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Online Channel Key for Many Small Businesses

By Christopher Saunders
May 19, 2004

Small business owners might do well to consider ways to leverage the Internet, since new data indicates that more businesses than ever are moving online -- and expect to be more profitable as a result.

According to a new survey conducted last month by Harris Interactive, a staggering 70 percent of small businesses in the U.S. already have an online presence, or will have one by the end of the year. That's a massive change from the 35 percent of American small businesses that had their own Internet site at the end of 2002, based on a report by the U.S. Small Business Administration's Advocacy Office.

The newest survey polled more than 1,000 U.S. businesses employing fewer than 100 people, and was sponsored by Yahoo! Small Business.

The survey also found that 35 percent of small business owners feel that having a Web site was the most important tool to expand their business. Small business owners rate Web sites more highly than dedicated e-mail presence or online advertising efforts, both of which garnered support from about 30 percent of the respondents.

Small business owners surveyed by Harris also believe that having a Web site is even more critical for growth than hiring more employees -- which received only 19 percent of the votes.

While most small businesses polled by Harris anticipate sales growth during 2004, businesses with an online presence tend to be more optimistic about their prospects. About 66 percent of the survey's participants said they expect their annual revenue would rise during the coming year; the vast majority of these, 75 percent, were companies who also reported having an online presence currently.

The research supports several other findings that indicate that small businesses are increasingly leveraging the Internet to boost profits, and are more optimistic about the future as a result.

In March, ACNielsen and eBay released a survey that found that 51 percent of small businesses using the Internet believe that it has helped their businesses increase profits. Furthermore, 58 percent of small firms polled report that using the Internet has helped their businesses grow or expand, and 15 percent feel that using the Internet is critical to their business' very survival.

That study, based on feedback from approximately 400 small businesses, also indicates that many small businesses view the Internet as a powerful sales tool. Thirty-three percent of small business owners use the Internet to sell goods and services online, and 43 percent find sales prospects online.

"Clearly, small businesses realize the importance of establishing an online presence and leveraging the Internet as a way to reach new customers," said Rich Riley, vice president and general manager, Yahoo! Small Business.

Christopher Saunders is managing editor of eCommerce-Guide.com.