Online Business Centers Set Up Their Web Sites

Launching his toner-cartridge-recycling company, Robert Welsh had a vague idea that he needed a business license. A phone call sent him down to the courthouse in San Jose, Calif., where he found he needed much more than one document, sending him on an odyssey of bureaucracy before he could do a dollar of business.

By MARK HENRICKS
Staff Reporter of The Wall Street Journal.

"It was just a manual process of finding things out," says the co-owner of two-person South Bay Recharge in San Jose. "I almost wanted to write a book on the steps you need to go through." Authorship is no longer one of Mr. Welsh’s ambitions, however, since he found a site on the Internet that provides tips for cutting through the paperwork associated with starting a small business. The site, Bizzed.com (http://www.bizzed.com), run by Citigroup Inc., contains advice that would have helped him get his start-up paperwork done much faster, Mr. Welsh says. "It would probably would have saved us about two weeks."

All-in-one Web sites catering to small business have popped up like T-shirt peddlers at a rock concert in the past year or two. At the moment, there are more than 50, according to Leslie Shattuck, co-author of a report on online business centers by Cahners In-Stat, a Scottsdale, Ariz., research firm. Some are backed by companies like Citigroup aiming to leverage brand names. But most are independents that are trying to stand alone as one-stop online providers of advice, products and services to millions of small-business owners.

Fill-in-the-Blank Planning

"Basically, it’s an online destination where small businesses can go to get all the resources they need for their online and off-line activities for work," explains Ms. Shattuck.

Online business centers offer everything from free marketing tips to office supplies for sale, from online applications for business loans to fill-in-the-blank business-plan templates. Some include news wires consisting of articles culled from the day’s reporting that the user can customize. Others give you the option of creating an online desktop from such items as weather reports, stock market updates, even astrological predictions.

While the jury is still out on whether online business centers are here to stay — most have arrived in the past two years and remain unprofitable — the most popular centers receive millions of visits a month and generate considerable loyalty among some users.

Orit Shiffman, president and chief executive officer of the O Group Inc., a New York City marketing firm, started off using online business center Office.com (http://www.office.com) to research unfamiliar industries for client meetings. In just a few months though, Office.com has gone from an occasional tool to an everyday essential. Ms. Shiffman typically starts her morning with a look at the latest industry-specific news as selected by Office.com. Through the day, she flips back to the business-center’s home page as she surfs for information and communicates with clients.

"In the beginning, I would look at it if I needed to," says Ms. Shiffman. "Now it’s like picking up the paper."

Donna Dewey ran her Sunnyvale, California, custom chocolate shop for five years from a retail store without ever venturing into e-commerce. Then she began frequenting the Bizzed.com site and learned of Bizfinity, an e-commerce software and services company whose wares Bizzed.com offers to its small-business users. Soon, Ms. Dewey was selling her chocolates online through a Web storefront that, while rudimentary, is more than she says she would have without Bizzed.com and its connections.

"It’s what I need right now," says Ms. Dewey. "This has allowed me to get started without spending a lot of money. And I think it’s going to work."

What They Offer

The typical online business center has four main offerings: content, community, commerce and tools.

Content consists of articles and other information on aspects of starting and running a small business. A typical example is a how-to article on Bizzed called "Finding The Right Number 2," about hiring a second-in-command. Online business centers may also have lists of frequently asked questions, and directories of links and phone numbers of places with additional information.

Community consists of message boards, chat rooms, forums and other ways for entrepreneurs to ask questions, provide answers, trade ideas and otherwise communicate with each other about small-business needs.

Watch out. Many of the message boards and forums are run by and dominated by consultants whose primary objective is to market their services. That doesn’t mean their advice isn’t good, just that it may be incomplete or overly general, and that there may be a price tag for a consulting engagement attached to receiving a complete answer.

Kent Capener is a Salt Lake City marketing and business-plan adviser who participates frequently in forums on Ideacafe, a site based in Grants Pass, Ore., Mr. Capener has been answering questions posted by people looking for help with marketing and finance issues for two years and reports that it’s an effective way for him to market his services. "I get a lot of business from it," he says. "I get unsolicited e-mails every day from people looking for help."

Commerce is an increasingly important part of online business centers. Many sites offer to sell you a wide variety of products, from pens and copier paper to computers and office furniture. They do this either through their own e-commerce operation or with links to other sites.

Thirty-one percent of small businesses with online access buy products on the Internet, according to a 1999 study by IDC, a research firm in Framingham, Mass. "If you want to recast that in terms of total small businesses, not just those that have Internet access, the percentage falls somewhat, to 21% — still a good number and one that will be growing rapidly," says Mary D. Porter, senior research analyst at IDC and author of the study.

At present, many entrepreneurs prefer to do their shopping elsewhere. Ken Shapiro, president of Askit.com in New York, offers his company’s online customer service support software to small-business buyers through Onvia.com’s (http://www.onvia.com) quote service that matches sellers and buyers. The partnership generates a handful of good prospects every day for Askit.com (http://www.askit.com). But Mr. Shapiro doesn’t buy supplies and equipment for his 10-person company through Onvia or any online business center. "We have a direct account with Staples," he says. "To go online is a change in behavior," explains Mr. Shapiro. "Besides, the store is right down the corner, and a lot of times when we need things, we need them right now."

The Tools component of online business centers is something of a wild card. Some centers, such as Smart Online (http://www.smartonline.com), are betting the farm that small-business owners will want to rent their software applications, having them run on Smart Online’s servers and accessing them through the Web. Smart Online started as a business-content provider, but has evolved into a pure application-service provider, delivering online access to programs that help small business develop business plans, write letters and do market research.

"Our niche is 100% Web-based applications that enable you to start, grow and manage a small business," says Jeffrey D. Smith, a vice president at the Research Triangle Park, N.C., company. "We’re not interested in providing perishable content."

Using Web-based applications can be more convenient and cheaper than buying commercial software, but their use is not without cost. Unlike other online business-center services, such as providing how-to articles, users are charged directly for using applications over the Web. Smart Online charges $14.95 a month, for instance, for access to a dozen applications. Whether or not the fee is worth it depends on the application and on the entrepreneur.

Marketing Plans

Mr. Capener, the consultant, derides software programs to generate business plans as horribly inadequate. "All they do is give you the blanks," he says. "It’s what you put in them that matters." But he feels that tools for creating marketing plans online are far more worthwhile. "I used to do marketing plans myself," he says, "but don’t any more because there’s so much out there on the Internet."

The first commercial online business center likely was Ideacafe (http://www.ideacafe.com), a site aimed at the smallest and newest businesses. It was started five years ago by Francie Ward, a former publisher of small-business books. Ideacafe hasn’t turned to outside investors to fund its operation and it lacks the millions of dollars spent by its competitors on promotion. But according to Ms. Ward, it turns a profit.

"So many companies trying to reach small business don’t have a clue," Ms. Ward says. "That’s our language. We know what kinds of problems they’re dealing with."

And a shakeout is looming among online business centers. "How many sites do you need out there?" wonders Brook Newcomb, senior analyst at Forrester Research in Cambridge, Mass.

Scott Waltz, executive vice president and chief marketing officer of San Francisco online business center Allbusiness.com (http://www.allbusiness.com), is full of confidence when he points to the service’s one million small-business users and predicts that his one-stop shop is one that small businesses will keep stopping at. "You’re going to see consolidation," he says. "But that’s going to be good because it’s confusing out there."

Tool Fees

The next evolutionary step will be to strengthen the focus on online tools, ranging from simple calculating forms that help entrepreneurs figure their start-up costs to full-fledged accounting systems with programs and data residing only in business-center computers. Cahners In-Stat, the research group, says usage fees for tapping into such applications will represent the largest part of online business-center revenue, perhaps as soon as year’s end.

Mark J. Baumli, senior vice president, business Internet services, for Wells Fargo Internet Services Group and architect of Wells’s Small Business Resource Center, agrees that online tools for doing work are the way to go.

"The whole key to small-business sites is that they have to be useful," he says. "Purely content sites are not overly useful. You want something where people can take an action. You want them to not only learn about how to make a press release but also put the press release out on the business wire."

Sites also will probably become more specialized by industry. At present, small businesses, despite their diversity, are treated as monolithic by online business centers. "You’re going to see a serious vertical play," says Ms. Shattuck of Cahners In-Stat, segmented by industry. "Marketing information for a baker and for a law firm is completely different," she adds.

For many businesspeople, no site can truly be all-in-one. Denise Iorio is co-founder and creative director of Movie Engines Inc., a Los Angeles start-up that aims to produce digital films for Web sites, and she’s become an avid user of Allbusiness.com, one of the soup-to-nuts online centers in the mold of Office.com. Ms. Iorio was impressed with Allbusiness’s database of more than 250 business forms. "It allows you to familiarize yourself with things that I don’t think you would do if you had to search," she says. "I found that database one of the most comprehensive I’ve come across and it was incredibly easy to use."

But Ms. Iorio relies on more than one business-center site, a common practice. She found a directory of representatives for various film directors at Planetpoint (http://www.planetpoint.com), an online service that serves primarily as an online portfolio of people in advertising, film and related industries. Without Planetpoint, she says, "I can’t even imagine, if you had been trying to find out who represented various directors, how long it would have taken."

Mr. Henricks is a writer in Austin, Texas.

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