A Third of Small Businesses Benefit from Internet

Almost a third of U.S. small businesses think the Internet has had some impact on their overall success, according to a survey conducted by KeyCorp.

Of more than 400 small-business owners interviewed for the study, 7% said the Internet has had a major effect on their business, while 25% said it has had a minor impact. Sixty-seven percent of the respondents, however, said that Internet use has had no effect at all on their business.

While interest is clearly growing among small-business owners, the fact that most still don't use the network has caused KeyCorp to think twice about the idea of providing direct connections to the Internet on its PC banking platform.

"Entrepreneurs are very bottom-line oriented," said Sandra Maltby, senior vice president for the Cleveland-based banking company, which is a major lender to small businesses. "If can't find value on the Internet, they shouldn't spend time with it."

The survey, conducted by Wirthlin Worldwide, Salt Lake City, polled the owners of businesses with annual sales from $1 million to $3 million. Fifteen percent of the business owners polled said their technological resources were "cutting edge," 28% said their technology was "sophisticated," and 45% termed their resources "average."

Businesses whose owners described their technology as cutting edge or sophisticated were more likely to have experienced high revenue growth than businesses whose technology was average or behind the times.

Of the businesses with above-average technology, 71% experienced revenue growth greater than 10% over three years, compared to 60% of the time for businesses with average or below-average technology.

Businesses with above-average technology were also more likely to say that the Internet helped contribute to their bottom line. Of those that were more technologically adept, 43% said that the Internet had had a major or minor impact on their business. Only 23% of businesses with average or below-average technology felt that the Internet had an impact on their businesses.

"While the Internet has been growing like gangbusters, it couldn't have an impact on more than 10% of small businesses," said Allan C. Bloomquist of Oxford Information Technology, Rockville, Md.

Most small businesses that are on the Internet currently have a very static presence there, added Charles Wendel of Financial Institutions Consulting in New York.

Until there are "cornerstones" on computer networks that provide a reason for computer users to come back frequently, small businesses won't find the Internet very helpful, Mr. Wendel said. He advised small businesses to team up with banks to provide this type of anchor, and cited the Wells Fargo home page on the World Wide Web as an anchor for an on-line financial community.

Ron Rosenthal of Harbinger Corp. in Atlanta likened the prospects for increased Internet usage to the process by which small businesses adopted the fax machine.

"As soon it hit a critical mass, it became inconvenient not to have a fax. It may not be inconvenient today not to have a Web site. But as access improves, it will be inconvenient not to be able to contact small businesses through the Internet."

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