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"New Tacks for Tough Times" Business Week October 16, 2002

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Thanks to the Internet's ability to broaden sales, a new survey finds small-business owners surprisingly positive about the future

A wobbly Wall Street, earnings estimates down, corporate scandals, and the specter of war. The summer of 2002 was short on optimism. Right? Well, apparently the gloom didn't extend to all sectors of the economy. According to the results of a survey that set out to calibrate the mindset of industrial small businesses, some 75% of the 5,000 outfits that responded are convinced that the next 12 months will witness bottom-line growth -- fully one third believing they can expect "significant" expansion.

Those upbeat findings can't be dismissed as mere wishful thinking. When the survey, sponsored by Thomas Regional Directory and MasterCard, asked respondents to explain their optimism, the most common response was an evolving faith and focus on ways in which the Internet allows entrepreneurs to define and exploit fresh opportunities.

Some 29% of respondents running businesses with six or fewer employees reported that they had established online sales operations, with 40% reporting increased Web sales, vs. the previous 12 months.

NEW DIRECTIONS. That's not to say tech is seen as an automatic salvation. Business owners were frank in admitting that adjusting to the gloomy economic climate would require changes in strategy. For 54%, the primary goal in 2003 will be preserving profits by keeping costs down. The only difference of opinion concerned the best way to boost revenues: 56% planned to weather the economic turbulence by the simple expedient of increasing existing sales and 44% planned to concentrate on opening fresh markets.

The most striking trend, however, is the way in which business owners regard the Internet as the primary means of finding new customers and providing better service to existing ones. Some 80% already buy goods and services online, citing shorter delays to delivery (57%), convenience (56%), and savings (32%) as the greatest advantages.

"The Internet has proven to be a lifeline for industrial small businesses, allowing them to reach new audiences in a cost-effective manner," says Eileen Markowitz, Thomas' president. "As more products and services become available online in the coming year, we expect to see an increase in online activity, not only in sourcing information, but in e-commerce and requests for custom work."

By Roger Franklin in New York

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