Not Too Wild About the Web

A new Conference Board survey finds few small companies are counting on e-commerce to build business

So much for the Internet Revolution. A recent survey of small and midsize companies found that just 10% expect online sales to be an important source of revenue growth over the next five years. Instead, they expect the top three drivers of growth to be acquisitions, new customers, and new products and services.

Such low enthusiasm contrasts sharply with the hype of just a few years ago, when the Web was expected to help smaller companies more easily compete against larger ones. In truth, many small businesses remain skittish about the Internet, suggests Howard Muson, who oversaw the study for The Conference Board. "A lot of these businesses serve regional markets," he says. "If they go on a worldwide communications system, they may get orders from places where they can't deliver. They may not be ready for that kind of thing."

Another reason for the hesitation: the cost and complexity of building a Web site that can handle e-commerce. "If you transform your whole method of processing orders, you may have to fire some of your staff and hire new people. At the very least, you're going to have to train people in new skills," says Muson. And smaller companies, particularly those in mature industries, are often reluctant to embrace change.

Indeed, demographics may explain, at least in part, the survey's results. Of the 184 companies that responded, 42% were founded before 1950, and only 8% consider themselves part of the so-called New Economy.

By Julie Fields in New York

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