still relatively barebones; there are no explicit ties to other Microsoft services, such as Outlook.

You have to schedule your own conferences using your own software. Skype In The Workspace subscribers won’t be able to pay each other for the privilege of meeting either, at least not through the service.

Cebeci compared Skype In The Workspace to a coffee house or a shared workspace.

“It’s really the community talking to the community,” he said in an interview.

Microsoft already provides collaboration tools for businesses, namely Lync, which also includes the ability to work together via video. The difference, Cebeci said, is that Skype In The Workspace is all about small businesses, while Lync’s focus is on the enterprise. In the future, Lync users will directly be able to contact Skype subscribers via IM, and be able to see their presence, and make audio calls, and vice versa.

Microsoft also has SharePoint, but that’s somewhat further removed, using collaborative workspaces and shared pages to manage and develop projects. Still, given that Microsoft executives have talked about Skype’s integration across all of its product lines, Skype should be able to span most if not all of Microsoft’s products.

(Separately, Microsoft said that it plans to retire Windows Messenger by early 2013, but that all of each user's contacts will be imported into Skype 6.0.)

Skype In The Workspace's “opportunities” are themselves curated, and you can also search out your own. The layout, however, is open and unfocused, and in this iteration, it’s really incumbent upon people to seek their own opportunities to network, or else hope that Skype In The Workspace puts a relevant connection in front of them. Unfortunately, you can't search opportunities by the name of the person that posted them. However, you can "favorite" opportunities and come back to them later.

One beta participant, Toby Trembath, the head of intraction design at WildWest Design, and founder at TwoByte Interactive, offered design consulting via the SITW beta. But ir hasn't proven useful yet, he said.

"To be honest, you are the first person to contact me regarding this, so it hasn’t been super-successful for me," Trembath said via email from the U.K.

"This probably has as much to to do with the insufficient amount of time I put into creating the advert as anything else. I’ve just updated it with fresh eyes, maybe it will drum up a bit more interest but I won’t be holding my breath. Most of my current business comes through word of mouth and customer referrals."

Hands-On With Skype In The Workspace

Users visiting Skype In The Workspace for the first time are asked to log on with either their Skype ID or LinkedIn profile, then fill in a little information about themselves. At this point, tying your profile to LinkedIn saves some time.

From there, you, well, search. Skype In The Workspace presents a list of curated opportunities, but the service resembles Craigslist in that each participant can both hang out a shingle (if they so choose) as well as hunt down their own sources of knowledge. There’s no real “social” element to Skype In The Workspace -- people are invited to chat for five, 10, 15, 20 minutes and so on on a given topic. Points aren’t awarded for knowledge, for example, as some of Microsoft’s own TechNet blogs do, and users can't vote topics up or down.

Really, there’s no indication whether someone claiming to be a “social media expert” really is, or if they’re a raw greenhorn. Or, worse still, a bored Chatroulette user seeking out new horizons. To learn more about a potential connection, a Skype In The Workspace user might be better off exploring the connected LinkedIn profile and other social networks.

If you do find a potential conversation that interests you, however, clicking on the “connect” button generates an email to facilitate the connection. But if Skype In The Workspace knows whether or not the other user is online (the concept of "presence"), there’s no indication. 

As with any social network, the problem is one of scale. For now, the limited number of members means that people can be assured that they’ll discover most of the opportunities Skype In The Workspace offers. But as more sign on, the risk is that the service will be drowned by a wave of opportunities and participants. Features such as filtering by tags, for example, will be left to new iterations, Cebeci said.

Likewise, you can’t import your existing list of Skype contacts into the Skype In The Workspace framework, which apparently means yet another platform for notifications and connections.

A video-based, Quora-like repository of knowledge seems to have value, but only if people can quickly connect and benefit. Skype In The Workspace really needs filtering capabilities, as well as some sort of reputation system. Microsoft has built an intriguing platform with Skype In The Workspace, but this initial version seems more curiosity than useful tool for entrepreneurs.

This story was updated to include the exerience of Toby Trembath.

Mom-and-pops often take fewer precautions, and when their customers also let down their guard, they all become easy prey. It might be more time-consuming to string together access to a lot of small businesses, but the prize – fat consumer financial accounts – is just as valuable as any stolen from big firms.

Security Polices Are Lacking

A recent survey of more than 1,000 businesses with less than 250 employees shows that nine in 10 have no formal policies guiding employees on how to avoid malicious sites that download malware. Commissioned by the National Cyber Security Alliance and Symantec, the poll also found that more than seven in 10 respondents have no guidelines for using Facebook, Twitter and other social media where cybercriminals will hijack accounts to distribute malicious links.

Privacy polices were also lacking. The survey found that 60% of the businesses had no guidelines for employees to follow regarding customer or employee information.

The Security Risks Are Obvious

Oddly, small-business owners understand the importance of Internet security.

Fully 73% said using the Internet safely was critical to their business, and 46% acknowledged it was very critical. In fact, nearly nine in 10 had one or more employees using the Internet for daily operations, with seven in 10 saying they were either somewhat or very dependent on the Internet for running their company.

Nevertheless, nearly 60% of the businesses had no contingency for handling a loss of customer or employee data, credit or debit numbers or intellectual property. Yet, nearly seven in 10 manage their own sites in-house, meaning if there's trouble, the small business is liable.

Size Doesn't Matter

So why the disconnect? Michael Kaiser, executive director of security alliance, said small businesses believe hackers are more interested in breaking into large companies that would seem to have much more valuable information.

"They may think their size protects them," Kaiser said.

What many small businesses don't realize is that hackers value information no matter the size of the company. They want names and passwords of employees' email accounts in order to identify customers and send them malware or links to malicious sites.

Small businesses “may not understand how the cybercriminal system works," he said. "A list of 200 customers may be incredibly valuable."

Of course, not all small businesses operate the same way. Those working with defense and financial firms are used to tighter security requirements, for example. More small businesses will have to upgrade to similar levels.

The Easy Pickings

Software powering electronic cash registers is a popular target. Last December, four Romanians were indicted in U.S. federal court for allegedly stealing credit-, debit- and gift-card numbers from the point-of-sale systems at 150 Subway restaurants and more than 50 other franchise and small retailers. The suspects were accused of charging millions of dollars to the accounts of 80,000 customers.

Chester Wisniewski, senior security adviser for anti-virus software vendor Sophos, said small businesses tend to fall behind in software updates that patch security flaws.

"A small business is a target that doesn't necessarily have any better security than my mom and dad," Wisniewski said.

Weak security by small businesses accounts for 90% of the payment data breaches reported to Visa. A study by Verizon found that nearly three-quarters of data breaches in 2011 involved businesses with fewer than 100 employees.

Share As Little Data As Possible

Put all the facts together and a person would be wise to share as little personal information as possible with a small business.

All business owners should consider the case of hotelier Wyndham Worldwide. It was sued this year by the Federal Trade Commission for failing to have adequate security to prevent the theft of payment card information of hundreds of thousands of customers.

There’s nothing to say a small firm can’t be victimized and then sued.

"I wouldn't store my credit card with anyone," Wisniewski said.