Recession Affecting Nearly 60 Percent of Online Small Businesses, Survey Finds

A survey of online small businesses reveals the majority of e-commerce entities have been impacted by the down economy, according to Web hosting company Midphase.

Web hosting company Midphase announced the results of a survey of 3,000 of their customers, revealing nearly 60 percent of their small and midsize online businesses had been affected by the recession with 58 percent indicating a revenue drop from between 5 percent to more than 60 percent. One of the main reasons, cited by 46 percent of this group, is the challenge in finding new customers.

Midphase currently hosts more than 120,000 Websites. The company's general manager, Marc Bollinger, said the statistics indicate that many people are dealing with the recession by creating new revenue streams specifically through online businesses. The survey found that 60 percent of respondents are supplementing their existing income with a Web presence. Bollinger said this fact is supported by the finding that 47.7 percent claim that their Web presence will represent less than 10 percent of their income. "We feel this is a true cross section of American Internet users," he said.

Generally the respondents felt their online initiatives would grow over the next 12 months, with 56 percent predicting a 5-10 percent increase, 20 percent predicting a 10-20 percent increase and 12 percent predicting a 25-50 percent increase. "People are going online to make money," he said. "A motivated individual can have a new business up and running in a matter of days; and we're providing the tools to do it. Seventy-one percent of the respondents said they looked at three or more hosting companies before selecting Midphase and 70 percent claimed that our products and services were important to the success of their businesses."

Of those surveyed, 46 percent said their e-commerce or Web-based business was their first, while 54 percent had previous experience in the e-commerce environment. Sixty-seven percent of respondents had been operating online for three or more years, with 10 percent having just started, 8.4 percent said they had been in operation for a year. Interestingly, 41.6 percent of respondents said revenues had not dropped when compared with last year's revenues.

Marketing followed difficulty finding new customers on the list of challenges online entrepreneurs faced when starting, coming in at 29.4 percent, while finding suitable technology solutions placed third with 18.6 percent. Finding suitable vendors placed fourth on the list of challenges with 5.8 percent. When asked what online businesses expect from their hosting company in terms of enabling business, 44 percent listed accessible customer support, 17.6 percent said data tracking and 19.4 percent listed marketing tools. E-commerce solutions and social networking tools placed fourth and fifth, with 14 percent and five percent, respectively.