Casting a Wide Net:

Online Activities of Small and New Businesses in the United States

usinesses, particularly new businesses, are using the web in diverse ways as they pursue their commercial activities. While newly released data shows overall incidence of a reported website among the population of U.S. businesses was only about a quarter in 2007, young businesses in 2007 were more likely than not to have a website. Online sales were reported by 6 percent of all U.S. businesses in 2007, compared with more than a quarter of young firms. Additionally, among online sellers, young firms were about twice as likely to generate more than 50 percent of revenues online. In examining differential outcomes from online activities, our analysis shows having a business website had the earliest and most long-lasting effects among startups.

Prevalence of Internet Activities

Website Internet Sales

Prevalence of Internet Activities by Industry: 2007 70 60 50

Percentage Kauffman Foundation
Website Internet Sales

All Firms Young Firms Employer Firms Only Asian Black Hispanic White Female-owned

24.8% 51.5% 40.5% 26.5% 35.2% 29.8% 39.9% 39.8%

6.0% 26.8% 7.3% 4.8% 4.7% 4.5% 7.4% 7.4%

40 30 20 10 0
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Manufacturing Wholesale Retail Services

Source: Survey of Business Owners, 2007. Kauffman Firm Survey microdata

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2005

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Internet Sales as Percentage Internet Sales as aaPercentage of Total Sales* of Total Sales* All Firms Selling Online, 2007 All Firms Selling Online, 2007
13.9% 13.9% 49.1% 49.1%

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Source: Employer firms only. Survey of Business Owners, 2007.

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E-Commerce Sales as a Percentage of Total Sales, United States: 20042009

45 40 35 30
Percentage Kauffman Foundation

37% 37%

25 20 15 10 5 0
2004 2006 2007 2008 2009

Young Firms Selling Online, 2007 Young Firms Selling Online, 2007
32% 32% 25.8% 25.8%

Source: U.S. Census Bureau, 2009 Annual Survey of Manufacturers, 2007 Economic CensusManufacturing, 2009 Annual Wholesale Trade Survey, 2009 Annual Retail Trade Survey, and 2009 Service Annual Survey.

42.2% 42.2%
Kauffman Foundation Kauffman Foundation Online sales less than 5% revenues Online sales less than 5% revenues Online sales 51%100%* Online sales 51%100%* Online sales 5%50% Online sales 5%50%

Assets and Revenues by Use of Website

$800,000 $700,000 $600,000 $500,000 $400,000 $300,000
Kauffman Foundation
Assets (Firms with website)

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Assets (Firms without website)

*SBO category breaks at 5%-49% *SBO category breaks at 5%-49% and 50%-100% and 50%-100% Source: Employee Firms Only, Source: Employee Firms Only, Survey of Business Owners, 2007; Survey of Business Owners, 2007; Kauffman Firm Survey microdata, 2007 Kauffman Firm Survey microdata, 2007

$200,000 $100,000 $0
2004 2005 2006 2007 2008 2009

Revenues (Firms with website)

Revenues (Firms without website)

Source: Kauffman Firm Survey microdata.