• American small businesses have embraced broadband. [24]
• Fifty-five percent of American adults connect to the Internet wirelessly.[25]
• All income groups have high Internet usage, from 65 percent (less than $30,000 per year) to 98 percent
($75,000 per year or more). [26]
• Forty-six percent of small business owners plan to grow their businesses by creating or improving their
company’s online presence. [27]
• Almost half (49 percent) of online adults have used online classified ads.[28]
We live in a society of 24/7 immediacy, where the equivalent of foot traffic is increasingly
becoming eyeballs on a website. [29] People and businesses turn to the Internet to solve problems
and address the needs that they have. Embracing this change and moving existing small
business practices to include e-commerce would not seem to be an option. Rather, it is
increasingly becoming a requirement for survival. Even so, small business must think carefully
Saylor URL: http://www.saylor.org/books Saylor.org 52
about how to enter the e-commerce world or, if already there, how to best take advantage of the
opportunities. Both situations will require careful and deliberate decision making that takes e-
commerce implications into consideration regularly. K E Y T A K E A W A Y S
• The creation of customer value must be a top priority for small business. The small business owner should be thinking
about it every day.
• Cash flow is a firm’s lifeblood. Without a positive cash flow, a small business cannot survive. All business decisions will
have an impact on cash flow—which is why small business owners must think about it every day.
• A cash-based accounting system is for small firms with sales totaling less than $1 million. Accrual accounting systems
measure profits instead of cash.
• Digital technologies are very important to small businesses. They can improve efficiencies, help create greater
customer value, and make the business more competitive. Digital technology integration should be something that
small business owners think about regularly.
• It is not correct to use the terms e-business and e-commerceinterchangeably. E-commerce is a subset of e-business.
• E-business can work for any small business.
• E-commerce generates revenue. E-business does not.
• Moving existing small business practices to e-commerce is increasingly becoming a requirement for survival.
E X E R C I S E S
1. “A customer calls L.L. Bean about a favorite jacket he purchased more than 10 years ago and has recently lost. In a
matter of minutes, the sales agent identifies the old jacket, locates a replacement model in the current catalog,
suggests a matching size and color, and orders the jacket. The replacement jacket arrives three days later.” [30] How
has L.L. Bean added to the customer’s perception of value?
2. When thinking about customer value, you should plan to address three questions: (a) What do my customers truly
value? (b) What do I provide? and (c) How does what I provide differ from my competitors? Select a small business
and interview the owner to see how he or she answered these questions. Pay particular attention to the first question.
3. Intuit QuickBooks, Peachtree, and AccountEdge are three popular accounting packages. Gather information from their
websites and conduct a comparative analysis as though you were a new small business looking to buy one of them.
[1] John A. Jakle and Keith A. Sculle, Fast Food (Baltimore: Johns Hopkins University Press, 1999), 163–
64.
Saylor URL: http://www.saylor.org/books Saylor.org 53
[2] Philip Kotler and Kevin Lane, Marketing Management (Upper Saddle River, NJ: Pearson Prentice-Hall,
2009), 121.
[3] H. Whitelock, “How to Create Customer Value,” eZine Articles, March 16, 2007, accessed October 7,
2011, ezinearticles.com/?How-to-Create-Customer-Value &id=491697.
[4] Earl Nauman, Creating Customer Value: The Path to Sustainable Competitive Advantage (New York:
Free Press, 1995), 16.
[5] “Why Is Cash Flow So Important?,” North Dakota Small Business Development Center, 2005, accessed
October 7, 2011, www.ndsbdc.org/faq/default.asp?ID=323.
[6] Barry Minnery, “Don’t Question the Importance of Cash Flow: Making a Profit Is the Goal but Day-to-
Day Costs Must Be Met in Order to Keep a Business Afloat,” The Independent.com, May 28, 2010,
accessed October 7, 2011,http://www.articlesezinedaily.com/dont-question-the-importance-of-cash-
flow/.
[7] Barry Minnery, “Don’t Question the Importance of Cash Flow: Making a Profit Is the Goal but Day-to-
Day Costs Must Be Met in Order to Keep a Business Afloat,” The Independent.com, May 28, 2010,
accessed October 7, 2011,http://www.articlesezinedaily.com/dont-question-the-importance-of-cash-
flow/.
[8] Fred Adler, QuotationsBook.com, accessed October 7, 2011,quotationsbook.com/quote/18235.
[9] Christopher Elliott, “5 Ways Smartphones & Servers Boost Productivity,”Microsoft Small Business
Center, 2010, accessed October 7, 2011,www.microsoft.com/business/en-
us/resources/technology/communications/smartphones-and-business –
productivity.aspx?fbid=WTbndqFrlli.
[10] Brent Leary, “The iPad: Changing How We Build Business Relationships,” Inc., accessed October 7,
2011, www.inc.com/hardware/articles/201005/leary.html.
[11] Kevin Bonsor, Candace Keener, and Wesley Fenlon, “How RFID Works,”HowStuffWorks.com,
accessed October 23, 2011,electronics.howstuffworks.com/gadgets/high-tech-gadgets/rfid.htm.
[12] Jonathan Blum, “Running an Entire Business from Smartphones: Mobile Software Helps Track
Equipment, Accounts—and Employee Lunch Breaks,”CNNMoney.com, March 12, 2008, accessed
October 7, 2011,money.cnn.com/2008/03/11/smbusiness/mobile_phone_software.fsb/index.htm.
Saylor URL: http://www.saylor.org/books Saylor.org 54
[13] “Technology: Your Roadmap to Small Business Success,” Intel, 2009, accessed October 7,
2011, www.intel.com/content/www/us/en/world-ahead/world-ahead -small-business-success-
article.html.
[14] Kelly Wright, “E-Commerce vs. E-Business,” Supply Chain Resource Cooperative, November 27,
2002, accessed October 7, 2011,scm.ncsu.edu/public/lessons/less021127.html.
[15] Elias M. Awad, Electronic Commerce: From Vision to Fulfillment (Upper Saddle River, NJ: Pearson
Education, 2004), 4.
[16] Kenneth C. Laudon and Carol Guercio Traver, E-commerce: Business, Technology, Society (Upper
Saddle River, NJ: Pearson Prentice Hall, 2007), 11.
[17] “Making Money on the Internet,” BizBeginners.biz, accessed October 23,
2011,bizbeginners.biz/e_business.html.
[18] William M. Ulrich, “E-Business Integration: A Framework for Success,”Software Magazine, August
2001, accessed October 7, 2011,findarticles.com/p/articles/mi_m0SMG/is_4_21/ai_78436110.
[19] Heather Green, “US Ecommerce Growth to Pick up in 2010, But Hit Mature Stride,” Bloomberg
BusinessWeek, February 2, 2009, accessed June 1,
2012,http://www.businessweek.com/the_thread/the_thread_05272011/blogspotting/archives/2009/0
2/us_ecommerce_gr.html.
[20] Robyn Greenspan, “Net Drives Profits to Small Biz,” ClickZ, March 25, 2004, accessed October 7,
2011, www.clickz.com/clickz/stats/1719145/net-drives-profits-small-biz.
[21] “E-commerce: Small Businesses Become Virtual Giants on the Internet,”SCORE, accessed October 7,
2011,www.score.org/system/files/become_a_virtual_giant.pdf.
[22] “Trend Data: What Internet Users Do Online,” Pew Internet & American Life Project, May 1, 2011,
accessed June 1, 2012, http://www.pewinternet.org/Trend-Data-%28Adults%29/Online-Activites-
Total.aspx.
[23] “Home Broadband Adoption Since 2000,” Pew Internet & American Life Project, 2010, accessed June
1, 2012, http://www.pewinternet.org/Static-Pages/Trend-Data-(Adults)/Home -Broadband-
Adoption.aspx.
[24] Robyn Greenspan, “Small Biz Gets Up to Speed,” ClickZ.com, January 26, 2004, accessed October 7,
2011, www.clickz.com/clickz/stats/1704631/small-biz -gets-up-to-speed.
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[25] Lee Rainie, “Internet, Broadband, and Cell Phone Statistics,” Pew Internet & American Life Project,
January 5, 2010, accessed October 7,
2011,pewinternet.org/~/media/Files/Reports/2010/PIP_December09_update.pdf.
[26] “Demographics of Internet Users,” Pew Internet & American Life Project, 2012, accessed June 21,
2012, http://www.pewinternet.org/Static-Pages/Trend-Data-%28Adults%29/Whos-Online.aspx.
[27] “Small Biz Plans to Grow with Social,” eMarketer.com, 2010, accessed October 7,
2011, www.emarketer.com/Article.aspx?R=1007706.
[28] Sydney Jones, “Online Classifieds,” Pew Internet & American Life Project, 2010, accessed June 1,
2012, http://www.pewinternet.org/Reports/2009/7–Online-Classifieds/1-Overview.aspx.
[29] Sramana Mitra, “The Promise of E-Commerce,” Forbes.com, April 9, 2010, accessed October 7,
2011, www.forbes.com/2010/04/08/retailing-entreprenuers-online -intelligent-technology-
ecommerce.html.
[30] Peter Kolesar, Garrett van Rysin, and Wayne Cutler, “Creating Customer Value through
Industrialized Intimacy,” Strategy + Business, July 1, 1998, accessed October 7, 2011, www.strategy-
business.com/article/19127?gko=81aa7.
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Chapter 2
Your Business Idea: The Quest for Value
Cheshire Package Store
Source: Used with permission from Robert Brown.
Robert Brown has been the owner and operator of the Cheshire Package Store for 25 years. It is
one of several liquor stores in this town of 25,000 people. Some of his competitors are smaller
or approximately the same size, and one is significantly larger. Robert is very clear in his
understanding of what gives his store a competitive edge. He believes his establishment provides
the setting that makes a customer feel at home. “My feeling has always been that small
businesses must have a feeling of comfort. If your customers do not feel that they can ask you
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questions about the product or if they feel that they are imposing on you, then they are not likely
to return.”
