Why Home Businesses Stay Offline - Industry Trend or Event

Home Office Computing, April, 2001 by Victoria Hall Smith

WITHOUT A WEB SITE AS PART OF YOUR marketing plan, your small business has as much long-term survival potential as a snowman in a bonfire--or so goes contemporary hyperbole. The reality of how small businesses prefer to reach their customers casts doubts that e-commerce is a necessity at all for home-based businesses.

For one, home-based business owners don't think that a Web site and e-commerce go hand-in-hand, says Merle Sandier, senior analyst at Boston-based Small Business Research Group, a division of IDC. A recent study by IDC found that out of 850 small businesses, while 70 percent had the ability to go online, only a third of those online had a Web site. "Plus, only a third of those Web sites are actually capable of transacting business online," says Sandler.

A slightly different picture emerges from ActivMedia's study of 1,013 small businesses. Fifty-six percent of respondents claimed to be set up for accepting orders over active Web sites, while 64 percent say they use it primarily for marketing purposes. Moreover, only about a third of the participants in the ActivMedia study claim to generate revenue over the Internet.

"Currently, of the 15 million domain names registered worldwide, just over seven million are using the `.com' domain extension," says Chris Wheeler, vice president of information services at ActivMedia Research, based in Peterborough, N.H. "But, there are only approximately 500,000 substantial Web businesses found in the various published directories."

So, why are the majority of small businesses staying offline? Wheeler says it's a matter of understanding the wants and needs of the customer. Louis Rivet, a small-business owner, agrees. He says that his business simply doesn't lend itself to an online operation. For the past 30 years, Rivet has operated Pleasant Mailboxes, a provider of packing and shipping services and rental mailboxes to individuals and businesses in Claremont, N.H. "I can't rent mailboxes online because of all the strict picture-I.D, regulations," he explains.

Respondents in the IDC study cited fear of designing and operating a Web site as a major reason for keeping their businesses offline. "Entrepreneurs tell us they are not sure how to go about getting a Web site up and running," says Sandler. "Besides, most small businesses just want to send out an electronic brochure or newsletter." Even the prospect of creating a simple site with templates doesn't ease the fear of launching a Web site for a small business. According to Sandler, most small-business owners think a professional designer will cost thousands of dollars--well out of their budget range.

The tides may change, however. ActivMedia's study indicates that small businesses will eventually become more comfortable in establishing a Web presence. Wheeler is hopeful; he projects that the number of online businesses will continue to expand steadily at about 100,000 newcomers per year.