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© Simon Grant, March-April 2001
Links revised 2006, and again 2012
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The smallest businesses are widely recognised as being vital seeds for growth and health of the economy in general. The definition of what constitutes this kind of microbusiness is not standard across the world. The UK generally defines them as companies with 10 employees or fewer, but another frequently quoted figure is 5 instead of 10.
During February and March 2001, the author was employed by Business Link Merseyside, supervised by Michael Ashcroft, to act as a specialist e-business adviser to those SMEs which appeared to be most ready for that level of discussion and advice.
Most of the companies had first contacted the UKOnlineforbusiness information or advice service, and some 850 of these companies fell within the catchment area of UKOnlineforbusiness Merseyside. They received a mailshot with basic information including a seminar, and subsequently a telemarketing organisation, Baseline, went through the list ascertaining their current needs. Of those ones identified by Baseline as promising, the author selected the ones most suited for specialist e-business advice, which were on the whole the ones furthest advanced in their use of the Internet.
He ended up visiting 27 companies, mostly microbusinesses, and discussed their situation and needs over a period of between one hour and three hours in total, mostly in one visit, but one company had three visits and two others had two. He also telephoned some others without visiting, where this was either inappropriate or impossible to arrange conveniently. Information was gathered informally, as the main objectives were to answer questions, and discuss the issues, which were most important to the companies, thereby delivering significant e-business support, and helping them towards their next step in e-business development.
This paper represents some informal findings which have emerged from that work. It would be theoretically possible to formalise the results by means of carefully-designed questionnaires and surveys; however it is not easy to get access to busy entrepreneurs without offering them real benefits in return. The majority of the companies visited made it clear that the visit was helpful and interesting, and this fact was a necessary aspect of the interaction which enabled the information to be collected. If others are interested in compiling more exactly quantified and statistically significant results, they may wish to use the findings presented here as working hypotheses to test out in their studies.
These businesses are typically owned and managed by a founder / owner / entrepreneur, without whom the business could not possibly exist. The business model is largely if not entirely in the head of the owner, and most likely, little or no attempt has been made to codify and formalise the business processes. If the entrepreneur is working intuitively, the business model may not be explicit even to its owner. One aspect of this which is seen typically is a lack of any customer database or any explicit customer relationship management processes.
The owner is often directly responsible for vital day-to-day business operations. As a consequence, the entrepreneur is usually closely tied to the business and cannot leave it untended for any substantial time. In addition, whether because of their small scale or novelty, microbusinesses tend not to have much spare money. If they were to have more money, they might well get larger and grow out of the category, migrating from being microbusinesses to small businesses.
Given the constraints of money, one may expect other people in a microbusiness in general not to be very highly qualified, and highly skilled only in the areas which are vital for the ongoing existence of the business. In particular, in a non-ICT microbusiness it would be unlikely to find anyone with substantial knowledge of e-commerce and e-business. Thus the constraints imposed by time, money and knowledge tend to reinforce each other, with each one being difficult to overcome because of the limitations in the other two.
It may be helpful to think of microbusinesses as parts of virtual businesses. If, as is likely, owner-entrepreneurs are following good business intuition (rather than theoretical or business school knowledge), they may not have a clear overview of their industry, or their value chain. The viable business (the business unit from the point of view of someone outside it) may be not the microbusiness under consideration, but a set of small (or micro-) businesses. To give two examples of the very many possible: a graphic artist working with the Internet may depend completely on an Internet publisher, who in turn may depend on an Internet service provider; a small software company may exist only so that one particular larger company can outsource one aspect of its operations. Alternatively, the entrepreneur may have taken a conscious decision to outsource all functions which are not part of that company's core competence. This tendency has been strongly supported and advocated within the business community.
Either way, a microbusiness could be seen as virtual if it exists in conjunction (or symbiosis) with other companies, without having the independence of its own varied customer/client base and supplier base. One can readily imagine how a business can grow up like this servicing a niche provided by another company. It is not uncommon to see microbusinesses outsourcing their Internet operations altogether, even though this might be a vital part of their business. In this case, there is no point in promoting e-business support to the microbusiness in isolation, but rather only to the combination of the company itself and the company in control of the e-business implementation and operations.
It is easy to imagine what microbusinesses appear to want most immediately: that is direct financial support. This feeling is particularly acute in areas where there is a lot of public funding being distributed. Microbusinesses can feel that they are hampered by lack of opportunity and information, and they end up last in the race to "get their noses in the trough". However, this is a difficult subject to cover properly or impartially, and will not be discussed further here.
It is possible to say what they do not want. The established large consultancy operations (e.g. Atos, PWC, KPMG, Accenture, Ernst & Young, Deloitte, et al.) are seen as charging too much, taking over the whole process, and delivering advice, services or results in chunks that are too big to handle or benefit properly from. They are seen as being well-adapted to the needs of large organisations, not small ones. Even lesser consultancies may have a mode of operation that is unsuitable, as well as daily rates that are not affordable.
There is a perceived need among microbusinesses for introductory and awareness-raising information and knowledge about e-business issues. This needs to be given both at an appropriate level and at a realistic time. In another paper, the author has outlined the stages of development towards e-commerce and e-business, and at the first stage which must be undertaken involves use of e-mail, and experience with the Web, which may well include having a 'brochureware' company website. It is only after this stage has been undertaken that the question of e-business support can properly be raised - to do otherwise would be like running before one could walk, or teaching physics without a basic understanding of algebra, equations and formulae.
Even when courses on e-mail and basic Web use have been taken, there is often a need for further help to ensure that the basic knowledge has taken root in the context of the business, and this is a matter which often emerges at the stage of offering e-business awareness. A standard course is all very well, but when an microbusiness owner with little Internet experience has returned to the office, there may be a need to ensure, for example, that e-mail really is understood and used.
Bearing in mind the possible limitations of basic knowledge, the introductory e-business courses or information presented should require only a modest level of awareness of the Web, e-mail and their potential. Even more importantly, courses should be arranged to fit in with the entrepreneur's schedule, neither presenting too much at once, nor presenting material in too theoretical a manner.
Individual advice dealing with the particular needs of entrepreneurs is a vital follow-on from courses, as it allows the details of that particular business to be considered properly, and related to issues which may only have been covered at a general level in courses. Microbusinesses want this advice to be offered in small bites, otherwise there is a danger of it not being effective. The image of the troubleshooter seems to fit well with them: someone who will come in at short notice and fix a problem that has been identified, or identify a problem where there is something wrong but it is unclear what.
When it comes to implementation of e-business and e-commerce plans, and decisions about which option will be the most cost-effective and strategically prudent, the information needed to help with these decisions is likely to be beyond what even a specialist adviser can hold in memory, mainly because the ever-changing nature and prices of the various offerings, with Internet businesses also being very volatile. What is needed for the microbusiness is access to impartial expert advice for the specific questions that are relevant to that company, and this advice must not involve the microbusiness in substantial costs or commitment. For instance, a general question may be of the form: what is the best system / hardware / software / supplier to use in this situation, seen in its actual business context?
For example, a frequent question still near the forefront of development at present is, what is the best option for selling products or services over the Web? Even when the context has been identified - whether there is back-end integration needed, whether B2C or B2B, whether on-line transactions or credit cards are feasible, etc. - there is still usually a range both of products and suppliers which may fit the bill. It is of little use simply to present a long list of options, whether of software or of suppliers, without offering help or guidance in selecting which one to choose, particularly in the light of the fact that they are unlikely to have anyone in the business with sufficient background knowledge to evaluate a bare list.
Another very common question concerns how to draw the right traffic to a website that has been built, in order to attract new customers. Microbusiness owners need help to unpack their knowledge of their actual and potential customer or client base, and allow that to direct their strategy to ensure that the right people visit their website.
A very general need of many microbusinesses is to find good suppliers, contractors or collaborators. Sometimes they are not fully aware of the potential use of Internet technology for this, which could be seen as a failure in the earlier stages of familiarisation with the Internet. If this is the case, part of the support that they need (even if they are not aware of it) is to be helped with using Internet tools for this purpose.
In traditional business practice, these questions are often raised in informal business networks. There is nothing quite like a recommendation from a business in a similar position who has had experience with a system or a supplier. Microbusinesses are well aware of this need for networking or for a reputation service, and this need is greater than for larger companies, because the range of experience within the microbusiness is in general narrower.
Working from these needs, we shall firstly consider what systems can be put in place, by any agency and without the need to visit individual companies - systems which may be expected to meet some of the needs identified. Secondly, we will address the question of how best to deliver the individual advice and consultation that is likely to be wanted and asked for, as identified here above.
The first step towards providing the information which would be useful for e-microbusiness support would be listings of local companies who are capable of doing work in the various areas related to e-business, as well as other information of direct relevance to e-business. Surprisingly, it is currently difficult to find any reliable or comprehensive list, for any geographical unit, of website designers, suppliers of e-commerce software, or any other kind of supplier. Yellow Pages holds a fuller list than is currently available anywhere on-line, but being a paper publication, it is up to a year or so out of date, and in any case some of the smallest businesses may not even have an entry there, as they may not have a separate business telephone line, or they may not be able or willing to spend money on advertising there.
There are other problems which beset any paper-based listing. Firstly the playing field is not level, in that the bigger companies can purchase more space; but more importantly there is no indication of reputation or quality, which might give feedback from customers about the kind of service offered. This in particular gives the opportunity for web-based listings to improve on paper-based ones.
It is rare to find comparative guides and reviews of products and services offered by more than one company. That has tended to be the province of magazines, and some of these periodicals have associated websites where reviews can be seen. This is an area which would be very valuable for the microbusiness with little prior knowledge of the area. If the support offered is simply a formal scheme for evaluating competing products, the company is left to do their own research, and this may put a great strain on the microbusiness which is short of time and knowledge.
Amazon.com has had a ratings system in place for many years. Not only is there free input from the reading public about whether any particular book is worthwhile, there are useful features such as the indication of other authors that might also be of interest, based on the buying patterns of Amazon customers. The basic one to five star rating system seems to have become accepted as standard, and there are no technical reasons why a system based on a similar five-point scale should not work with e-business suppliers. Ebay.com is another example of a very popular service which has gained popularity by including ratings and reputations in the business system. In this case it is the individual buyers and sellers that are being rated, not primarily the goods being sold.
There are nevertheless challenges to overcome. Are people likely to stick their neck out and criticise a local supplier publicly? Or would feedback in practice be limited to endorsements - with the corporate buyer having to infer problems from a lack of endorsements? And how would the entry of data be moderated? Would it be possible for supplier companies to claim all kinds of skills and experience without foundation? These questions remain to be answered, but if they can indeed be overcome, the resulting listings together with attributable feedback and reputation would be an enormous help for the microbusiness wanting support in finding suppliers.
This kind of facility could be provided by a business association or by a publicly funded support organisation. In the case of Liverpool, the Chamber of Commerce's ICT committee is, at the time of writing, planning to build a site which may include those features. In general it is only important that the body sponsoring the system is reputable and independent of any particular supplier. That same website would be an obvious place also to hold pages explaining the opportunities for e-business development, and the stages that a microbusiness can expect to go through during that development process.
Another service which could best be provided impartially would be a comprehensive list of courses of all lengths and levels on which people can learn about e-commerce, e-business and related subjects. A Liverpool-based site, Merseyworkplace courses, has the facility to list courses. However the listing is not comprehensive, and there is little indication of what is a relevant course for what situation. Thus it is useful for people who already know what kind of course they might want, but not so useful for those, including many microbusinesses, who do not know where to start.
To help with this and more generally with e-business development, it would be helpful if there were some kind of guide, perhaps with a front end asking a series of questions to discover the relevant facts about the business and the individual who wished to learn more. This would help companies understand their stage of development in e-business, and therefore the options that are in principle open at that stage, as well as the courses that may be suitable at that stage, to prepare for and lead on to the next stage.
Microbusinesses also often need investment either to survive or to grow. Some of the businesses visited had problems with traditional financial backers such as banks, and a first step to opening up other possibilities would be a comprehensive listing of sources of financial support, along with a guide to what sources are available to businesses in that company's particular situation. Ideally, an effective site would also allow investors to search for companies in need of investment, matching their criteria so that the investors could properly manage their own risk.
Beyond information systems and services provided for the common good, microbusinesses could also help to support each other. Though this is not yet something that has come up a lot in discussion, it could be a subject for advice and guidance, from whatever agency or body delivered that advice.
Companies that have websites can agree to put links to each other on their websites. Perhaps surprisingly, this has been little done. It is particularly appropriate when the businesses have some common interest, but is also quite plausible just to provide extra traffic between non-competing businesses that have a friendly disposition towards each other. Links built up in this way give another stimulus to developing stronger business relationships, and a group of companies providing interrelated services could potentially move towards being a "virtual business". This might mean the presentation of a single face to the outside world, while extensively sharing business information within what would be an extranet for each single business, but would be effectively an intranet for the virtual business.
Many of the microbusinesses visited operate essentially alone, without the benefit of business networking. This may be because they have not identified other companies which share common interests of importance to their business. Common interest may arise from a number of factors including shared location, or common relationships with customers, suppliers, or other agencies (including funding agencies). However the visits to the businesses in this work suggests that this process of association based on common interest needs a helping hand to get going. Part of that help could be through a web-based system which describes the opportunities to be had, guides companies to evaluate the potential of each networking opportunity, and allows them quickly and easily to join whatever groups are appropriate, whether they are based on face-to-face meetings, electronic communication, or a mixture.
It would be very natural for businesses that have built up good relationships with each other also to represent each other at networking meetings, networking organisations and other similar situations, and of course to communicate extensively by e-mail to share information gathered at the various networking opportunities.
Setting up groups or opportunities for networking might be done by a support agency, or a private sector business, or a business association of any kind, or simply informally through personal contacts. However it is done, the end result is a structure or forum in which businesses can help each other. But because it is such a potentially valuable support for microbusinesses, it is something that should be carefully considered as a part of any effort to support microbusinesses in general. There are few examples of a public sector agency setting up an effective business network, and none evident from any of the companies visited during this project.
The essential aspect of fostering any network organisation will be to find those points of common interest between the members of the network, in such a way that all members of the network are motivated to interact in a way that is beneficial for the other members. One relevance of this to e-business is that Internet tools and systems can potentially greatly facilitate people meeting other people with common interests. The lesson for e-microbusiness support is that when a microbusiness has got Internet access, that medium can potentially be used to provide the opportunities for building, even more than conducting, business networking.
It was clear from many discussions that advice to help microbusinesses in the area of e-business needs to be local, consistent, readily available, and responsive, as well as being expert.
The responsiveness of a telephone help desk would be appreciated, as long as that did not mean that every time the helpdesk was phoned, a different person was there to whom the whole background of the business needed to be explained. Ideally, there should be only a few advisers delivering advice to each company. The more people that are involved, the more necessary it would be to give support staff immediate access to a comprehensive database of facts about the company making the enquiry. The technology could be similar to that which now underlies many call centres dealing with customer enquiries.
How many advisers are needed for one company? Businesses as well as private individuals already accept that lawyers and accountants are separate. There may also be a similar case to be made out for the separation of routine business advice and e-business advice. Business advisers are frequently drawn from the ranks of those who have been successful in business themselves, and therefore have first-hand experience to pass on. This means, however, that those advisers are unlikely to have experienced e-business. It is a good question, which needs careful consideration, whether programmes such as Technology Means Business can produce advisers fully effective in both areas. If not, then best practice may turn out to be that business advisers and e-business advisers should be separate, but know enough about their counterparts that advice can be handed from one to the other in the most appropriate way. Returning to the case of lawyers and accountants, they know a enough about each others' profession to refer helpfully. The ideal for a business adviser and an e-business adviser dealing with the same company goes beyond that: there needs to be good communication between them based on shared information about the company.
(2012 note: Technology Means Business was a government funded business advisory service active in 2001. Face-to-face support in the UK is less now than it was – most support is provided through the Business Link web site.)
This communication between advisers could perhaps best be built around a database of information about the small businesses, maintained by all advisers that interact with that business. This would go beyond the current approach of a contact management system, and some of the topics that need to be covered are discussed in a separate section below. Suffice it to say here that the information maintained should be sufficient both to facilitate any appropriate e-business advisory initiative, and to make handing on to new advisers as seamless as possible.
Advice delivery needs to be ultra-flexible, to meet the needs of the microbusiness whose hours and availability are less flexible. A logical progression, based on the efficient use of resources, would start with microbusinesses accessing information on the Web, as the marginal cost of providing this support is negligible. If access to this information is logged, and the log made available confidentially to the selected advisers, they would be in a better position both to identify the advice needed, and to gather feedback on the usefulness of the material presented on the Web.
Next in line should be e-mail and telephone support from selected advisers. But the adviser relationship needs to be built around face-to-face contact, and therefore personal visits should be made not too rarely. The consideration of efficient use of time suggests that visits of an hour or two would be most appropriate, as with much less than an hour chunks the majority of an adviser's time would be spent travelling rather than advising. On the other hand, experience has just shown that after two hours, talking to one person usually loses its effectiveness as it is too much to take in and digest.
Another separate question is who to talk to in the microbusiness. A well-known failing is to talk to someone who is not empowered to make decisions. However this is not actually likely to happen in the microbusiness, as it is likely that the owner / manager / entrepreneur alone will be the point of contact. A less well-known pitfall, noted on these recent visits, is talking to the owner without the presence of the person who deals with Internet matters generally, and the website in particular. One can end up talking about what would be a reasonable strategy, only to find later on that because of the way the system has been developed so far, or because of the limitations of the developer, options that appear attractive strategically are impractical.
It would appear that there is considerable potential demand in the near future for advisory services around e-business, particularly if it can be provided at low cost and in the ways described above. It is unlikely that existing specialist e-business advisers could cover that demand. Given the need for more people to fill the role, they could be drawn from a number of different sources.
Businesses on the whole are resistant to the idea of advice in this area being provided on the back of sales in exactly the same area. It seems a universal recent experience that small companies have been approached by several suppliers offering to build websites, for example, and this is not appreciated. Hence there is already a resistance to accepting advice from someone with a service to sell, as they are unlikely to be impartial. As explained above, it also seems unlikely that the majority of current personal business advisers will make the transition to fully specialist e-business adviser.
But if some agency with e-business expertise has already developed a trusted relationship with a microbusiness, that may prove to be an acceptable basis for an e-business advisory role. Legal, accountancy, advertising, PR and training companies, among others, could find themselves in this role, as well as established Internet Service or software providers, or others within the ICT industry who are not selling the products or services advised about.
Training would be the other way to bring people into the field. Anyone with experience of Internet-focused business would be a possible candidate for training, or anyone with a good background of knowledge in e-business, who has sufficient business sense, and perhaps who can be trained in the business matters that are essential knowledge in order to be able to work as a team with traditional business advisers. If a support agency decides on the training route, it would make sense to secure some of the best and most experienced specialist e-business advisers to act as trainers for the new entrants. Looking beyond a simple training model, because of the fast development of the area, it would seem sensible to have a strong framework of support and information sharing between e-business advisers, so that wherever the advisers are first recruited from, they work progressively towards a high shared standard of knowledge and competence, which is continually updated. This updating is particularly important in the fast-changing field of e-business.
If a support agency is going to provide e-business support, the question of funding arises. Public subsidy could be justified in the general terms of the overall impact on the regional economy of promoting the development of e-business practices, where otherwise opportunities would not have been taken due to the constraints on microbusinesses. There are two other, more specific and interesting, lines of argument which could be used to justify subsidy.
Just as IT ten or twenty years ago was a stimulus for renovating the structure of many businesses, e-business development today can also serve the same purpose. The detailed arguments for this will be developed elsewhere, but in outline it can be said that the investigations and awareness-raising that are needed in preparation for developing e-business strategy also will serve to prepare a company for growth, that might have otherwise been trapped in a "lifestyle business" situation. The argument here is that e-business support can actually improve the chances of a business growing and developing even outside the e-business model.
The second specific argument is in terms of information gathering. One of the upsides of providing a subsidy is that one can insist on something in return. Experience with this project suggests that microbusinesses willingly give information in exchange for advice. Subsidised advisers could be made responsible for gathering and maintaining the information listed below. This information would give the agency that holds it a very detailed picture of what is currently happening in the e-business arena, and they can plan effective interventions based on this, which are therefore likely to be of a higher quality than would have been the case without that information. The natural effect will again be the faster uptake of effective e-business practices, and ultimately better business growth.
Recent experience on this project suggests that there are a substantial number of questions that need to be answered to enable any e-microbusiness adviser to get beyond generalities and fit their advice to a specific company. This is due to the wide diversity of possible strategies that can be adopted, together with the fact that each different situation may only fit with some of those strategies. In an integrated support framework, it would make sense for the advisers to gather this information, firstly so that advisers can hand over their support role with the maximum information and the minimum disturbance of the company which would result from asking the same questions repeatedly. If the advisers are funded or part-funded by the public sector, it is a reasonable expectation that the companies should be willing to share the necessary information in confidence with the advisory agency. Without breaching commercial confidentiality, this means that very accurate statistics can be compiled about the exact state of e-business, broken down in terms of any particular business sector or any other definable group.
While it is impossible to write a definitive list of facts which are relevant to e-microbusiness support, the list here has the benefit of being tried out in practice in this current project, where it covered most eventualities. Not all the information was appropriate to every situation, however, so it would be a mistake to insist that everything necessarily needed to be filled in. Note that the information here is a combination of some items that would appear in a technical ICT audit, other items to do with business processes that might be dealt with by standard systems analysis approaches, and yet other items that relate to the financial side of the business.
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