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I thought this was on outstandingly interesting article. Too many small business owners undervalue the impact of a solid web presence.

INC.COM October 22, 2011
Are You Bad at the Internet?
Eric Markowitz

A Kauff­man study released Thurs­day illu­mi­nates how small busi­ness­es are strug­gling with using the Web to con­vert sales, while a few unlike­ly indus­tries are find­ing suc­cess.

In the world of start-ups, a web­site is a com­pa­ny’s lifeblood.

But for the rest of small busi­ness own­ers in Amer­i­ca, it seems, hav­ing a vibrant web­site is some­times mere­ly an after­thought.

In a study released this morn­ing titled Cast­ing a Wide Net: Online Activ­i­ties of Small and New Busi­ness­es in the Unit­ed States, Kauff­man Foun­da­tion researchers com­pared data from the Cen­sus Bureau’s 2007 Sur­vey of Busi­ness Own­ers to a data set that fol­lowed near­ly 5,000 young firms that start­ed up in 2004. The study pro­vides one of the first in-depth looks at how small busi­ness­es—across indus­try sec­tors—are lever­ag­ing the Web to sell to cus­tomers.

Or, not lever­ag­ing the Web, as it may be. Accord­ing to gov­ern­ment data, as of 2007, only about a quar­ter of all small busi­ness­es in Amer­i­ca had a web­site. And with­in that fig­ure, only six per­cent report­ed online sales rev­enue.

Ali­cia Robb, the study’s co-auther and a senior research fel­low at the Kauff­man Foun­da­tion, says a par­tic­u­lar­ly unex­pect­ed find­ing was the rel­a­tive­ly low per­cent­age of Web sales with­in the retail cat­e­go­ry. In 2004, just 2.1 per­cent of over­all retail rev­enue was gen­er­at­ed on the Inter­net. By 2009, that per­cent­age hov­ered around 4 per­cent.

“It’s a tiny frac­tion of sales,” Robb says. “I was expect­ing some­thing larger.”

Man­u­fac­tur­ing, on the other hand, seems to be hit­ting its e-stride. In 2009, Web sales with­in man­u­fac­tur­ing rep­re­sent­ed 42 per­cent of over­all indus­try rev­enue.

And with­in near­ly every ver­ti­cal, Web sales are grow­ing at a much quick­er year­ly pace com­pared to indus­try rev­enues. Web sales in man­u­fac­tur­ing, for instance, grew 87 per­cent from 2004 to 2009—com­pared to a growth rate of just 3 per­cent of total man­u­fac­tur­ing sales.

“E-com­merce sales are grow­ing much faster than over­all sales.” —Ali­cia Robb, senior research fel­low at the Kauff­man Foun­da­tion

“E-com­merce sales are grow­ing much faster than over­all sales,” Robb says. “It’s going to be an increas­ing­ly instru­men­tal part of firms as they go for­ward, and they’ll have to have an online pres­ence to be competitive.”

Though it’s some­what of a no-brainer, the study con­firms an often-assumed idea: young com­pa­nies appre­ci­ate the need for a Web pres­ence, and they also are more adept at sell­ing online. Near­ly a quar­ter of small busi­ness­es found­ed in 2004 that sell online said that online sales account­ed for between 51 and 100 per­cent of their rev­enue, com­pared to just 13 per­cent of the rest of Amer­i­can small busi­ness­es.

Still, Robb says this study just scratch­es the sur­face of a sub­ject that will become a focal point point of eco­nom­ic pol­i­cy in the years to come.

“We hope this report will stim­u­late fur­ther research about these activ­i­ties and their influ­ence on our econ­o­my, as well as a seri­ous dis­cus­sion about how offi­cial sta­tis­tics can be improved to allow for the study of this grow­ing phenomenon,” Robb says.