Small Businesses Embracing The Internet

Small companies are overwhelmingly identifying the Internet as critical to the operation and management of their businesses, according to new research from International Data Corporation (IDC), an information-technology market research and consulting company in Framingham, Mass. The IDC survey of 1,011 U.S. firms with fewer than 100 employees shows U.S. small businesses accessing the Internet increased from 19.7% in 1996 to 41.2% in 1998. IDC predicts Internet usage among small businesses will gain momentum, approaching 4.3 million small firms by 2001. The percentage of companies (with fewer than five employees) that access the Internet more than doubled from 1996 to 1997, climbing from 17.2% to 36.4%, respectively.

"Internet usage by company size can easily be traced to the PC penetration gap between larger- and smaller-sized companies," notes Warren Childs, research manager of IDC's Small Business Market program. "When just PC-owning companies are considered, Internet penetration tends to be relatively consistent across all size categories." As the deluge of low-cost, Internet-ready PCs continues, Internet penetration in smaller-sized companies will continue to expand, suggests Childs.

Other key findings from the survey:

  • Professional services (e.g., law firms, insurance agencies, real estate agencies, accounting firms) lead in Internet usage with 63% of PC owners online.
  • Retail and health care industries continue to lag in Internet use.
  • Internet users in manufacturing companies log onto the Internet most frequently and for the broadest range of applications.
  • PC-owning small businesses with home pages will increase from 9% in 1997 to 20.1% by 2001.
  • 36% of small businesses that plan to go online expect to use the Internet to sell products.
  • Less than 5% of small businesses access the Internet through any type of shared server.
  • Small businesses that use the Internet have higher revenues, averaging $3.79 million compared with $2.72 million overall.
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