Thinking of starting up a small e-business? Analysts caution that only the most savvy, targeted, and streamlined efforts will succeed.
Today's small e-businesses need to have a product that appeals to a well-researched niche market, noted Gartner Group analyst Robert Anderson. "(Small) e-businesses need to target the market," Anderson opined. "They need to be industry-specific and carefully aim their products if they wish to succeed."
Anderson recommends that e-business start-ups target industry verticals and sub-verticals rather than pitching their product at a broader market. "Small businesses really want to do business with companies that align and understand the way they do business," he stated. "Taking a targeted approach will not only attract new customers, but make it easier to branch out later."
Rather worryingly, Gartner recently revealed that over 60 percent of Web-based service providers to small businesses have failed in the past year and a half. "In the last 18 months there has been a huge washout amongst dot-coms that were attempting to provide Web-based services to small businesses ... much of this fall-out is simply due to the fact that they didn't narrow and target businesses specifically enough," explained Anderson.
As for small e-start-ups that are looking for funding, "the key word is still targeted," joked Anderson. "Do your homework ... it doesn't help asking money from someone who has done a thousand Internet deals and you can see in the news that their companies are losing money!"
Faced with the ongoing dot-com downturn and an uncertain economic climate, e-business start-ups are playing against a market that's generally sceptical towards online businesses. "To make things worse," states VentureEconomics' Jesse Reyes, "its harder to get started because there's simply a lot more competition in these lean times."
Nonetheless, Reyes counsels emergent e-businesses to keep at it. "Don't give up," he advised, "there's always money in the game for companies with good business plans."
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