Posted on: Tuesday, August 28, 2001

Power of Web lost on small businesses

USA Today

SAN FRANCISCO — About 1.6 million small businesses will launch Web sites in the next year, but many will waste more money than they make.

That's because a majority of the sites will be little more than electronic brochures gathering dust in cyberspace, says a report out today by the National Federation of Independent Business, a major trade group.

Already, 65 percent of small-company Web sites do not let customers buy online — and that substantially reduces their effectiveness, the NFIB says. Those companies need to invest more in the sites to make them fully functional and profitable.

The study says 35 percent of small firms — those with fewer than 250 workers — have sites. That's about 2 million firms. Of the remaining firms, 45 percent expect to launch sites in the next year.

More than half of the Web sites cost less than $10,000 to build, analysts say.

Why small employers struggle to fully exploit the Web:

• Lack of support. About 25 percent of companies say they don't have time to maintain a Web site, especially those interactive enough to do e-commerce, the NFIB says. Engineering firm LR Design in Scottsdale, Ariz., had a site for three years at an annual cost of $1,000. But owner Larry Rock pulled the plug because he couldn't maintain it. He plans to build a new site now that he's hired a full-time tech specialist.

• Uncertain payoff. For years, mattress retailer Jonathan Stevens Mattress in Grand Rapids, Mich., lacked a Web site because owner Ron Zagel thought it would be more trouble than it was worth — a familiar refrain among small firms without sites. But three years ago, Zagel decided the Web had replaced the Yellow Pages. He spent $11,000 developing a company Web site. Now he's convinced it pays for itself, even though customers can't use it to complete orders. "I'm eating a little crow," he says.

• Wrong product. Almost 77 percent of firms say their product or service does not lend itself to direct online sales. As a result, they limit their sites to promotion.