EDITOR'S NOTES - by Diane W. Collins

Opportunity Knocks...but it Doesn't Wait:
Small Business Internet Solution Providers Wake Up!
by Diane W. Collins

Technology companies providing Internet solutions to the small business marketplace need to seriously reconsider their approach. It is true that small business was among the first to embrace the Internet. The Internet was seen as an "equalizer" or a method of leveling the playing field by giving small business an economical means to compete with the "Big Boys". However, the majority of small business has not taken hold of the Internet's full potential by developing web sites and enabling e-commerce.

In fact, out of this market which, according to the Yankee Group, "represents 98% of all US businesses, 50% of the GNP and spends approximately $445 billion annually on information technology products and services" only 41.2%, according to IDC Research, currently access the Internet! Yankee research states that of the small to medium businesses surveyed in their report only 30% felt the Internet was important to their business goals. The small businesses who actually have an Internet presence (SBI's) for the most part remain as entry level "electronic brochures". Why?

Recent reports identify small business concerns as web development costs, maintenance, customer service and security. These issues are thought to be the existing impediments to furthering the small business IT market. However, these are the concerns of the small businesses who have an Internet presence... SBI's, the ones who already understand the value. What about the majority? Let me further my point, all of these SBI concerns are being addressed by innovative software companies developing packaged software solutions that reduce costs, enable you to maintain your own site, deliver high quality customer service and provide the security options small business needs. Yet the majority of small business is not running to take advantage of the one tool that will take them into the next century...that will preserve their place in the economic structure. "Among the small (2-99 employees) and medium (100-499) businesses surveyed by the Yankee Group, an average of only 30 percent stated that the Internet was important to achieving business goals." What is the missing link?

Through technology we have structured the solutions. But are we still believing that "if we build it they will come?" Just because we have the solutions doesn't mean small business knows about them or believes in them. So what's the answer? Education...both online and off. If you're not spending money on education it really doesn't matter what products you have to offer. It is also important to remember that 58.8% of your market is still off-line. If you don't offer off-line education in strategic small business arenas you're missing the majority of your market share.

Why do companies providing Internet solutions to the small business marketplace need to get on this now? According to Forrester Research by 2002 of the 5,367 companies that make up US Big Business (1,000 - 4,999 employees) 98% will be online and 79% will be e-commerce enabled. Concerning the 1,352 companies comprising US Very Big Business (5,000 plus employees) 98% will be online and 92% will be enabled with e-commerce. Including 1999 there is a four year window. We all understand the importance of being in the marketplace first. We have all seen the changes taking place in Internet demographics. The small business customer is online. Even local markets will be effected by local content sites. Studies are available on cities as designated "most connected" by population. Without an Internet distribution channel small business will be seriously handicapped.

No one understood this better than Amazon.com, once-upon-a-time a small business. However, consider this... how is Amazon.com currently affecting the small business book-seller who is off-line? How much more affected do you think he will be in 1999 when the major shift in Internet demographics is seen as "the masses come to the net"? The small business IT market is going to shrink unless small business is brought up to speed on the opportunity available to them. Unless this is accomplished, the ROI for small business Internet solution providers will definitely be reduced. Opportunity knocks...but it doesn't wait. Providers of small business Internet solutions had better get heavily into education...and that means on and off the Internet if they want this exceptional market called small business to remain a viable marketplace for their products and services. Otherwise, it's just going to be the "Big Boys' " game.

JANUARY 11, 1999
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Related Articles:
IDC Predictions '99: The "Real" Internet Emerges, IDC Research

Small Business Embraces the Internet, IDC Research

SMBs Missing Internet Opportunity, CyberAtlas

More Small Businesses Using the Internet, CyberAtlas



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