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“Crowdsourcing” is a relatively new concept in the business world that involves harnessing the power of organized groups to provide tasks for businesses large and small. The benefit to small businesses is that it can level the playing field between big and small companies as well as provide a leg up to small businesses located in areas with small talent pools. Websites like Elance and 99designs use this concept to great advantage connect workers with businesses while taking a cut of the action, but the concept needs fine-tuning before it can be widely utilized and the lack of direction is also providing opportunities for businesses designed to help with organization. For more on this continue reading the following article from TheStreet.

Every few years, a new business model comes along that carries a certain in-the-know cache. Mention it casually in conversation or a meeting and you're signaling subtly that you're up on the latest innovation trends.

These days, "the crowd" is one of those buzzworthy business concepts. Harnessing the power of groups through online communication has already revolutionized standard models of publishing or marketing; think of Wikipedia's collaborative writing model, or the thousands of Twitter users who can sink a movie release if they all share bad reviews.

So it's no wonder some see great potential for crowdsourcing, a term that encompasses a variety of methods for handing off business tasks to the crowd. Theoretically, crowdsourcing allows small businesses to take advantage of a vastly wider talent pool while keeping costs down. But this virtual crowd, by its very nature, is an ever-changing, hard-to-pin-down concept. And while a few crowdsourcing applications have clear benefits for small businesses, the concept as a whole is still very much a work in progress.

Later this month, leaders from throughout the crowdsourcing industry will come together in San Francisco for CrowdConf, an annual gathering that aims to raise crowdsourcing's profile among investors, venture capitalists, analysts, the media and corporate managers. This year, for the first time, a series of panels have been designed specifically for entrepreneurs to show the ways a crowd-based approach can be used by start-ups.

"We're putting a huge emphasis on customer learning," says Mollie Allick, marketing director for the crowdsourcing company Crowdflower, which organizes the conference. "If you're a small or medium-sized business and you're not in a major metropolitan area, it's so easy to access these resources once you know where to go."

Crowdflower, to take one example, operates by breaking down a client's huge projects into "microtasks" that can be performed quickly, remotely and cheaply. One specialty is "image moderation," which accesses a huge network of contributors who judge whether photos uploaded to a website are acceptable. While Crowdflower mostly works with large companies that have enormous data-processing needs, other crowdsourcing companies lend themselves to smaller businesses by providing access to talent needed for a specific project.

The design resource 99designs, for example, allows business owners or startups to solicit ideas for logos, signs, banner ads and website designs from the more than 100,000 designers around the world signed up with the site. Interested designers compete for the job by submitting (unpaid) samples. Elance works similarly by matching businesses with writers, marketing specialists and computer programmers. The advertising agency Victors & Spoils operates on the same general principle, with a full-time, in-house team of creative directors and account managers who work directly with clients, but who outsource the actual creative work to a team of thousands of freelance writers, designers and strategists.

The beauty of crowdsourcing is its potential to level the playing field between businesses in different parts of the country. While tech start-ups in San Francisco or New York are the most likely to have experimented with crowdsourcing, it's the entrepreneurs in Omaha or Charlotte or Milwaukee who could benefit the most in the long run because it allows them to temporarily "hire" a wide array of affordably priced talent. (Sadly, the recession has also helped, by increasing the number of workers who are willing to work freelance and compete against each other to be the lowest bidder.)

Still, crowdsourcing has yet to revolutionize the ways most businesses operate. "The spectrum of the type of work that can be done and the sophistication of that work is very broad," Allick says. But for the most part, crowdsourcing applications for small businesses are simply a new twist on traditional staffing companies: You go through a gatekeeper to access talent that you could not find on your own. A crowdsourcing site may help you reach many more potential workers than your local temp agency, but you still need procedures in place to protect the security of your business data and to provide some level of quality control.

Will crowdsourcing remain a niche resource or steadily grow in popularity? A lot depends on how the industry's trailblazers fare. For this month's CrowdConf, the organizers are using crowdsourcing to market the conference and book entertainment. "We want to show that we can use these resources to create a successful event," Allick says. "We're putting our money where our mouth is."

This article was republished with permission from TheStreet.