|
|
|
Business as Usual, or Business as Usual Plus
Has the Internet really changed the face of small businesses?
|
Business New Haven
5/14/2001
By: Susan Cornell
|
There is an “all aboard” hail regarding the Internet in the business community today - it seems that everyone from the barbershop to the pizza purveyor has a presence on the Web. The number of small businesses embracing the Internet is increasing faster than Amtrak's new high-speed Acela train.
Clearly, technological advances have changed the way companies of all sizes do business today. But does every Tom, Dick and Harry Inc. really have a Web site? It seems that way - but it's not.
According to the findings of IDC's 1999 U.S. Small Business Survey, fewer than 13 percent of U.S. small businesses had invested in a PC, let alone added Internet capability. According to the IDC's vice president of small-business research, Raymond Boggs, “Small businesses are experimenting with Web promotion of their products and services. And there is plenty of room to grow.”
According to a survey by the National Foundation of Women Business Owners, only 44 percent of business owners who have identified growth as a primary business goal have a Web site. The NFWBO survey also reveals that less than one-third of companies which are less growth-oriented have a Web site, while only about 20 percent of all business owners consider e-commerce and the Internet to be critical business growth strategy elements.
So, while keeping up with technological changes is important and e-commerce does present a significant growth opportunity for an array of small businesses, the Web cannot be considered the be-all and end-all. While there are roughly three million small businesses promoting themselves online today, the majority still are not. Others still have experimented with this channel only to revert back to basics after finding that the old ways of doing things seem to work still.
Sigrid LaFrance, owner of the Virtual Office, a consulting firm specializing in Web design and office-support services, finds that, “A lot of small-business owners are struggling to bring their companies into the new millennium either because they are unfamiliar with certain technologies they wish to implement, or simply are uncertain what type of technology they need to keep a competitive edge.
“Many entrepreneurs are still reluctant to embrace today's technology simply because they don't understand how it works,” says LaFrance. “They are familiar with the tried-and-true, and being human, have difficulty when something new comes along.”
Richard Pleines, the owner of three good old-fashioned small businesses in leafy Killingworth and president of the town's chamber of commerce, has had phenomenal success with the Internet. Ninety-eight percent of the business for his quaint bed-and-breakfast “comes off the Internet,” Pleines says. Still, he notes, “Many small, in-town businesses don't need Web sites.”
Pleines' experience illustrates one of the most significant challenges for small businesses: “Not only do you have to build a great Web site, but then you have to promote that Web site via the search engines,” he says. “You are re-posting and re-posting, which is time-consuming.”
As well, “The biggest problem is that people will pay someone to build a Web site, but then [the site] needs changes, updates and upgrades,” he says. “This occurs frequently in the real-estate industry where the site may need changing daily [with properties entering and departing the market]. But the small-business owner may not know how to do this or may not have the time. So he or she then needs to pay someone else.”
While many people believe that the Internet will provide a low-cost alternative to traditional forms of advertising, in reality cost and finding the right person to get the job done can deter the small-businessperson.
According to the Small Business Journal, “The going rate for design of a home page for a business is anywhere from $500 to $2,000 depending on the size and design features. Additionally, you will often be charged a monthly fee of $100 to $200 for storage and maintenance on your ISP's computer.”
Peter Sachs, the president of IConn.net, a New Haven-based Internet-services firm, concurs with the price-tag issue for small businesses. He adds, “For a lot [of small businesses] it is cost, yet for some they are just behind the times or intimidated seeing what has happened with the dot.coms. But for most it is cost - or the perception that it will be costly.”
Finding the time to learn, to build and to maintain a Web presence is a common concern.
Says Denise Roberts Salafia, owner of the Dance Corner in Killingworth, one of the fastest-growing studios on the shoreline: “The challenge is finding someone cheap but good to do the design. That's probably the biggest issue for small business, especially ones that wouldn't benefit from the wider Web audience.”
In a service industry that is highly localized, Web sites can be built for a variety of reasons and often the initial intentions change over time. For the Dance Corner, Salafia's original objectives were to provide online brochure information, ticket sales and newsletters.
But, at least for now, Salafia says, “The Web site is just another vehicle to promote our studio to our local audience.”
The Virtual Office's LaChance adds that she has “been receiving calls to do Web sites for businesses, not because they feel they need to hurry up and get on the bandwagon, but because they had already hired someone to design their site over a year ago and still don't have anything to show for it. Because Web sites are relatively new, business owners end up being held hostage by their lack of understanding of the process and how long it should take to complete.”
In other service-oriented businesses, the plans for technology may differ from the reality of how the technology is employed once the project is underway.
Says Tracey Hickey, marketing director for Pipeline Petroleum, a shoreline oil company, “We really didn't know where [the Web site] would go, but the company didn't want to be left behind.”
Like others, Hickey acknowledges, “No one has time to learn, so it's business as usual.” A principal objective for this type of small business, Hickey finds, is maintaining a Web site “mainly for attracting new customers moving to town.”
As it is with many businesses, the Web is one component of the overall marketing mix. Pipeline was one of the first oil companies in the area to create a site, yet billing is not yet done via the Web, and many of the company's existing customers don't even know that Pipeline's site exists.
The original plan included posting the company's newsletter on the Web, but at least for now, it truly is “business as usual,” with invoicing, printing newsletters and advertising performed as the company has always done. Yet, there are no intentions of eliminating the site as it behooves the firm to advertise via the Net to those moving into town.
At Chamard Vineyards in Clinton, the Web has clearly delivered benefits yet is still used only in specialized areas. Edmée Dewitt, the vineyard's business manager, acknowledges that Chamard “hasn't used the Web to the full capacity.” She notes that keeping the site updated with a small staff is a challenge, although “The Internet has delivered a lot of what we hoped for in terms of increased sales and exposure for wine shops and restaurants.”
The winery does not now sell wine over the Internet. Rather, the big benefit is in bringing customers to the vineyard and advertising its wares. So in that sense, much of Chamard's business is still conducted in the traditional manner.
To determine whether the new economy is a viable part of a small business's strategic plan, one needs to look at an array of costs and benefits. Basically, the equation is: It depends.
The Internet brings a whole new set of challenges. Some customers are Internet customers, while others will be the traditional ones. This means that the small business may need to duplicate many functions.
For example, the business may need to maintain a list of “e-customers” to contact, traditional customers to be contacted in an entirely different fashion, and those who may have come to the business via the Internet yet request traditional marketing materials such as receiving catalogues via snail mail.
Vladimir Moroson, president of Musica Russica, a Madison-based international music publishing and distributing company specializing in Russian choral and folk music, says his business has been “technology-driven” since “without the technologies developed over the past 15 years - computerized desktop publishing, high-quality duplication and the Internet, our business probably wouldn't exist.”
On the other hand, he says that although “Online orders have increased, especially over the last two years, there are still people who call our 800 number to complain that they can't get our [online] shopping cart to accept their order. We still have to rely on traditional means of support.
“Certainly it is possible to reach a lot of people via the Web and e-mail,” adds Moroson, “but you cannot help but wonder if there are people you're not reaching because they don't have a computer.”
So at Musica Russica, there is the high-tech side of globally marketing a niche product, yet there is a no-tech side of promoting business the old-fashioned way to those customers without computers. This means creating different databases of customers to whom the company sells the same products as well as creating both an online catalogue and a print catalogue.
“Companies with a distinctly local clientele may or may not benefit from having a Web site or electronic distribution options,” Moroson observes. “The problem of letting people know that you're out there still remains. Very often this entails traditional [direct mail and other media advertising] just to let people know you exist.
“We began building our client base by direct-mailing paper catalogues to music directors, college professors and teachers, churches and libraries,” he explains. “We include our Web and e-mail address on every single piece of sheet music we publish. The new technology is just another tool of many. It is not the magic bullet that is going to transform an unsuccessful business to an overnight success.”
For small businesses with catalogues, one issue is whether to permit the customer to view merchandise photographs as an option. While producing a snail-mail catalogue can cost three times as much as an online equivalent, many customers access the Internet over slow modems, which means that downloading images can be burdensome. Additionally, it is more difficult to determine which customers are accessing the online catalogue compared to simply reading your mailing list.
Like Musica Russica, other businesses have alighted on a marketing mix in which e-commerce is a tool, not a stand-alone sales strategy. This means that online retailing is combined with traditional approaches. Even the e-tailers still must employ traditional approaches to generating sales.
And the Internet doesn't always lend itself to good, old-fashioned one-on-one communication. Robert Rioja, owner of Unison Travel in Killingworth, finds that “Clients want to have a person they can call to get instant information. Dialogue is essential. Although you can get some information from a Web site, there is no real dialogue.”
So while Unison faces increasing competition from forces such as Travelocity.com and does have a Web site, Rioja finds that the bulk of his company's communication and personal attention take place off-line.
The dot.com failures of recent months have furnished small businesses with a number of valuable lessons.
First was the misconception, “If we build it they will come.” Many firms simply had flawed ideas and assumed that just because they could put something on the Web, someone out there in cyberspace would buy it. Some copycatted other businesses. And, some had great ideas but either became greedy, arrogant, or grew too quickly.
Stamford's Priceline.com serves as an example of the third category. The plus side of the dot.coms' failures is that the experiences serve as educational grist for small business. The downside, however, is that the failure of many intimidate some small businesses, leading them to steer clear of e-commerce altogether.
Another lesson dearly learned, IConn's Sachs says, is that “Many companies don't need to be on the Net. [For some there is] no advantage except for e-mail. Take the mom-and-pop barber shop: Unless they are marketing hair-care products it just doesn't make sense.”
Sachs adds that businesses should not give up on traditional marketing means. The Internet, he adds “is not the be-all and end-all.”
The moral of the story is that the new frontier and the new economy are pretty much Main Street and the old economy simply setting up business on a different street. Small business online is still small business - with a few added ingredients. The same business must plan, manage, research, market, and finance - regardless whether it is in cyberspace or a bricks-and-mortar storefront on Main Street. And for those many businesses that span both worlds, much of the way they conduct business is the way they did in the old days (the 1990s).
While the Internet and new technologies of the digital age have tremendous reach and so many companies are experimenting with Web promotion, most are not. Says Moroson, “Whether a company decides to embrace the new technology depends on the company - and the product.”
|
Go FirstGo PreviousGo
NextGo LastGo
to Index
|
|
