Small Business Leads Way

As we head into 2002, there's much to worry about regarding American business.

As we head into 2002, theres much to worry about regarding American business. We experienced the biggest bankruptcy ever as energy trader Enron filed for Chapter 11 early in December, while during last year, we saw millions laid off from the largest corporations in the country. Thats the bad news. The good news is that small businesses—which make up most of the incorporated entities in the United States—are not in as bad a shape and are not as worried about the health of the economy.

According to a recent survey of 976 "very" small businesses—that is, those consisting of 20 or fewer employees (the U.S. Small Business Administration classifies small businesses as having 500 or fewer employees)—86 percent have confidence in the future of their business and 67 percent are confident in the U.S. economy. The survey goes on to say that 77 percent believe that a Web site is essential to their business, whether as a marketing tool or an e-commerce channel.

The survey, commissioned by small-business and consumer site developer and host Homestead Technologies, has, of course, its own agenda, which is to show that theres plenty of opportunity for Homestead as well, but the point about the health of small businesses is not to be overlooked. In times of great uncertainty, remember the basics.

"Small businesses tend to be optimistic," said Homestead Vice President Rich Pearson. "They feel they are the salt of the earth and the backbone of the economy. One thing we found is that poor business models—and businesses—have been weeded out."

As we go through the final shakeout of the failure of dot-com business this year, we are going to see many more examples of coming full circle. Small businesses were among the first to embrace the Web as a platform for making money. Many failed in the attempt.

Now that everybody realizes that it isnt the Web site per se but how the Web site is used that makes a difference between success and failure, small businesses again may be showing the way for the Enrons of the world.

How important is small business? Write to me at [email protected]

Scot Petersen

Scot Petersen

Scot Petersen is a technology analyst at Ziff Brothers Investments, a private investment firm. Prior to joining Ziff Brothers, Scot was the editorial director, Business Applications & Architecture,...