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Abstract -- The Internet for Small Businesses: An Enabling Infrastructure for Competitiveness Commercial and Business Aspects Track
C3: Business of the Internet

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The Internet for Small Businesses: An Enabling Infrastructure for Competitiveness

Poon, Simpson ( spoon@swin.edu.au)
Swatman, Paula ( pswatman@ponderosa.is.monash.edu.au)


Small Business Opportunities and Barriers to the Internet.

Since the beginning of allowing commercial activities on the Internet, commercial domain number overtook the number of research and academic institutions in the middle of 1994 (December and Randell 1994). Although the original users of the Internet are directly related to the information technology industry, increasing number of organizations are connecting to the Internet to explore opportunities and gaining experiences in using the Internet for potential competitive and strategic benefits. Many organizations currently on the Internet are considered small in terms of the physical size and employee numbers. These companies are often formed by entrepreneurs or family businesses of different kinds. For instance, shareware writers is an active group in using the Internet and its related networks (e. g. Fidonet and Bitnet) for the distribution of their products, indirect advertising and customer support activities. Potential clients, if they have connection to one or more of these networks, can download demonstration software, often fully functional to evaluate the product痴 suitability before paying for the product. Also through newsgroups and mailing lists, shareware writers exchanges ideas and discuss technical issues concerning software production.

The main reason why the shareware industry can be so successful in using such global information infrastructure for their business operations is because most shareware entrepreneurs are information technology literate, and many also has experiences in using the global information infrastructure for different purposes. At the same time, customers of shareware often have access to the same information infrastructure. Subsequently, the concept of using the Internet, or Fidonet and Bitnet as a virtual marketplace is a natural consequence. Such self-development of virtual marketplace may not be as straight forward for small businesses in other industrial sectors.

As the Internet is quickly becoming the information superhighway, the Infobahn and a kind of open and extendable network structure, many small businesses are making an effort to ensure they will not be disadvantaged by gaining connection to the Internet. One phenomenon reflecting such rapid growth is the booming business of Internet Service Provider (ISP). Generally, small businesses are flexible and adaptable to changes readily, but also suffer from lack of resources of various kinds. Many small businesses do not process the technological background to use and evaluate the Internet and lack the time to explore it. Others may not perceive such information infrastructure can enable them to operate their businesses more efficiently or cost-benefit justifiable. These becomes the barriers for small businesses to use the Internet for business activities and operations. Business Activities by Small Business on the Internet.

For small businesses which determined to explore and use the Internet for business purposes, Barker (1994) lists out their uses into the following categories,

Finding Customers, through scanning of newsgroups and advertising.

Effective advertising and marketing campaign can be expensive and require marketing expert who have good understanding of the industry involved. For small businesses, access to such expertise is both resource demanding and may not be inviting given the available budget from small business operators. Conversely, localized marketing campaign is effective to broadcast the image and products of a small business but the coverage is limited and do not necessarily reach the target audiences. The scanning of the newsgroups, focusing particularly on the questions and needs posted in individual messages can provide important leads to potential customers. The difference from such intelligence gathering exercise compared to traditional marketing campaign is that it is a pulling system. That means customers looking for information, rather than information being pushed to customers, although by scanning signature of messages can help to build a bigger potential customer database than exchange of business cards. Such scanning exercise still require the input of significant effort and time, and also may not be appropriate for industry which products do not have a national or international demand.

Ability to find specific and detailed information for marketing purposes.

Apart from newsgroups, there are also specific mailing lists or electronic asynchronous conferences which are important for trade specific information exchanges. These mailing lists can be more purpose specific and can be created without going through a concensus gathering process like non-local Usenet newsgroups. Another important feature is that you can normally access a list of subscribers on a mailing list and sometimes their affiliations. Both the newsgroups and the mailing lists contain readers and subscribers who possess specific skills or have access to information which maybe useful to other subscribers on the list. Often questions and invitation for comments posted on such forum are responded with great rigor. It is often with the non-physical contact and the unlikely to interact within a company context helps to create the willingness to disseminate information due to the non-threatening nature.

Another type of information sources are stored using gopher or world wide web technology. Examples of such information resources for small businesses including the EGOPHER, the Small Business Advancement National Center, and the Small Business Administration efforts. Specific information related to trade regulation and marketing are provided online with latest updates. Such initiatives allow small businesses to access timely information with minimum access costs.

Source of new ideas / opportunities.

Time and resources are found to be the biggest constraints for most small business operators. And yet, the need to stay flexible and innovative are the criteria for survival and success for small businesses. Availability of new ideas and be able to seek opportunities are essential for small businesses to stay flexible and innovative. The sources of new ideas and opportunities are often freely accessible with little time delay. This in turn allows small businesses sufficient time to react to business situation and exploit such opportunities.

Low cost communications.

Communications with customers for document exchange purposes can be a significant overhead for small businesses. The expenses on postal and courier services vary according to business sector but are increasing due to the continous information exchange. In order to shorten turnaround time for decision making process, interactive negotiation and group knowledge are essential. The Internet provides an electronic medium for relatively low cost communication compared to courier and much speedier delivery compared to postal services.

Keeping in touch / Networking.
General / global awareness and environmental scanning.
Customer / Supplier support.
Geographic Reach / general accessibility.
More productive communications (less paperwork, greater speed, no telephone tag etc.).
Stature / Experience / Keeping ahead of the competition.

Aligning Business Strategy and Internet Usage Strategy.

Although the Internet offers a variety of services and tools which can improve on both computer-mediated communications and information storage and retrieval, it will not automatically allow small businesses to become more competitive. In fact, the learning curve and overhead involved together with financial investment may end up disadvantaging the normal operation of small businesses. For example, a small business operator do not normally have free resources to spend on surfing the Internet due to the time consuming nature such exercise. Also, when this paper is written, it is still unlikely that a small business operator will apply for a domain name and have a permanent link to an in-house world wide web server due to the technical knowledge needed to maintain such set up and financial committment involved. Neither it is effective to try advertise and sell products which customers do not get any comparative benefit from going through the Internet to do their shopping. For example, it is unimaginble someone from Australia will buy a car from a US dealer via the Internet. It would be unusual for a typical household order a pizza by dialling in to a network service provider, log on, and use the ordering form from the world wide web home page, instead of just ring the pizza shop and place a verbal order directly.

Therefore, it is very important for small businesses to set up their business operations such that the Internet as an enabling tool can actually streamline these operations to allow the business to be more effective and efficient. For example, if a small business provide ordering facitlity accessible via the Internet, it is important to demonstrate assurance to the customer that products will be delivered as if it is order in any other ways. At the same time, it is essential to ensure the delivery process can be streamlined too. It provides no incentive for customers if the ordering process takes a few seconds, and the goods is not delivered for a much longer time. One such example is the information brokering business. It is very important that the Internet is used to streamline all parts of the order-delivery process such that information-on- demand can be obtained not any longer than the time needs to place an order. It is not effective if the delivery is to be done via a fax machine instead of using electronic mail (assuming the electronic mail message is not being held up by a mail gateway).