Modest Growth Is Seen for Small Business Web Sites

Small businesses are working their way online and spending more money in the process, with the cash they devote to Web hosting growing by 9.5 percent annually and expected to top $7.4 billion by 2009, according to a new report. By that same time, 80 percent of small businesses are expected to have Internet access and 83 percent will have homepages. "A couple of years ago we were saying the Internet is standard in small business. Now Internet presence is a necessity" says Ray Boggs, vice president of small/medium business at IDC, and coauthor of "U.S. Small Business Internet 2005-2009 Forecast: Continuing Growth of Online Access, Online Promotion, and Online Selling." Most people assume that all small businesses have Internet access at this point in the game, according to Boggs, but just 70 percent of small businesses with 100 or less employees are represented. "There are mom-and-pop retailers that don't even have computers at this stage. Eighty-eight percent have PCs [and] 90 percent of PC users have Internet access." These businesses are using the Internet for two reasons: to expand their geographic reach on the cheap, and to build community with current customers. "You can be extremely astute with moving inventory and you can experiment with different things," Boggs says, such as offering longtime customers special limited time promotions. Although Internet use for self-promotional purposes will continue to increase, with homepages detailing what a company is about, online selling will remain relatively rare even though it's increasingly easy to implement. Only about 25 percent of small businesses will use e-commerce by the end of the report's forecast period, while about 22 percent are doing so now. Interestingly, some of the tiniest companies (fewer than five employees) are more likely to add e-commerce capabilities than the next highest level. The changing way companies with 100 or fewer employees are doing business represents new opportunities for technology suppliers, according to Boggs. As the Internet becomes more integral to small business operations, more advanced capabilities like tracking site performance and providing access to more comprehensive resources for visitors will be of interest to those looking to the Internet for support of a wide range of activities. "Even though there's not a dramatic increase in the number of folks that have home pages," Boggs says, "the spending to enhance the Web site has [increased]." Related articles: Marketers Need To Log-On Consumer trends will drive marketers to online channels in 2005. Internet Spending Reaches an All-Time High