Is your small business an e-commerce laggard?

Companies that included an online sales component from early on were bigger, on average, than those businesses that stuck strictly to 'real world' sales activities.
Written by Heather Clancy, Contributor

So, I pretty much assumed that EVERY business these days had some sort of e-commerce presence. Boy was I wrong, and boy is your company missing out if it doesn't, at least according to some new data collected by the Ewing Marion Kauffman Foundation.

That study, "Casting a Wide Net: Online of Small and New Businesses in the United States," suggests that startup businesses are much more likely to have an online sales funnel than established businesses. For example, the data showed that one-quarter of what Kauffman calls "young" businesses generate more than 50 percent of their business online, which was double the rate found in the general business population.

The companies that chose to use a Web site from the start were generally larger, with a financial capitalization of almost $55,000 more if it was using a Web site, $46,000 more if it was using email,and more than $25,000 more than if the company got started later on with online sales or e-commerce activities.

The industries that were most likely to get involved in online sales the earliest were (little surprise) high-tech firms, but companies in manufacturing, wholesale trade, professional services, retail trade, professional services, finance, insurance and real estate, and arts and entertainment were also generally early to the Internet. Those in professional services or finance, insurance and real estate usually had the lowest level of Internet sales.

The Kauffman research covered 4,928 firms from their founding in 2004 through 2009, comparing it with government data on all small businesses overall.

It doesn't really surprise me to hear that new small businesses use the Internet more than established ones, because that is often their quickest path to sales. What does surprise me is that their peers let it become a long-term advantage. Word of mount or referral sales, which are what many smaller companies live on in the absence of deep marketing budgets, can only go so far, especially in a stagnant economy.

If your company hasn't added even a minor e-commerce component to its activities, it could be really be missing out.

Editorial standards