Taking a Small Business Online: A Systematic Approach

Article excerpt

ABSTRACT

Historically, small businesses have been slow in taking advantage of electronic commerce (e-commerce) opportunities offered by the Internet. The dot-com meltdown only served to further impede development of web applications by small firms. Recently, attention is once again shifting back to the web. This paper focuses on issues that require attention by small businesses as they contemplate having a presence on the Internet. We present a systematic approach for small businesses. The paper concludes by presenting implications of the proposed approach for small businesses.

INTRODUCTION

The advent of the Internet, the World Wide Web (WWW or web, for short), and affordable technology have lead to a growing role for electronic commerce (or e-commerce) in the world economy. These have forever transformed the way firms do business, and communicate with their customers and suppliers. Increasingly, businesses are realizing that the Internet1 provides opportunities for gaining a competitive advantage. Indeed, if firms are to remain competitive, they will need to adopt Internet technology and integrate it into thenoperations (Porter, 2001).

Despite the dot-com meltdown, the Internet continues to grow and has become part of the mainstream business culture (Mullaney, 2003). The most recent estimates released by the U.S. Department of Commerce indicate that unadjusted retail e-commerce sales for the second quarter of 2003 were $12.5 billion, an increase of 27.8 percent from the same quarter of 2002 (U. S. Dept. of Commerce, 2003). Online sales, both business-to-business (B2B) and business-toconsumer (B2C), are steadily growing (Kirkpatrick, 2001). Consumer confidence in Internet products and services remains high, with increased online spending expected in 2003 (Gill, 2003).

While the Internet has had a major impact on how large businesses operate, small businesses have been slow to respond to the changes introduced by Internet technology (Kleindl, 2000). According to Patrick Marshall, Group VP of Marketing for Verizon Information Services, small businesses without a web site may be at a competitive disadvantage (Fusco, 2003). Web sites are increasingly key for any business because consumers often use them to research a product or service before purchasing online or offline (Woods, 2003); they may also serve to enhance the visibility and credibility of these firms (Pratt, 2002).

Purpose of the Paper

The focus of this paper is on issues related to how small businesses might take advantage of the opportunities offered by the Internet. We propose that small firms contemplating a presence on the Internet first attempt to define the objectives they wish to achieve with their online presence. Next, they need to determine the route they will take to implement the online presence. After the presence is implemented, they need to promote the web site.

The paper is organized as follows. First, we discuss the current applications by small businesses on the Internet, which leads into the discussion about web site objectives. Next, we explain how to create an online presence. After that, the paper offers suggestions for promoting web sites (online presence). Finally, future implications for small firms adopting this approach are considered.

A question naturally arises: why is it important to discuss e-commerce issues, especially in the small-business arena? This was summed-up very well by Pratt (2002, p. 3):

Small business (SB) makes a significant contribution to employment and to commerce. Ninety-five percent of small businesses have fewer than 100 employees and employ about half of the U. S. workforce . . . This year, small businesses will account for one-fifth of e-commerce spending. . . . About 60 percent of small businesses with online access have a Net presence. . . . But only about one-third of them sell goods online . . . The proportion of total sales made online is greatest for firms with fewer than 10 employees, which highlights 'the very real potential of the Internet to generate sales even for the smallest SBs. …