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August 31, 2009

Finally – Online Businesses Get Some Respect

Finally – Online Businesses Get Some Respect

Anita Campbell

CEO, Small Business Trends LLC

Summary

Online businesses and the Internet entrepreneurs who run them sometimes get the Rodney Dangerfield treatment – “no respect.”  Despite exampl

Online businesses and the Internet entrepreneurs who run them sometimes get the Rodney Dangerfield treatment – “no respect.”  Despite examples of huge commercial success, such as Google, there’s still a tendency by traditional establishment to treat them as hobby businesses, as if they are not serious.  For some, the idea of online-only businesses conjures up visions of underemployed individuals working in their underwear in their basements.

We have such a manufacturing mentality in the U.S., that unless you’re making “stuff” it’s as if your business doesn’t count in some camps.  It’s not uncommon to hear someone protest “but they don’t make anything!”

However, the majority of the U.S. economy is not manufacturing based.  According to the Bureau of Economic Analysis, in 2008 manufacturing was just 19% of GDP, while services were 68% and technology/information 3.7% (although drawing the line between technology and services sometimes is tough.)  Manufacturing is important, don’t get me wrong.  But it does not rule the roost – and hasn’t for some time.  Meaning, the majority of the economy is not engaged in building physical stuff.  Still, perceptions persist.

That’s why I found this year’s list of the Inc 500 so interesting.  A number of the businesses on that list – which honors the fastest growing businesses in the U.S. --  are online-only businesses according to this Inc article. 

The list includes businesses that sell something physical, like Cali Bamboo which sells bamboo fencing and flooring but does so entirely online.  Cali Bamboo comes in at $7.2 Million in revenues for 2008.  Pretty big “hobby.”

Or there’s IntegraClick, which is ranked #5 on the Inc 5000 list.  IntegraClick is an online affiliate and advertising network which grew from $755,000 in revenue in 2005, to $96 Million in 2008.  Hmmm, we should all have such lucrative “hobbies.”

And how about One Technologies, an online technology and lead-generation company that comes in at #8 on the list.  It grew from $505,000 in revenues in 2005, to $51 Million in 2008.  Nice “hobby.”

This trend toward online-only businesses will continue to evolve especially as entrepreneurs figure out new business models that allow services to be marketed, sold and delivered remotely, via the Web (since we’re such a services economy).  Of course, you still have to have a real business model to build a business – more than just an interesting website.  But, maybe with attention being paid to the online-only businesses that grow fast, like on the Inc 5000 list, online businesses will get the respect they deserve for their contributions to the economy.

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