In the book, Digital Siege, I write about the assault on traditional corporations by young, Internet based businesses that have created new business models.  It is easy to see the sales that Amazon has taken from Borders, CompUSA, Tower Records, and others.  It is less obvious to see the impact that new entrants are having on small, local businesses.

There are multitudes of small businesses that are struggling to deal with the changes impacting their business due to the Internet.  I would classify these businesses into three groups:

1. Businesses that deliver local customer service (i.e. haircut, gas station,grocery store, motel, gym)
2. Businesses that sell products that can also be sold and delivered by remote competitors (book sellers, boutiques, hardware, electronics)
3. Businesses selling services that can also be provided fully via the cloud (travel agents, insurance agents, banks, financial advisory).

All are being affected and the owners are generally not skilled in the techniques of the Internet and online marketing.  Therefore, unless they are part of a larger corporate group that is providing support to enhance their online presence, they are at a loss.

The response required by these small businesses depends on the type of business and its service delivery as grouped above.  Here are the responses by category I would recommend:

1. Use the Internet to enhance local customer contact and service with online reservations, mailing lists for specials, loyalty programs,  etc.
2. Specialize in local interest items and customer tailored  content online.  Realize the customers will all be online, so you must constantly check online prices and offerings to be competitive.  The Internet will be the means to communicate and serve your customers complimented with the in person relationship and service.
3. Realize that your local presence is no longer important enough to grow and maintain your business.  Do not be misled by older, loyal customers, judge by the new customers won.  Develop a speciality and present it on the Internet.  The speciality could be regulatory (insurance for full-time RVers), niche (escorted adventure tours), or some other focus that is not offered by the generic price promoting online sellers.

The Internet is like water.  It cannot really be stopped and will seek its  own level. The small business owner that has built a loyal customer base over the last 30 years must realize that times have changed and be open minded as to how to adapt.  The alternative is to minimize expenses, milk the cow, and retire.