The Internet - Revolutionizing the Power of
Small Business
This is the first of a two part series devoted to exploring the
role of the Internet and the potential it offers small businesses through
e-commerce opportunities. We will provide tips and strategies on
implementing or expanding a web-based sales presence and introduce several
Kentucky entrepreneurs that are taking advantage of the Internet to start and
grow their own small businesses.
According to a report published in the 2004 Kentucky Annual
Economic Report, E-Commerce in Kentucky, the author, Jonathan Roenker,
indicates that only 12.7 percent of Kentucky's small businesses utilize the
internet to conduct online sales.
The report points to data gathered from a recent survey
initiated by the University of Kentucky's Center for Business and Economic
Research and goes on to state that while 20.6 percent of large businesses in
Kentucky utilize e-commerce, the percentage of small businesses in the state
utilizing the Internet to conduct online sales bounced back from a dip seen in
the previous year.
The report also indicates that the percentage of large
businesses engaging in e-commerce over that same time period actually
decreased. Of the firms surveyed, the larger ones reported a stronger
tendency to sell their products and services to government agencies and other
businesses via the Internet. The smaller firms indicated a propensity to
sell their products and services to individual consumers but also showed strong
tendencies to sell to other businesses.
"E-commerce not only offers small businesses the
opportunity to bring additional income into their own business, it can also
provide a stream of new monies to communities, especially rural
communities. In other words, it's not just dollars being recycled over
and over within that community," said Gae Broadwater, State Extension
Specialist for Community and Economic Development, Kentucky State
University.
The U.S. Census Bureau estimates that in the second quarter of
2003 alone, almost $12.3 billion in sales occurred via the Internet, an
increase of almost 28 percent over the second quarter of 2002. During
that same period, total retail sales increased by only 5 percent.
A report developed for the Small Business Administration's
Office of Advocacy entitled E-Biz: Strategies for Small Business Success
by Joanne H. Pratt, offered the following key findings after surveying a number
of small businesses:
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A Web site gives entrepreneurs access to markets at low cost.
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67 percent gained new customers.
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62 percent improved competitive position.
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56 percent increased total sales.
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56 percent attracted new types of customers.
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Firms with fewer than ten employees benefit the most from being
online.
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35 percent gain 10 to 99 percent of current sales directly or indirectly from
their Web sites.
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Web sites are a growing trend.
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65 percent of businesses currently online have been online for one year or
less.
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32 percent of firms not yet online expect to use the Internet within the next
year.
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Web sites are cost effective for small niche businesses.
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65 percent of firms make a profit or cover Web site costs.
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The expense to set up and maintain a small business Web site is minimal and can
be covered by revenues.
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The larger small firms are leading the change.
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77 percent of firms with 20 to 249 employees have a Web site compared with 58
percent of those with less than 10 employee
Ultimately, I believe the trends are telling us that being on
the Web and having an e-commerce enabled site can help a small business reach
customers that it might not normally have had the opportunity to reach.
That translates into increased revenues for a small business owner without a
great deal of cost," said John Cole, Director of the Small Business Services
Division of the Cabinet for Economic Development. "Not just from a
business to consumer standpoint, but also in terms of procurement and business
to business opportunities, the Internet is becoming as important today as the
phone was to a small business owner 25 years ago."
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