Don't believe everything you read

I'm usually a huge fan of the journalistic quality of the Wall Street Journal.  So I was shocked to see on article on page B4 yesterday by Elizabeth Holmes entitled "Going Online Isn't a Must Move for All Entrepreneurs."  The article begins by quoting the 62-year-old owner of a fabric business in Florida who prefers to advertise in the senior section of the local paper and the vinyl cover of the phone book. 

Gregory Giesche, the owner of a shoe store in Geneva, Illinois that has been around since 1890 is quoted as saying he has no interest in being online.  "Everybody in my family is computer illiterate.  We have a difficult time understanding the Internet."  He notes that they keep their inventory using the same pencil-and-paper system that the family has used for over 100 years.

The article goes on to say that the rate of businesses opting to be online has slowed since 2000, citing a recent survey by the National Small Business Association.  Reading the WSJ article would make you think that this survey was entirely about the online behavior of small businesses, and drew damning conclusions.  In truth only 3 out of 48 pages of the study have anything to do with the internet.  The article also states that the NSBA survey concludes 2/3 of small businesses are rejecting e-commerce, when in fact the study states that 2/3 of businesses don't use ecommerce (this is because about 2/3 of businesses are service businesses and don't have any products to sell!!).  Ms. Holmes creative interpretation of the survey explains why a somewhat stunned representative of the NSBA is quoted in the article as saying "I would think in today's day and age you would have to have a web site." 

I would think so, too.

Readers of this blog will know that I couldn't disagree more with Ms. Holme's assessment.  Please take my word that having a website presence is not an option for a business that hopes to grow in the 21st century.  There are many reputable studies that conclude millions of businesses are moving online every year, and the millions that aren't are being left behind.  I'm not going to say that all businesses are going to fail if they don't have a website (heck, any business that has been around since 1890 knows more than I do about how to survive!).  But grow they will not.

I'll stick to a claim I made a few weeks ago in a speech to an audience of several hundred small business owners: if you don't serve and aquire customers online, it's a race to see if you can retire before your existing customers die off.  If you're a 62-year old entrepreneur selling sewing machines to retirees in Florida, this may be a race worth running.  For the rest of you, I might suggest giving that Internet thingy a shot.

--jsk

P.S.  I would provide a link to this article but you wouldn't be able to read it unless you were a WSJ subscriber.  Further evidence that the Journal is becoming irrelevant in the new world?

Comments

[Dawn Rivers Baker]

Microbusinesses Dominate Online User Profile

I've been waiting for this one.

Late last year, JupiterResearch released a report profiling the online small business market (see "Jupiter Profiles Online Small Businesses" in the November 13, 2006 issue of The MicroEnterprise Journal). In that report, lead analyst Sonal Gandhi estimated that, in 2005, almost 20 million small businesses (or about 78% of them) were active users of the Internet.

But a funny thing happened when Ms. Gandhi was analyzing the data she used to write that report.

She found that the subset of online small businesses that had fewer than five employees — that is, online microbusinesses — were noticeably different from small business executives in firms with between 5 and 100 employees. In fact, from a marketing perspective, they were different enough to warrant a separate research report.

That report, entitled Micro-Business Executives: Examining the Online Behavior and Attitudes of Executives from the Smallest Businesses, was released last week. In many ways, its findings should come as no surprise to those of us who have been watching the microbusiness space over the past decade or so.

According to this report, the proportionate size of the online microbusiness population is similar to the overall numbers. Ninety percent of online small businesses are microbusinesses. No one of these tiny businesses spends much on business products and services but, collectively, they account for half of online small business spending. And online microbusinesses are the fastest growing segment of the online small business market.

In addition to the fact that online microbusinesses are a pretty huge and growing chunk of the small business market, they are simply different from larger small business.

For one thing, you'll find more women-owned businesses here. Among larger small businesses, 30% of owners are female. By contrast, women are at the helm of almost 40% of online microbusinesses. In light of overall size of the online microbusiness market, that translates into an influential segment that controls a significant portion of online small business spending.

Online microbusinesses are also significantly more likely to be home-based businesses; in fact, a fairly stunning 89% of online microbusinesses are estimated to operate out of a residence. This finding, based on surveys of online small business owners, conflicts with the data released in the Census Bureau's 2002 Survey of Business Owners finding that only 49% of U.S. firms are home-based. That alone is worth at least a few minutes of thought.

The report notes that many marketers tend to categorize microbusiness owners with overall online users, otherwise known as online consumers. This survey shows why that is such a common mistake. Almost one-third of online microbusiness owners reported that they regularly mix business and personal activities when they are online, compared to 20% of small business owners.

However, as a group, online micros are in a class of their own, a hybrid of the business owner and the consumer. And they are very, very active.

Microbusiness owners spend more time online that either of those other two groups and they use the Internet more than other media. They watch more online video, they are avid users of online news and information and, in addition to sending email and instant messaging, they spend more time reading and posting to message boards than overall users or other small business owners.

This research found that microbusiness owners are not adopting blogging any faster than any other group but they are twice as likely to use RSS feeds and listen to podcasts than other small business owners. However, the numbers are still fairly low (only 11% and 10% of them, respectively), indicating that they are still in the early adopter phase.

They also appear to have little interest in social networking sites. More often than not, they may register at such sites but rarely use them. That is not surprising. Microbusiness owners have been using message boards to do their online networking for years, so they don't really need a new platform to make business connections online.

Online microbusiness owners show more of a willingness to provide information about themselves than other users, too, provided you can earn their trust and offer them the right incentive. The trust piece is important; without even bothering with the incentives, two-thirds of microbusiness owners say they would provide information at a web site that guarantees the information will not be misused.

As for those incentives, entering contests and sweepstakes, accessing exclusive information, and receiving customized information and promotional pitches will get this group to tell you about themselves faster than anything else. Jupiter suggests that marketers include questions about business size when collecting information about small business users, so don't be surprised if you start seeing that small change on online registration forms.

The picture that emerges will no doubt be intriguing to online marketers but the less obvious policy implications here are significant. Given the differences in the way they use the medium, it makes sense that most of the small business lobby is not exactly up to speed on tech issues as they might impact that constituency. The Internet is clearly not as important to those larger small businesses, and the relevant policy challenges take a back seat to other, more traditional issues.

But it is equally clear that the Internet is a critically important medium for microbusinesses. One basic bit of information that is missing from this report is the number of online microbusinesses that are actually doing business from an e-commerce enabled web site.

A 2002 report by Joanne Pratt, published by the SBA Office of Advocacy, found that 61% of online small businesses had a web site and 35% of them were selling online. However, that report was confined to employer firms, excluding the vast sea of nonemployer businesses that are truly the fastest growing segment of the small business population.

I would be willing to make an educated guess that at least 70% of nonemployer businesses are selling online. In fact, one reason why nonemployers are the fastest growing segment of the small business population is probably because the Internet allows them to start a business with a worldwide reach, with relatively low up-front costs.

No matter how you slice it, policy makers are going to have to deal with the implications of telecommunications policy on the microbusiness population if they want to do their job properly. That means, among other things, making a place at the table for microbusiness interests on issues such as data protection and user privacy issues, 'Net neutrality, anti-spam and anti-fraud efforts, broadband penetration, and more.

Right now, the biggest hurdle for those policy makers to overcome is the lack of an organized microbusiness voice. The logical outfit to turn to under the circumstances would be the National Association for the Self-Employed (NASE), which already has a presence on Capitol Hill and has proved an effective force for micros on other issues.

In recent years, the NASE has been understandably pre-occupied with the issue of affordable health insurance for microbusinesses. One hopes that, at some point, they will expand their advocacy efforts from the health of microbusiness owners to the 'Net related issues that are so critical to the health of online microbusinesses.

Copyright © 2007 by The MicroEnterprise Journal.
All rights reserved.

(This article originally appeared in the March 5, 2007 issue of The MicroEnterprise Journal.)

[M.]

I have been on the internet for over a year now. My business has still not taken off. I even used Homestead. I have been working my tail off to get off the ground. It's just not happening, so what am I led to believe? That it's me? That it's the internet? I don't know, but what I do know is I'm not going places like I'd hoped I would.

[Sean McCloskey]

Its hard to believe there are still internet-phobic people out there. Its interesting in the new show on NBC called Journeyman, the main character travels through San Francisco past. In the most recent travel he came across a girl that said she was waiting for a guy she met over the "World Wide Web." How long has it been since I heard someone use those words? About the same time I had heard the fear and loathing about the internet.

The trouble is marketing, even with the 1-5 person team. You have to know your market, and you have to be able to sell to them. I recently worked at a video game publisher that had an e-commerce site simply because everyone else did. As such it was an outsource company that sold the goods, and the person who maintained the page left the company and no one knew what to do with it for years.

It was old and dated and showed products that weren't on store shelves anymore. The web is not meant to be a static store shelf, it needs almost daily care, or at least enough care to see that you come back more then once. No one wants to log onto your site and see a banner supporting the troops in Operation Desert Storm, it will just tell them that you don't care about your site.

Next you can't believe the hype of the late night informercials. Instant sucess is a right time, right place phenom. Get to know the internet, and understand why you aren't at the top of search engines results. Don't sit there and use a template from which ever web hosting site you go to. They are templates, or ideas. As a customer I don't want to go to someone's site and see the same thing that I saw on another site about dogs, when I am shopping for furniture or pens.

[justin]

thank you for my web page bring on the new business just let everyone know of my web site bonsailifecoach...and please continue your personal phone care..respect for the creatity in homestead ..there is change always lets have courage and keep your accountability and grow to a great worldly company..smile hooray

[Chris Horn]

Hello Justin,

As you know, with the internet and telecom industry, innovations come along that dramatically change the way we think about & operate our online businesses. And some of them remarkably change the speed and accuracy by which we do business. This is one of those times.

It is very very important. I need to setup a 5 minute appointment with the CEO of our company concerning a web tool which we are the first and only company in the world to create, called NetCaller.
Our company is made up of Programming Engineers, Telcom and Online Marketing Guru's.

You will appreciate us giving you 5 minutes of our time before your competitors see it or worse before you see it in your competitors business model.

Product: NetCaller (Vertical)

NetCaller is basically a white labeled way of providing telco functions inside of your backoffices/websites. Through various API webcalls, you can tell NetCaller to dial phone numbers and connect those dialed calls back with your customers. This can be accomplished in many different ways. Some of our customers implemented a "NetCaller" system into their backoffice as a sort of prospecting semi auto dialer with a press 1 campaign. Others use this to "Thank" prospects for submitting their information and asking them if they would like to speak to a agent now, Press 1. The possibilities are endless.

NetCaller Summary: Anywhere you have a phone number, NetCaller can be called to dial that number and connect to customer.

NetCaller (Vertical): By Using NetCaller API, your customers will never see Powered Marketing. This will be rolled out as YOUR product and implemented however you see fit.

NetCaller Cost: Our Cost to you is $15.00/month + $.03/min Of the $15, $5 is added for telco funds. Another way of looking at it: $15/month gets you 1 NetCaller License + 150 min. You can charge whatever you want, we do not have to know, nor do we care. They are your customers and is none of our business.

NetCaller Charge (recommended): We recommend that you charge your customers at least $19.95/mo + $.04/min We strongly recommend that you DO NOT use this product as just another way of keeping customers thereby just passing product at cost, rather we want this product to be a PROFIT center for you.

NetCaller Customizations: The NetCaller (Veritcal) is not in stone or concrete. We know that not any one implementation is the same and we will create/modify the API to exactly fit your needs.

Chris Horn
800-594-4503 x102
321-972-0100 x102

You can go to our website but you won't see the Never Before Seen applications. These are special. http://www.poweredmarketing.com/interactive.asp/af=chris