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A commuter reads on an e-reader next to a newspaper reader while riding the subway in Cambridge, Massachusetts, March 18, 2011. (BRIAN SNYDER)
A commuter reads on an e-reader next to a newspaper reader while riding the subway in Cambridge, Massachusetts, March 18, 2011. (BRIAN SNYDER)

Small Business Briefing

Technology leads to longevity for new firms Add to ...

The latest news and information for entrepreneurs from across the web universe, brought to you by the Report on Small Business team. Follow us on Twitter @GlobeSmallBiz

Young companies benefit from e-business

New businesses have a higher propensity to use websites and e-mail, and to sell online, and more importantly those inclinations have an impact on capitalization and longevity, a study by the U.S.-based Ewing Marion Kauffman Foundation says.

More related to this story

Casting a Wide Net: Online Activities of Small and New Businesses in the United States compares data from the Kauffman Firm Survey, which follows 4,928 companies from their founding in 2004 through 2009, with recently released figures from U.S. government sources on businesses overall.

“Startup companies often are at the forefront of technology implementation that streamlines productivity and gives them a competitive advantage in the marketplace,” says Alicia Robb, a Kauffman senior research fellow and co-author of the report.

The study showed that new businesses tend to implement e-business activities at higher rates than existing companies. Six per cent of all U.S. firms had online sales in 2007, for example, compared with more than 25 per cent of young businesses. A quarter of young businesses generated more than 50 per cent of their revenue online, almost double the rate of the general business population.

New companies that used websites, email and online sales generally started bigger, with greater financial capitalization at birth:

  • Almost $55,000 (U.S.) more if a firm had a website
  • Almost $46,000 more if the business owner had e-mail
  • In excess of $25,000 more if the company later reported online sales

These businesses also recorded higher levels of employment, their owners more frequently had previous entrepreneurial experience but less industry work experience, and those owners dedicated about eight more hours a week to their ventures than entrepreneurs who launched without a website.

What's also interesting is that high-tech startups were no more likely to be selling online than non-high-tech companies. Manufacturing, wholesale trade, professional services, retail trade, finance, insurance, real estate, and entertainment and recreation were the sectors most likely to start with websites and e-mail.

A contrarian view of Small Business Week

Toronto Star columnist David Olive argues that "the dismal failure rate of small businesses is such that they kill about as many new jobs as they create," and takes consultant Rick Spence to task for writing in an op-ed piece in the Financial Post that “Canada’s prosperity will crumble unless we become a nation of entrepreneurs.” Most small-business owners, Mr. Olive claims, are not interested in growing their firms, a statement he backs up by citing a University of Chicago report. Small Business Week, he offers, "should be a time to think about scrapping misdirected 'small-business' assistance" to certain sectors and professionals and instead funnel it toward "small firms with promising R&D projects under way, or commitments to hiring and skills upgrading, as Obama’s proposed jobs bill does." Let the arguments begin.

Contest winners offer up advice

Scotiabank asked some of the winners of its Small Business, Big Impact Challenge to provide sets of tips to other entrepreneurs in their areas of expertise. Mark Winston, founder of Burrard Market Square, which houses 17 start-up retailers in Vanderhoof, B.C., outlines 10 ways to be a great small-business boss. And Amanda Thiessen, one of the owners of Creek Shore Farms, offers five points on how to create and delivering the best services and products. They will be joined Thursday by other small business experts for an online panel discussion with Dragons' Den-er Jim Treliving. The event, which starts at 2 p.m. ET, also features Catherine Swift of the Canadian Federation of Independent Business, and "specialists" from Google Canada and Scotiabank.

EVENTS AND KEY DATES

Catch the senior wave

A pair of webinars will offer insight for people in the Hamilton area who are interested in the seniors demographic trend and who are considering a career change, or would like to learn more about the home care sector. The hour-long sessions will include panel discussions with home and health care experts, and business professionals. The moderator will be Mary Ann Freedman, president of Freedman & Associates Inc. Marketing Consultants. Aging Trends and the Coming Age Wave takes place Nov. 2 at 3 p.m. ET. It will include a panel discussion on worldwide and Canadian aging trends, and focus on how the Hamilton community can prepare for this new demographic shift. Entrepreneurial and Small Business Opportunities is on Nov. 16, also at 3 p.m. ET. It will focus on the business opportunities being created, particularly in home care. Click here to register, or call 1-888-484-5759.

A heel of a good cause

A Heel of a Good Time is the inaugural fundraising gala for Toronto's Dress for Success program, which supports disadvantaged women in their journey toward economic independence by providing professional attire, a network of support, and career development tools. The event takes place at the Bata Shoe Museum on Nov. 2. "Strut the red carpet in your 'most memorable shoes' while joining like-minded young professionals, friends, business associates and the community for an enjoyable evening to raise funds for a great cause." Tickets includes refreshments, hors d'ouevres, and a fashion show. There will also be a silent auction and raffle.

EDITOR'S PICKS FROM REPORT ON SMALL BUSINESS

What has Bernier done, and where is he going?

Maxime Bernier philosophically appears the ideal fit for his new post as minister of small business and tourism. Not only does he have a business background, he makes no secret of his own aversion to big government, red tape and high taxes. Even so, squaring his political ideology with the practical realities of the job will be no easy feat. The federal government may have designated 2011 the Year of the Entrepreneur, but small business has long been a neglected cabinet portfolio. Speculation is already rife that Mr. Bernier will use the position as a stepping stone to a more influential and senior cabinet post. Although he denies harbouring such grand designs, observers say his political comeback is riding on his performance in this junior role – especially since a scandal cut short his previous stint in cabinet.

FROM THE ROSB ARCHIVES

Boomers inspire a whole new sector

The first batch of baby boomers reached 65 earlier this year and it’s estimated Canada will have a retirement age population as high as 10.9 million by 2036. This massive generation has been driving consumer demand for decades. Now, as it enters its later years, the boomer population is on the cusp of inspiring a whole new sector — niche businesses to serve it through those retirement years.

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