Fall 2000 E-Comm Final Report - Industry Canada

The SES Web Entrepreneurship Survey
Fall 2000
A Profile of Canadian Small Businesses
and Electronic Commerce
Industry Canada Electronic Site License
SES Canada Research Inc.

Toronto, Canada
www.sesresearch.com
December 2000
Dear Reader,
For over a decade, SES has provided strategic research, executive counsel and
innovative solutions to Canadas leading decision-makers. As part of its
practice of tracking public opinion and business trends, the firm launched the
SES Web Entrepreneurship Survey in the Spring of 1999.
We believe that having timely and accurate data on emerging on-line business
trends is critical to corporate and government decision-makers involved in the
Internet. Conducted every six months, the SES Web Entrepreneurship Survey
identifies opportunities and assists subscribers in understanding the
perceptions of small businesses as they relate to the commercialization of the
Internet.
With a final sample target of 1,000 small businesses, the SES Web
Entrepreneurship Survey is one of Canadas most significant research
benchmarks on small businesses and the Internet.
Nikita James Nanos

Managing Director
Bruce Kirby
Senior Consultant
SES Canada Research Inc.,

401-250 Consumers Road,
Toronto, CANADA
M2J 4V6
tel 416.821.3160
fax 416.821.3052

SES CANADA RESEARCH INC.
Industry Canada Site License - Fall 2000
TABLE OF CONTENTS
1.0 EXECUTIVE SUMMARY................................................................................................................. 4
1.1 WHO ARE THE INTERNET USERS?...................................................................................................... 5
1.2 WHAT IMPACT WILL THE INTERNET HAVE ON BUSINESS? ................................................................ 5
1.3 HOW BIG IS THE SMALL BUSINESS E-COMMERCE MARKET?............................................................. 6
1.4 WHAT ARE SMALL BUSINESSES DOING ON THE INTERNET? .............................................................. 7
1.5 WHAT'S NEXT?.................................................................................................................................. 8
1.6 KEY FINDINGS FALL 2000 SURVEY ................................................................................................ 8
1.7 KEY FINDINGS SIX MONTH TRENDS............................................................................................... 9
2.0 MARKET OVERVIEW ................................................................................................................... 10
2.1 DECISION-MAKER PROFILE ............................................................................................................. 11
2.2 BUYING AND SELLING USING THE INTERNET .................................................................................. 11
2.3 SIZE AND SCOPE OF ELECTRONIC COMMERCE ACTIVITIES .............................................................. 19
2.4 SIZE OF THE SMALL BUSINESS E-COMMERCE MARKET ................................................................... 22
2.5 INTERNET CONSULTANTS ................................................................................................................ 22
3.0 ATTITUDES TOWARD ELECTRONIC COMMERCE ........................................................... 24
3.1 IMPORTANCE OF INTERNET.............................................................................................................. 24
3.2 IMPACT ON BUSINESS ...................................................................................................................... 28
3.3 BENEFITS & BARRIERS .................................................................................................................... 33
4.0 E-BUSINESS ACTIVITIES............................................................................................................ 36
4.1 COMMUNICATIONS AND INFORMATION ........................................................................................... 36
4.2 ELECTRONIC COMMERCE TRANSACTIONS ....................................................................................... 39
3.8 BANKING AND PAYMENTS ............................................................................................................... 41
3.9 SUMMARY OF ACTIVITIES ............................................................................................................... 43
5.0
CONCLUSION ................................................................................................................................ 44
6.0
DEMOGRAPHIC TABLES............................................................................................................ 45
7.0
INTERNET & E-COMMERCE ACTIVITIES ............................................................................. 54
8.0 SURVEY METHODOLOGY ......................................................................................................... 74

8.1 SAMPLE SELECTION ........................................................................................................................ 74
8.2 CONFIDENCE LIMITS ....................................................................................................................... 75
8.3 FIELD PROCEDURES......................................................................................................................... 76
8.4 TRAINING ........................................................................................................................................ 76
8.5 VALIDATION.................................................................................................................................... 77
8.6 CODING ........................................................................................................................................ 78
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LIST OF TABLES
TABLE 1
TABLE 2
TABLE 3
TABLE 4
TABLE 5
TABLE 6
TABLE 7
TABLE 8
TABLE 9
TABLE 10
TABLE 11
TABLE 12
TABLE 13
TABLE 14
TABLE 15
TABLE 16
TABLE 17
TABLE 18
TABLE 19
TABLE 20
TABLE 21
TABLE 22
TABLE 23
TABLE 24
TABLE 25
TABLE 26
TABLE 27
TABLE 28
TABLE 29
SCOPE OF INTERNET IMPACT ON BUSINESS ............................................................. 45

TYPE OF INTERNET IMPACT ON BUSINESS.46
PAST E-COMMERCE ACTIVITY ..................................................................................... 47
FUTURE E-COMMERCE ACTIVITY................................................................................ 48
OUTSIDE CONSULTANT USE ......................................................................................... 49
CURRENT INTERNET USE ............................................................................................... 50
INTERNET AND BUSINESS SURVIVAL......................................................................... 51
INTERNET AND NEW BUSINESS OPPORTUNITIES .................................................... 52
INTERNET AND PROFITABILITY THREAT .................................................................. 53
E-MAIL................................................................................................................................. 54
WEBSITE FOR EXTERNAL COMMUNICATIONS......................................................... 55
WEBSITE FOR INTERNAL COMMUNICATIONS.......................................................... 56
CONDUCTING BUSINESS RESEARCH........................................................................... 57
SELLING YOUR GOODS AND/OR SERVICES ............................................................... 58
MAKING TRAVEL ARRANGEMENTS............................................................................ 59
PURCHASING COMPUTER EQUIPMENT AND SOFTWARE....................................... 60
PURCHASING OFFICE SUPPLIES.................................................................................... 61
FINDING A NEW SUPPLIER FOR GOODS...................................................................... 62
FINDING A CONSULTANT FOR SERVICES .................................................................. 63
SENDING ELECTRONIC INVOICES TO CUSTOMERS................................................. 64
RECEIVING ELECTRONIC BILLS FROM SUPPLIERS.................................................. 65
ELECTRONICALLY PAYING BILLS THROUGH YOUR BANK .................................. 66
PROVIDING CREDIT CARD INFORMATION FOR PURCHASES................................ 67
ELECTRONICALLY RECEIVING PAYMENTS .............................................................. 68
TRACKING BANK ACCOUNT BALANCE...................................................................... 69
SUBMITTING A BANK LOAN APPLICATION............................................................... 70
SUBMITTING TAX RETURNS TO THE GOVERNMENT .............................................. 71
REMITTING TAXES TO THE GOVERNMENT ............................................................... 72
ACCESSING GOVERNMENT SERVICES........................................................................ 73

1.0 EXECUTIVE SUMMARY

For Canadian entrepreneurs, some of the thrill of the Internet is gone. Six
months ago at the height of the tech stock boom expectations for the
Internet and e-commerce were at an all-time high.
The views expressed in the Fall 2000 SES Web Entrepreneurship Survey are not
quite the same. After a year of steady growth in the number of Canadian small
businesses engaged in electronic commerce (from Spring 1999 to Spring 2000),
the last six months have actually produced a marginal decline from 41%
engaged in electronic commerce transactions last Spring to 40% this Fall.
Similarly, Canadian entrepreneurs are now more skeptical about the
importance of the Internet and its benefits than they were earlier.
The survey, conducted by SES Canada Research, interviewed a randomly
selected national sample of 1,000 Canadian decision-makers from businesses
with 50 or fewer employees. Interviews were administered to individuals at
the small business who were responsible for decisions related to the Internet.
This survey report is part of a longitudinal study of Internet trends tracked
every six months.
While there has been no recent growth in the number of small businesses using
the Internet to buy or sell goods, there has been a jump in the amount bought
and sold. In addition, while the total number of Internet users has remained
flat, the extent to which the current Internet users take advantage of the new
communications medium has broadened significantly.
The result has been an increasing polarization between those who are using the
Internet and those who are not. The small businesses not currently using the
Internet are more skeptical about its effects and the benefits it can bring to their
business. Skepticism does not reflect a negative concern about e-commerce or a
fear that it will harm their business. Instead, Internet non-users simply
perceive the Internet as irrelevant to their day-to-day operations.
Internet users have also grown more questioning of the Internets impact and
its ability to transform their business. However, the tempering of their views
has not prevented them from finding new ways to incorporate the Internet into
all aspects of their business.

There is no question that last Spring represented the peak of a wave of hope
and anticipation regarding the Internet and e-commerce. In its wake,
expectations are more modest and growth is slower, but for those using the
Internet it continues to become a deeper, richer experience.
1.1
Who are the Internet Users?
The number of Canadian small businesses using the Internet has not changed
significantly, considering the margin of accuracy for the research, since the Fall
of 1999. (Fall 1999 74.1%, Spring 2000 73.5%, Fall 2000 76.5%).
The profile of small business Internet users has remained consistent in the
current SES Web Entrepreneurship Survey. The two factors most closely
correlated with Internet adoption continue to be the size of the business and the
age of the key decision-maker. Businesses with the most employees are those
most likely to use the Internet. Almost nine out of every ten (88%) of small
businesses with 25 to 49 employees report using the Internet. Similarly, the
likelihood that a small business will be using the Internet declines as the age of
the key decision-maker increases.
Although the gap is relatively small, male entrepreneurs (78%) have
consistently been more likely to use the Internet than female entrepreneurs
(75%). This difference increases significantly when the depth of usage is
analyzed. For example, 50% of male small business decision-makers are using
the Internet for e-commerce compared to 31% of women.
1.2
What Impact Will the Internet Have on Business?
Canadian entrepreneurs remain enthusiastic about the potential offered by the

Internet and e-commerce, although some views have tempered over the past
year. The vast majority of small businesses believe the Internet will have some
significant effect on their business, with 40% saying that impact will be major.
While still high, the number of small business decision-makers who believe the
Internet will have a major impact on their business is significantly below what
it was last Spring. This is particularly significant among those using the
Internet today. Six months ago, 57% of Internet users believed it would have a
major impact on their business. Now, only 46% do.
At the same time, some of the optimism about the Internet has waned. Among
all Canadian small businesses, 78% believe it will have a positive impact. While
a large number, it is the first time in the history of the SES Web Entrepreneurship
Survey that the positive response has fallen below 80%.
Some of this shift in attitudes is likely linked to the changes that have taken
place in the media and the external environment. When the stock market and
particularly Internet stocks were booming, the optimism tends to be reflected
in media stories describing the boundless possibilities of electronic commerce.
When the markets reversed, so did the coverage, and a growing skepticism
crept into the views of entrepreneurs.
1.3
How Big is the Small Business E-commerce Market?
While the number of businesses engaging in electronic commerce has not

increased, the scale of their e-commerce activity has grown significantly. This
continues to reflect the fact that new e-commerce entrants tend to begin
cautiously and build business over time.
From Fall 1999 to Spring 2000, the number of e-commerce participants grew,
but the average level of activity declined. From Spring 2000 to Fall 2000, the
number of small businesses engaged in e-commerce remained flat, but the
average level of activity increase markedly
Last Spring, the average small business had purchased $1,300 in good and
services over the previous year. This Fall, that average had increased to $2,500.
Overall, SES has estimated that the last year has seen Canadian small
businesses spend $720 million buying goods and services. This represents a
marginal decline from Fall 1999.
For small businesses selling over the Internet, the average value of the past
years sales was $2,600 (down from $3,700) last Fall. However, the growth in
the number of businesses participating in e-commerce sales has produced an
overall growth in the market from $240 million to $350 million.
Increasingly, small businesses in Canada are migrating from being
predominantly an e-commerce market for other businesses to target offering
their goods and services via the Internet. In addition, those transactions both
buying and selling are becoming more focused on dealing with other
Canadians, both businesses and consumers.
An important question for future study will be whether the average value of
transaction increases in the future. As existing e-commerce participants become
more comfortable with the Internet as a transaction medium and as more
opportunities exist to expand business by exchanging invoices and payments
electronically the overall volume of business should increase. Given the
increasing intensity of other Internet activities, the e-commerce market will
likely reflect the same behaviour.
1.4
What are Small Businesses Doing on the Internet?
As described above, the overriding trend that appears in the Fall 2000 survey is
the increasing intensity of small business Internet use. While the overall
number of Internet users has remained flat, the number engaging in virtually
every Internet activity studied has increased.
This has been particularly significant for activities where entrepreneurs are
using the Internet to communicate or gain information. E-mail continues to be
the dominant Internet activity with almost 97% of Internet users saying they
used it. More than half also use the Internet to conduct research, access
government services, and access their bank accounts. An area of substantial
growth has been the number of small business Internet users who have decided
to establish their own website to communicate with customers and suppliers.
This has jumped from 59% to 67% over the past six months.
However these are not the only activities which are being adopted by Canadian
small business. While not as widely adopted, the percentage of businesses
engaging in a wide variety of e-commerce and financial transactions continues
to grow. One of the fastest growing activities is using the Internet to access a
bank account. In 18 months, the percentage of Internet users engaging in web
banking has grown from 25% to 51%.
The growth in both use of Internet-based government services and Internetbased banking reflects the role of supply in adoption of new technology. As
there have been more opportunities presented for small business to engage in a
particular activity, the numbers doing so have increased significantly. Some of
the more complex activities such as remitting taxes or applying for a bank
loan for which there are limited opportunities available, continue to produce
the lowest levels of adoption and have not reflected the growth pattern of other
activities.
1.5
What's Next?
The rush of hype and excitement surrounding the Internet has gone, and in its
wake the rate of adoption of the Internet and e-commerce by Canadian small
businesses has slowed down.
However, there is no evidence that Canadian entrepreneurs are abandoning
either the Internet or e-commerce. In fact, in a variety of ways, those currently
using the Internet are finding new and valuable ways to move their business
into the on-line world. As the Internet increasingly becomes integrated into all
aspects of the operations of small businesses, it will grow increasingly vital to
their success and future.
More than anything else, the continued positive experience of Canadian small
e-businesses will ultimately persuade the laggards of the value and benefits of
the Internet and the opportunities presented by electronic commerce.
1.6
Key Findings Fall 2000 Survey

! 76% of all small businesses in Canada currently use the Internet.
! 40% of all small business decision-makers have bought or sold
something over the Internet during the past twelve months.
! 44% of small businesses have plans to buy or sell over the Internet
during the next year.
! The average amount purchased by Canadian small businesses over
the Internet was $2,500.
! The average amount sold by Canadian small businesses was $7,600.
! The Canadian small business market for Internet e-commerce
purchases was $720 million over the past year.
! Canadian entrepreneurs have sold approximately $590 million
during the past twelve months.

1.7
Key Findings Six Month Trends

! Perceptions of the significance of the Internet have declined as the
number of entrepreneurs who believe it will have a major impact
on their business declined from 48% to 40%.
! The shift in perceived importance was greatest among small
businesses currently using the Internet, where those describing it as
having a major impact declined from 57% to 46%.
! Internet security continues to grow as a concern for Canadian small
business decision-makers as 25% of those not currently using the
Internet cited it as a barrier, up from 16%.
! Despite security concerns, the percentage of small businesses
willing to provide credit card information over the Internet has
grown from 19% to 25% in the past six months.
! International e-commerce transactions are increasingly focused on
bilateral trade with the U.S. as 93% now say it is their primary
trading partner, an increase of 11% since last Spring.
! The scale of e-commerce activity has grown significantly, with the
average purchase total for small businesses increasing from $1,300
to $2,500. The total small business market grew 75%.
! The magnitude of e-commerce sales by small businesses also grew,
with average sales increasing from $2,600 to $7,600, representing a
68% jump in the total Canadian market.
! E-commerce is increasingly being used for basic business
transactions by all Canadian small businesses:
! those using the Internet to book travel increased from
29% to 37%;
! those using the Internet to purchase computer hardware
and software increased from 21% to 28%; and,
! those using the Internet to purchase office supplies
increased from 14% to 24%.
! Bank-mediated financial transactions have also been growing
rapidly. Among all Canadian small businesses, the percentage
using the Internet to check their bank accounts has grown from
29% to 39%and, and pay bills has grown from 22% to 29%

2.0 MARKET OVERVIEW

The Internet bubble has burst. The collapse of most dot com stocks over the
last six months has been reflected in a renewed skepticism among Canadian
small business decision-makers regarding the Internet and e-commerce.
This change in views is apparent in the responses to the Fall 2000 SES Web
Entrepreneurship Survey. After a year of steady growth in the number of
Canadian small businesses engaged in electronic commerce, the 40% who
report having done so this Fall is actually a slight decline from the 41% last
Spring. Similarly, Canadian entrepreneurs in Fall 2000 are more skeptical
about the importance of the Internet and its benefits than they were in Spring
2000.
However, the end of the hype does not mean the end of the Internet nor the
end of e-commerce. While there has been no recent growth in the number of
small businesses using the Internet to buy or sell goods, there has been a jump
in the amount of goods and services bought and sold. In addition, while the
total number of Internet users has remained flat, the extent to which current
Internet users take advantage of the new communications medium has
broadened significantly.
The result has been an increasing polarization between those who are using the
Internet and those who are not. The small businesses not currently using the
Internet are more skeptical about its effects and the benefits it can bring to their
business. However, this skepticism does not reflect a negative concern about ecommerce or a fear that it will harm their business. Instead, Internet non-users
simply perceive the Internet as irrelevant to their day-to-day operations.
Small businesses using the Internet have also grown more questioning of the
Internets impact and its ability to transform their business. This tempering of
views has not prevented them from finding new ways to incorporate the
Internet into all aspects of their business.
There is no question that last Spring represented the peak of a wave of hope
and anticipation regarding the Internet and e-commerce. In its wake,
expectations are more modest and growth is slower, but for those using the
Internet it continues to become a deeper, richer experience.

10
2.1 Decision-maker Profile

For the past 12 months, the number of Internet users has remained essentially
flat considering the margin of accuracy for the research (Fall 1999 74.1%, Spring
2000 73.5%, Fall 2000 76.5%). However, as we will describe below, the manner
in which those small business Internet users are using the Internet has changed
significantly.
The profile of small business Internet users has remained remarkably consistent
across multiple waves of the SES Web Entrepreneurship Survey. The only
demographic qualities closely related to Internet usage are the size of the
business and the age of the principal decision-maker.
Larger businesses are more likely to have adopted the Internet than smaller
ones. While almost 9 in 10 (88%) businesses with 25 to 49 employees are
currently using the Internet, only 59% of those with less than 5 employees are
doing so.
Similarly, small business decision makers between the ages of 18 and 29 are
much more likely to use the Internet than those led by individuals over the age
of 50. Of the younger group, 85% are using the Internet for their business,
compared to only 62% of the oldest group.
Much less significant, but consistent over time has been a small difference in
Internet use tied to gender and region. Men continue to use the Internet at a
rate slightly higher than women (78% vs. 75%), although women slightly
outnumber men in the total sample. Similarly, businesses based in Western
Canada are slightly more likely to be using the Internet while those in Quebec
are slightly less likely to do so. (Ontario and Atlantic Canada have consistently
been very similar and fall between the other two regions.)
2.2
Buying and Selling Using the Internet
While three-quarters of Canadian small businesses have been using the Internet
for the past year, many have not taken full advantage of all the capabilities and
services it has to offer. The Internet is used for a variety of activities, including
communications, information gathering, electronic commerce and banking.
Entrepreneurs tend to progressively incorporate the Internet into their day-to-

11
day business over time by gradually expanding the scope of activities in which
they engage.
During the past 12 months, 40% of Canadian small business decision-makers
surveyed have used the Internet either to buy or to sell goods and services. This
total is a marginal decline from the 41% who reported engaging in e-commerce
during the Spring 2000 SES Web Entrepreneurship Survey. After steady growth
over the previous year, the 2000 results indicate a temporary stalling of ecommerce growth among Canadian small businesses. Additional responses
imply that future growth will occur, but at a slower pace than in the past.
Past E-Commerce Activity

Have you bought or sold goods or services using the Internet
in the past twelve months?
Both Business and

personal
15%
Busines Only
16%
Personal Only
10%
No
59%
The last three waves of the SES Web Entrepreneurship Survey have shown a
gradual flattening of the rate of Internet and e-commerce adoption among
small businesses. From the Spring to the Fall of 1999, both the number of
Internet users and the number engaged in e-commerce activities increased
significantly. Over the next six months, to the Spring of 2000, the percentage of
Internet user remained flat, but those engaged in e-commerce continued to
grow. Over the past six month, both Internet usage and e-commerce have
remained flat.

12
Internet and E-commerce Usage -- by Survey
90%
74%
74%
80%
77%
61%
70%
60%
50%
40%
30%
41%
35%
40%
27%
20%
10%
0%
Spring 1999
Fall 1999
Spring 2000
Internet Users
Fall 2000
E-Commerce Users
Comparison of Past E-commerce Activity

Have you bought or sold anything using the Internet for either personal
or business use in the past twelve months?
Business only
1%
20%
9%
Personal only
Both business and
Non-user
User
10%
0%
personal
19%
90%
No
51%
0%
20%
40%
60%
80%
100%
Naturally, almost all of the small business decision-makers who have engaged
in e-commerce are those using the Internet for their business. However, a small
percentage (9%) of those not using the Internet for business have engaged in ecommerce for personal purposes. A negligible number (<1%) also claim to have
either bought or sold something for their business.
13
The differences between men and women as Internet users are reflected even
more strongly in their e-commerce activities, and have actually increased over
the past six months. Small businesses led by men are significantly more likely
to have engaged in electronic commerce than those led by women (50% of men
versus 31% of women). This gap has increased significantly over the past year
because men have continued to adopt e-commerce in increasing numbers,
while women have not. (see Chart Comparison of E-commerce Activities by
Gender, next page).
Comparison of Past E-commerce Activity
12%
Business only
18%
Male
12%
Female
Personal only
10%
10%
Both business and

personal
19%
0%
5%
10%
15%
20%
Comparison of Past E-commerce Activity:

Fall 1999 and Spring 2000
31%
Fall 1999
40%
Male
Female
34%
Spring 2000
47%
31%
Fall 2000
50%
0%
10%
20%
30%
40%
50%
60%

14
The number of small businesses engaged in actively buying or selling through

the Internet will likely continue to increase over the next twelve months, but
more gradually than it has in the past. One-fifth of those who have not done so
in the past have plans to buy or sell goods or services at some point in the next
year.
Those entrepreneurs intending to engage in e-commerce in the future include
both Internet users and non-users. A majority (53%) of Internet users intend to
buy or sell something using the Internet in the next year. However, only 16%
of small businesses not currently using the Internet have plans to engage in ecommerce in the near future.
Both of these results represent substantial declines from the Spring 2000 SES
Web Entrepreneurship Survey, when 64% and 38% of Internet users and nonusers, respectively, had future plans to engage in e-commerce.
Comparison of Future E-commerce Activity

Do you plan to buy or sell anything using the Internet for either personal or business
use in the next twelve months?
7%
Business only
25%
4%
Personal only
Non-user
User
6%
Both business and
6%
personal
23%
72%
No
36%
0%
10%
20%
30%
40%
50%
60%
70%
80%

15
Both the lack of growth in electronic commerce activity reflected in the Fall
2000 survey and the drop in future expectations represent a significant change
Comparison of Future E-commerce Activity
Do you plan to buy or sell anything using the Internet for either personal or business
use in the next twelve months?
7%
Business only
25%
4%
Personal only
Non-user
User
6%
Both business and
6%
personal
23%
72%
No
36%
0%
10%
20%
30%
40%
50%
60%
70%
80%
from the previous patterns. The reported past e-commerce activity from the
Spring 2000 survey closely matched the future activity that had been forecast a
year earlier. At the time, the future e-commerce plans of Canadian
entrepreneurs indicated that 57% intended to engage in e-commerce over the
next 12 months.
However, at the half-way point of that year, there has been no increase in ecommerce activity. In addition, there has been a substantial drop in future
plans as of the Fall of 2000. Now, only 44% of small business decision-makers
plan to engage in e-commerce over the next year. This would represent a small
increase over current activity.
This break in the trendline reflects less excitement over the importance and
potential of the Internet, and a more modest expectation for the pace of
adoption. Of course, just as the forecasts from six months ago proved overly
optimistic, so may the current expectations be overly conservative. New
opportunities may cause e-commerce adoption to re-accelerate just as it has
slowed down in recent months.

16
Past and Future E-commerce Activity - by Survey

60%
50%
27%
40%
17%
15%
20%
7%
11%
10%
17%
15%
30%
17%
8%
19%
21%
16%
9%
5%
10%
15%
21%
19%
0%
Spring 1999 Spring 2000 Fall 1999

Future
Past EFuture
Plans
Commerce
Plans
Both business and personal
Fall 2000 Spring 2000 Fall 2000

Past EFuture
Future
commerce
Plans
Plans
Personal only
Business only
The differences in e-commerce activity between the different demographic

groups mirrors the differences in overall Internet use. As with the gender
divide described above, the gap between the largest and smallest companies
has also increased over the past six months. For companies with fewer than
five employees, 22% of the decision-makers have used the Internet to buy or
sell something in the past twelve months, a substantial decline from 37%
reported during Spring 2000. For businesses with 25 to 49 employees, the
number engaged in e-commerce has increased from 47% to 56% over the same
period.
This gap is also reflected in future e-commerce plans, particularly regarding
plans to engage in e-commerce for business purposes. However, as with the
overall future plans, expectations for future e-commerce activity by all
businesses have declined since last Spring. (see Chart - Future E-Commerce
Activity by Business Size, below).

17
Future Business E-commerce Activity - by Business Size

Do you plan to buy or sell anything using the Internet for either personal or business use
in the next twelve months?
25 to 49 employees
27%
21%
10 to 24 employees
15%
21%
5 to 9 employees
Fewer than 5
employees
Business only
18%
12%
0%
Both business and

personal
23%
19%
10%
20%
30%
40%
50%
60%
While overall the trend in small business e-commerce has been increasing, not
all entrepreneurs currently using the Internet to conduct business plan to
continue doing so. 12% of respondents who stated they had bought or sold
goods or services over the Internet during the past 12 months state they do not
plan to do so in the next 12 months. This number has not increased
significantly, but is now larger relative to the percentage of small businesses
who have not engaged in e-commerce, but plan to do so in the future.
Entrepreneurs who have used the Internet for both personal and business ecommerce are those most committed to continuing its use in the future. Only
5% stated they did not have plans to engage in e-commerce over the next
twelve months.
The progression of small business to the Internet and then to e-commerce will
not be as smooth as had been expected. While small businesses continue to use
the Internet and e-commerce for their business, the rate ofd adoption tends to
increase or decrease depending on the external environment and economic
trends. The questions raised about the viability of Internet business models
over the past six months have clearly affected the attitudes of small business
decision-makers and their actions.

18
2.3
Size and Scope of Electronic Commerce Activities
To further assess the extent to which Canadian small businesses are engaging
in electronic commerce, survey respondents indicating that they had bought or
sold goods or services were asked additional questions regarding the extent of
that business and with whom it was conducted.
Similar to last Spring, close to half (46%) of small businesses conducted almost
all of their e-commerce transactions with other Canadian consumers and
businesses. However, there has been a small shift towards entrepreneurs who
primarily engage in transactions with foreign counter-parties. Overall, this
represents a slight decline in the share of transactions conducted between
Canadians, and a slight increase in those transacted with international clients.
Comparison of Location of E-commerce Activity

What percentage of those Internet transactions occurred with a Canadian
supplier or customer?
19%
10% or less
11%
Fall 2000
Spring 2000
35%
10% to 90%
42%
46%
90% or more
47%
0%
10%
20%
30%
40%
50%
The international transactions that take place are heavily weighted towards the
United States. When asked which foreign country did they conduct the most
business with, 93% identified the U.S. This total is an 11% increase from the
number of small business decision-makers who identified the U.S. six months
ago, and a return to the same level of U.S. business identified in Fall 1999.
19
While there were not many entrepreneurs who identified a country other than
the U.S., most of them (4.2%) identified Europe as the primary site for their
international business. This too represents a substantial shift from Spring 2000
and a return to a level similar to Fall 1999.
Each of these respondents was also asked to state the dollar value of their
transactions separating buying and selling over the past twelve months.
While the total number of small businesses engaging in e-commerce has not
increased since last Spring, the amount of Internet business being conducted
has grown substantially.
For those using the Web to buy goods and services, the median response was
$1,000 in annual purchases, double the median of last Spring. Close to half
(46%) stated they had bought less than $500 in goods and services. Almost
one-fifth (19%) indicated total purchases exceeding $5,000. This represents a
significant shift from the Spring 2000 results when only 4% of respondents
reported purchases exceeding $5,000.
The increase in the quantities small businesses are selling over the Internet is
even more noticeable than that for purchases. The median response when
asked the dollar value of Internet sales was $5,000. Six months ago, it was only
$500. Only 9% said they had had sales less than $500 and 35% stated that they
had exceeded $20,000
The charts on the next page show the breakdown in both purchases and sales in
the Spring 2000 and Fall 2000 surveys. (see Charts Internet Purchases and
Internet Sales, next page). The shift in this distribution reflects the growing
experience that Canadian small businesses have with electronic commerce
transactions.
From Fall 1999 to Spring 2000, the number of entrepreneurs engaging in ecommerce transactions increased, but the average size of those transactions
declined. Over the last six months, there were relatively few new e-commerce
participants, but the amount of business they conducted grew significantly.

20
Small Businesses Internet Purchases

Percent of purchasers in each category
19%
$5001 and up
4%
22%
21%
$1001 to $5000
Fall 2000
Spring 2000
13%
$501 to $1000
9%
31%
$101 to $500
41%
15%
$0 to $100
25%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Small Businesses Internet Sales

Percent of sellers in each category
48%
$5001 and up
17%
27%
23%
$1001 to $5000
Fall 2000
Spring 2000
16%
15%
$501 to $1000
5%
$101 to $500
32%
4%
$0 to $100
13%
0%
10%
20%
30%
40%
50%
60%

21
2.4
Size of the Small Business E-commerce Market
Based on the dollar values that respondents ascribed to their e-commerce

business, an estimate of the overall small business market was developed.
Using the responses from the survey, an overall average was calculated of
$2,500 for each small business using the Internet for e-commerce purchases and
$7,600for e-commerce sales.
By applying this average to the overall percentage of Canadian entrepreneurs
engaging in e-commerce and estimates from Statistics Canada of the total
number of small businesses in Canada, an approximation can be derived of the
total Canadian market.
The estimated size of the small business market, as a purchaser of goods and
services, is $720 million. This represents a very large jump from the estimates
generated based on the Spring 2000 SES Web Entrepreneurship Survey. The total
number of businesses using the Internet for purchases did not increase, but the
amount they purchased jumped markedly, producing overall market growth of
75%.
For small businesses using the Internet to sell goods and services, the increase
was even more significant. Their total revenue for the past twelve months was
approximately $590 million. This reflects a 68% increase in total sales from the
$350 million market estimate based on the Spring 2000 survey. (While average
sales for small businesses exceed purchases, the number currently selling is less
than the percentage currently buying, so the overall market is less.)
The overall estimate, therefore, is that the Canadian small business e-commerce
balance of transactions between buyers and sellers is now negative $130
million. This is larger than the Spring of 2000, but smaller than the Fall 1999
result. While Canadian small businesses have significantly expanded their
Internet-based sales, their purchases have grown even faster.
2.5
Internet Consultants
Incorporating the Internet, and particularly e-commerce, into your business is

not a simple task. Consistently, a significant number of entrepreneurs identify
the complexity of the Internet as a reason for not using it. Another solution for

22
some small businesses is to find external support to help their Internet and
electronic commerce efforts.
The small business entrepreneurs surveyed were asked whether or not they
had ever hired or considered hiring an outside consulting firm to help them do
business on the Internet. 21% indicated that they had hired an outside
consulting firm to help them, an increase of almost 4% from last Spring and
almost 8% over the past twelve months. Larger businesses were more likely to
use consultants. 34% of businesses with 25 to 49 employees have engaged a
consultant, while only 12% of those with fewer than five employees had.
Naturally, almost all of those using a consultant are Internet users.
Hired Outside Consultant
Have you hired -- or considered hiring -- an outside consultant to help with your
Internet business?
6%
Yes, hired
26%
Non-Users
Users
9%
Yes, has considered

9%
79%
No
62%
0%
10% 20% 30% 40% 50% 60% 70% 80% 90%

23
3.0 ATTITUDES TOWARD ELECTRONIC COMMERCE

The attitudes of Canadian entrepreneurs are closely linked to their actions
regarding the Internet and e-commerce. Three-quarters of Canadian small
businesses are using the Internet in their work and 40% are using it to transact
business.
To better understand the forces either helping or hindering the adoption of the
Internet and e-commerce in Canada, small business decision-makers were
asked to provide an assessment of the importance of the Internet and how they
believed it would affect their business.
Those using the Internet for business are more likely to view it both as an
important development and to view the Internet as positive for their business
and its future. However, as the stock market bubble surrounding Internet
stocks burst, so did some of the more extreme views regarding the Internet and
its impact on small businesses.
However, the shift in views has not been towards more negative opinions, but
rather towards greater indifference. This is particularly true among the quarter
of small business decision-makers that have not adopted the Internet. In
previous waves of the SES Web Entrepreneurship Survey, the primary reason
Internet non-users had stayed away was that they didnt consider it important
enough. Over the past six months, this apathy has only increased.
3.1
Importance of Internet
The number of small business decision-makers who believe the Internet will
have an impact on the future of their business decreased for the first time. This
Fall, 16% stated that they believe it will have no impact on their business, a six
percent increase since the Spring. Almost four in ten (37%) entrepreneurs not
using the Internet say it will not have an impact on their business
These results are actually very close to the views expressed during the Spring
and Fall of 1999. Clearly, at the height of Internet mania the expectations of
small business decision-makers got caught up in the excitement and produced
the unusual results of last Spring.

24
Impact of Internet on Business

Do you believe the Internet will have a major impact, minor impa
or no impact on your business?
N o Im pact
16%
Unsure
3%
M inorIm pact
41%
M ajorIm pact
40%
Internet Impact on Business -- by Survey
100%
17%
15%
40%
41%
10%
16%
80%
60%
39%
41%
Minor Impact
40%
20%
No Impact
Major Impact
39%
40%
48%
Spring 1999
Fall 1999
Spring 2000
40%
0%
Fall 2000
Not surprisingly, Internet adoption by small businesses is closely linked to

their views regarding the importance of the Internet and whether they believe
it will impact their future. Only 10% of Internet users believe the Internet will
not impact the future of their business, while almost half (46%) believe it will
have a major impact.
Small businesses not currently using the Internet have very different views.
Only one-fifth (20%) believe the Internet will have a major impact on their
business and 37% say that it will simply have no effect. For both users and nonThe SES Web Entrepreneurship Survey
25
users, close to four in ten believe the Internet will have some impact, but that it
will be minor.
The decrease in perceived importance of the Internet has affected both Internet
users and non-users, although those not using the Internet changed their views
the least. The hype surrounding the importance of the Internet particularly
influenced the views of Internet users. One year ago, 47% believed the Internet
would have a major impact on their business. That increased to 57% last Spring
and dropped back to 46% this Fall. The comparable numbers for those not
using the Internet were 18% to 22% to 20%.
In addition to the direct question about the importance of the Internet, the
small business decision-makers were asked whether they agreed or disagreed
with a number of statements that reflected the importance of the new medium.
When small business decision-makers were asked whether they view the
Internet as critical to the survival of their business, similar results were
obtained. Among business Internet users, 40% either agreed or strongly agreed
with that statement, an decrease of 4% over six months, but still significantly
higher than in Fall 1999.
For non-users, overall agreement grew slightly to 20%, but three-quarters
disagreed. Significantly, 25% of small business decision-makers not using the
Internet said they strongly disagreed with the statement regarding the
criticality of the Internet, almost twice the percentage of Internet users.

26
Comparison of User and Non-user Internet Impact

Do you believe the Internet will have a major impact, minor impact
or no impact on your business?
20%
Major Impact
46%
Non-Users
Users
38%
Minor Impact
42%
37%
No Impact
10%
0%
10%
20%
30%
40%
50%
Comparison of Internet Users by Survey

The Internet is critical to the survival of your business.
6%
Strongly Agree
12%
7%
27%
Agree
32%
34%
Fall 1999
Spring 2000
52%
Disagree
44%
45%
Fall 2000
13%
11%
13%
Strongly Disagree
0%
10%
20%
30%
40%
50%
60%
As with the opinions on the importance of the Internet, the change in views of
Internet users has been more significant than those of the non-users. Over the
past six months, Internet users have become less likely to view the Internet as
critical to the survival of their business. Most significantly, the percentage who
strongly agreed with the statement was cut in half from 12% to 6%.

27
3.2
Impact on Business
There are two aspects to the potential effect that the Internet and e-commerce
can have on Canadian small businesses. First, as discussed above, what is the
magnitude of the Internets impact does it change the entrepreneurs business?
Second, what is the direction of that change is the impact positive or
negative?
Overall, three-quarters of small businesses asked (76%) stated the Internet
would be positive for their business. This is a marginal decrease from the
responses received last Spring. However, only 1% said they believe the
Internets impact will be negative, also a marginal decrease. The remaining
businesses those who says the Internets impact will be neutral increase from
15% to 21%.
As with other attitudes, Internet users are more likely (80%) to view the
Internet positively than are non-users (51%). However, neither group is
inclined to be pessimistic towards the Internet future. Instead, non-Internet
users were simply more inclined to believe that the Internets impact will be
neutral (37% for non-users; 20% for users). Over the past six months, both
Internet users and non-users have shifted towards a more neutral stance.
In addition to Internet users being more optimistic than non-users,
entrepreneurs who perceive the Internet as having a significant impact on their
business are more optimistic than those who see it as less significant. Among
small business decision-makers who say the Internet will have a major impact
on their business, 90% say that impact will be positive. For those who say it will
have a minor impact, only 64% believe it will be positive. Again, the difference
between the two groups is the proportion who believe the Internets impact
will be neutral. Very few of either group forecast a negative effect.
Interestingly, this split has actually widened over the past six months. While
the overall number of small business decision-makers who believe the Internet
will have a major impact on their business has declined, those who believe it
will have that impact are even more optimistic. For those who believe the
Internets impact will only be a minor one, the percentage viewing it as positive
has declined by 7%.

28
Internet Impact by Significance

Breadth and type of impact of Internet on small businesses in Canada
90%
Positiv e
64%
Major Impact
Minor Impact
9%
Neutral
32%
1%
Negativ e
2%
0%
20%
40%
60%
80%
100%
Small business decision-makers surveyed were also asked whether they believe
the Internet will open new business opportunities for them or whether it will
threaten their profitability. Again, the overall results indicate business Internet
users are more positive than non-users.
In addition, the number of respondents who agreed or strongly agreed with the
statement about new opportunities continued to increase, although with more
tempered views. One year ago, a total of 61% of entrepreneurs supported the
statement. This has since climbed to 73% last Spring and 81% today. However,
over the last six months, the percentage who strongly agreed with the
statement declined by 7% (from 27% to 20%). This was more than offset by an
increase in those who agreed from 47% to 61%.

29
Comparison of Fall 1999 and Spring 2000

The Internet will threaten our profitability.
1%
Strongly Agree
4%
Fall 2000
4%
Spring 2000
12%
Agree
Fall 1999
14%
21%
62%
Disagree
57%
61%
21%
Strongly Disagree
19%
11%
0%
10%
20%
30%
40%
50%
60%
70%
The number of small businesses who agreed or strongly agreed that the
Internet posed a threat to their business continued to decline (although less
significantly over the past six months than over the previous six months).
Again, it reflects some moderation of views towards the effect that the Internet
will have.
Finally, every respondent was asked the open-ended question, If you were to
describe the Internet and its future impact, if any, on the Canadian economy,
what words would you use?
While this question produces a mix of responses, they tend to cluster into two
main groups. The most common answers focused on the significance of the
Internets impact on the economy (huge, significant change, structural change)
and the belief that the Internet would have a positive effect (more productive
economy, positive impact, increased sales, more convenience).
The general structure of the response to this question has remained consistent
across all four waves of the SES Web Entrepreneurship Survey. More than 80% of
respondents choose a term that falls into one of the two groups representing
improved productivity or structural change. However, in previous waves of
30
the survey, both groups of responses were similar in size. This Fall there was a
significant shift in top-of-mind views towards the significance of the Internet
over its positive effects. (See Table Open-ended Impact Question, next page).
As with the questions discussed above, this appears to reflect some mellowing
of the views of small businesses. When asked to pick a way to describe the
Internet, they still jump to terms that indicate a substantial change in their
business or industry. It is the magnitude of change that appears to dominate
their thinking, and it has crowded out the optimism reflected in surveys
conducted last Spring or the preceding Fall.
However, consistent through all the SES Web Entrepreneurship Surveys is the fact
that very few small business decision-makers are fearful of how the Internet
will change their lives.

31
Open-ended Impact Question

If you were to describe the Internet and its future
impact, if any, on the Canadian economy, what
words would you use?
User
%
Non-User
%
71.1
72.8
10.8
5.5
Average Impact
Globalize Economy/
More Competition
7.5
4.5
9.3
3.9
Passing Fad /Useless

Black Market/Hurt Economy
1.2
4.0
4.6
2.3
TOTAL
98.1
98.4
Group 2 Change
Huge change
Significant Impact
Structural Change
Group 1 Productivity
Increase Profits
More Productive Economy
Positive Impact
Increase Sales
More Jobs
More Information

32
3.3
Benefits & Barriers
While less than one-in-four Canadian small businesses say they do not use the
Internet in any way, they still represent a significant segment of the potential
market. To assess what has been preventing them from engaging in ecommerce, the non-Internet users were asked an open-ended question
regarding why they were not on the Internet.
The results have remained remarkably consistent for the past 18 months. Even
though the subset of non-users has declined from 39% of the sample to 23.5%,
the reasons they identify for not using the Internet are largely unchanged.
There are no major barriers preventing Canadian entrepreneurs from using the
Internet.
Small business decision-makers not using the Internet simply do not see it as a
priority. They are much less likely than Internet users to view the Internet as
critical to their business and less likely to believe it will have a major impact on
their future success. When asked to describe what is keeping them off the
Internet, 61% state that their main reason for not using the Internet is that it is
not necessary for their business, a substantial jump from the 49% who
believed it was not necessary during Spring 2000.
Most of the other small business decision-makers not currently using the
Internet gave responses that also indicated it was simply not a priority. They
included:
!
!
!
!
Dont know enough about it (2.1%);

Dont have the time to set it up (6.0%);
Dont have a computer (11.9%); and,
Too expensive (8.9%).
Over the past year, those not using the Internet have actually grown less likely
to identify a practical barrier preventing them from using it. Instead, they are
increasingly just waiting for the killer app that will make the Internet and ecommerce something they consider important to their business. It shouldnt be
surprising that people who resisted the temptation of the Internet at the height
of the boom are continuing to resist it six months later.
All of the small business decision-makers were asked separately to identify the
key benefits and barriers to using the Internet for their business. Again, more
than half (56%) of the small businesses surveyed simply could not name a
33
barrier or stated that there were none. Among those who could identify a
barrier, the most commonly cited problems were a lack of security (30%), that
servers are not reliable (16%), that it was too expensive (12%) and the fact that
the Internet requires a lot of training (8%).
Small businesses using the Internet were more likely to cite security (32%
versus 25% for non-users) as a barrier to Internet use than non-users. The
number of small businesses identifying security as the primary barrier to
Internet use has more than doubled from 12% in the Fall 1999 survey. This
increase in concern is reflected in the responses of both Internet users and nonusers and likely results from the considerable media attention that web hackers
and e-mail viruses have received over the past year.
In addition to security, Internet users were more likely to complain about the
reliability of servers (18% for users versus 10% for non-users) and the difficulty
of finding information (8% vs. 2%).
Small businesses not using the Internet were much more likely than small
business Internet users to raise concerns about impersonal nature of the
Internet and claim their business is simply too small to take advantage of it.
Among non-users, 20% identified its impersonal nature as a barrier, while only
8% of Internet users did. Similarly, 11% said the small size of their business was
a barrier compared to 5% of those using the Internet.
When asked to identify the key benefits of using the Internet for business, even
more significant differences between users and non-users emerged. Half of
non-users simply could not identify any key benefit to using the Internet,
compared with 18% of Internet users. The percentage of respondents who
could not name a benefit has increased over the past six months for both
groups.
Internet users were particularly likely to cite e-mail as a key benefit of using the
Internet. Among Internet users, 11% volunteered e-mail as the Internets
primary benefit compared to 6% of non-users. Three in ten (29%) of Internet
users identified using the Internet for research as a key benefit.
Non-users were more divided in their views of the benefits of using the
Internet. Most of the non-users who could identify a benefit to using the
Internet were split evenly between research, using the Internet for advertising
or marketing, and the convenience or time saving it offers.

34
However, non-Internet users were significantly more likely than Internet users
to cite advertising or marketing as a key benefit of the Internet. Only 13% of
Internet users mentioned advertising compared to 24% of non-users. This gap
has actually widened over the last six months, although both groups were more
likely to identify advertising and marketing as a benefit than they were last
Spring.
Multiple waves of the SES Web Entrepreneurship Survey have demonstrated that
those not using the Internet are more likely to see it as an advertising medium
than are those using it, who tend to focus more on its communications and
research capabilities.

35
4.0 E-BUSINESS ACTIVITIES

Recognizing the benefits of the Internet and choosing to use it in your business
is only the first step along a path that leads to widespread use of electronic
commerce. As described above, while 76% of Canadian entrepreneurs
currently use the Internet, only 40% have actually bought or sold goods or
services over it.
All of the small business decision-makers surveyed in the SES Web
Entrepreneurship Survey were asked about a series of Internet and e-commerce
activities. Those currently using the Internet were asked whether they already
engaged in the activity. All respondents were asked whether they would
consider performing the activity using the Internet or whether they were
actively planning to do so.
The results produced by the Spring 2000 survey were consistent with previous
editions. Small business Internet users move towards the Internet and ecommerce in phases. The responses have consistently broken down into three
progressive stages:
! Communications and Information
! Electronic Commerce Transactions
! Banking and Payments
4.1
Communications and Information
Virtually every study of Internet usage has shown that e-mail is the killer app
of the new medium. 97% of Internet users (74% of all small businesses) say
they use e-mail in their business. For 11%, e-mail is the key benefit they
perceive in the Internet.
Closely behind e-mail in Internet activities is using it for conducting business
research. Almost three-quarters (73%) of Internet users say they use it for
conducting research over the Web. Almost 30% identified the ability to conduct
research as one of the primary benefits of the Internet.
The combination of those two functions communications and information
represent the core uses to which the Internet is applied by Canadian
entrepreneurs. Closely related to those two is establishing a website to allow a
business to present information about itself to the external world. Half of all
small businesses (and two-third of those currently using the Internet) report
36
operating a website for external communication. In addition, 59% of Internet

users have accessed government services over the Web. All of these represent
continuing steady growth in the depth of Internet use by Canadian small
businesses. Each wave of the SES Web Entrepreneurship Survey has
demonstrated that, even without growth in the number of Internet users, there
is growth in the number of ways the Internet is used.
Business Internet User Activity Profile
E-mail - Research - External Website - Gov't Services
97%
E-mail
Users Engaged
1%
0%
1%
Users - Planning
73%
3%
Research
5%
19%
Users - Consider
67%
10%
External Website
6%
Users - No
18%
59%
Access Gov't
4%
9%
Services
28%
0%
20%
40%
60%
80%
100%
120%
The largest jump in these numbers is the percentage of small business Internet
users who have established a website, which increased from 59% to 67%. As the
number of Internet users was growing quickly, the proportion with a website
lagged the growth in other activities. Presumably, it takes new businesses some
time to get comfortable with the tools and capabilities of the Internet before
they actually try to establish their own site.
Smaller, but sizeable minorities of businesses using the Internet have engaged
in a number of related activities that are all focused on communications and
information. For example:
! 45% have used the Internet to find a supplier of goods or services;
37
! 37% have established a web site for internal communications; and,

! 25% have searched for a consultant using the Internet.
While Internet use is closely correlated with the size of a company, not all
activities are. Size does not tend to influence whether businesses use e-mail or
use the Web for business research. However, there is a significant gap between
the smallest and largest businesses regarding whether they operate a website
for either external or internal communications. For example, among businesses
with less than 5 employees, almost half (49%) of Internet users currently have a
website, but 78% of businesses with 25-49 employees do. Similarly, less than
one-quarter (23%) of the smallest group of companies operate an Intranet site
for internal communications, but almost half (48%) of the largest companies do.
The number of small business decision-makers currently not using the Internet
who are either planning or considering engaging in Internet activities continues
to increase. This has occurred despite the increasing skepticism regarding the
Internet voiced by the group of entrepreneurs not currently using it. For
Business Internet Non-user Potential Activity Profile

Planning to engage in activity in the future
30%
E-Mail
45%
50%
19%
Research
30%
40%
Fall 1999
21%
24%
External Website
Spring 2000
38%
10%
Access Gov't.
Svces.
29%
28%
Fall 2000
8%
Find Supplier
27%
37%
8%
Find a Consultant
15%
22%
0%
10%
20%
30%
40%
50%
60%

38
example, half of those not using the Internet are giving consideration to
adopting e-mail. Particularly significant over the last six months is the
percentage planning or considering a website for their business. This has
jumped from 24% of non-users last Spring to 38% today.
The only exception is the insignificant decline in the number of small
businesses not using the Internet who are considering using it in the future to
access government services. However, the 28% who now say they are planning
to remains almost three-times as high as the 10% who said so during Fall 1999.
Fundamentally, the Internet is a communications network. Communications
and information activities are both the easiest to perform by new Internet users
and require the least change in existing business practices and habits.
Naturally, they are the functions Canadian entrepreneurs adopt first.
4.2
Electronic Commerce Transactions
The second stage of Internet and e-commerce adoption begins when businesses
move beyond the exchange of information or communications to actually
conducting transactions. As described above, 40% of all Canadian small
business decision-makers have used the Internet either to buy or sell goods or
services in the past twelve months.
When specifically asked about selling over the Internet, 47% of small business
Internet users say they are currently engaged in doing so. Another 12% state
that they are already planning to do so and a further 12% are considering it.
These numbers are essentially unchanged from last Spring However, among
the set of businesses not currently using the Internet, there has been a
significant drop in those planning or considering adopting it as a selling tool.
While 40% of non-users indicated an interest in selling over the Internet six
months ago, only 29% are either planning (17%) or considering (12%) is today.
Less popular but growing are a variety of transactional electronic commerce
activities. Among small business Internet users:
!
!
!
!
!
49% have already used the network to make travel arrangements;

37% have bought computer hardware or software over the Internet;
33% have received a bill using the Internet;
31% have bought office supplies using the Internet; and,
23% have sent an invoice.

39
The three activities that reflect direct Internet-based transactions (travel, buying
a computer, and buying office supplies) have all continued to grow quickly in
acceptance. The more administrative activities (receiving bills and sending
invoices) have not been growing as quickly, likely reflecting the additional
complexity of managing billing and paper requirements for record-keeping.
Business Internet User Activity Profile

Has engaged in activity in the past
32%
Make Travel
Arrangements
39%
49%
25%
Bought a Computer
29%
Fall 1999
37%
27%
Received a Bill
Spring 2000
31%
33%
Fall 2000
22%
Sent an Invoice
25%
23%
16%
Bought Office
Supplies
19%
31%
0%
10%
20%
30%
40%
50%
60%

40
3.8
Banking and Payments
The third stage of e-commerce adoption is the use of the Internet for banking
and for making or receiving payments. These types of activities tend to be the
most difficult for small businesses to adopt and raise the greatest concerns
about privacy and security. It is one thing to send an e-mail and another to
place an order for new office supplies, but it is something quite different to
trust the transfer of funds to this new medium.
Where Canadian small businesses have moved into using the Internet for
financial purposes, it has been driven by large service providers who offer
precisely those guarantees about security and reliability.
Basic electronic banking is the fastest growing Internet activity. Half of small
business Internet users (51%) have used the Internet to check their bank
account balance and 38% have used it to pay bills. However, while these are
banking applications, they tend to have more in common with the
communications and information activities above. Checking bank accounts (a
pure information application) has grown quite rapidly, more than doubling
from the 25% level in the Spring of 1999. Paying bills through a website has
increased almost as quickly from 21% to 38%. While there is a transactional
component to paying bills and a lower adoption rate in practice the bill
payment services are operated through major financial institutions. The webbased function is merely to request that the payment be made (which takes
place through existing payment systems) and does not directly involve
transferring funds.
Slightly less popular, 31% of Internet users have submitted an electronic tax
return and 30% have received a payment electronically. Like banking and bill
payment, these are activities in which a financial institution often plays an
intermediary role, and the Internet primarily serves as an access channel to the
existing service.
For every financial activity measured, the percentage of Internet users engaging
in it has increased during the past six months. Some, such as checking a bank
account or paying bills, have had significant increases. Others, such as
submitting a tax return or applying for a bank loan have only increased
marginally. (see Chart Internet Activities Spring and Fall Comparison
Banking and Payments Activities, next page).

41
Internet Activities -- Spring and Fall Comparison

Banking and Payments Activities
25%
Check Bank Account

21%
30%
39%
51%
29%
Pay Bills
30%
38%
16%
Provide Credit card

Information
Spring 1999
25%
26%
17%
Submit Tax Return
22%
Fall 1999
32%
Spring 2000
30%
31%
Fall 2000
15%
19%
Receive Payments
22%
9%
Remit Taxes
8%
Submit Bank Loan
14%
30%
19%
19%
11%
15%
15%
0%
10%
20%
30%
40%
50%
60%
One of the most interesting issues regarding small business e-commerce

activities has been the willingness to provide credit card information over the
Internet. Over time, the percentage of small business Internet users who say
they have provided credit card information has doubled from 16% to 32%.
However, a majority (55%) of Internet users and three quarters (77%) of nonusers say they have not even considered providing credit card information over
the Internet. While the willingness to provide a credit card number has grown,
there continues to be a significant amount of concern about its safety. This is
also reflected in the number of Internet users who have stated that security is a
barrier to Internet use.
Even among those currently using the Internet, there is a dichotomy between
those who trust it enough for a credit card and those who dont. Interestingly,
the shift from refusal to engagement appears to derive from a change in
42
perspective. Consistently, few Canadian entrepreneurs say they are planning to

use a credit card, but havent yet done so.
Finally, the two Internet applications least popular among small businesses are
actually remitting taxes on-line (19%) and using the Internet to submit an
application for a bank loan (15%). These results are unchanged from six
months ago. In both cases, a major constraint is simply that there are currently
a limited number of opportunities to do so.
3.9
Summary of Activities
The difference between the different stages of Internet adoption are particularly
profound when the groups of activities are observed together. The chart below
demonstrates the average adoption rate for Internet users for each of the three
groups of Internet activities discussed above:
! Communications and Information
! Electronic Commerce Transactions
! Banking and Payments
Two themes emerge. First, communications leads Internet adoption followed
by e-commerce and then financial activities. Second, all three areas have
reflected consistent growth over time. Even as attitudes and expectations swing
up and swing down, the Internet continues to work its way into the core fabric
of business life in Canada.
Stages of Internet Adoption -- by Survey
60%
50%
47%
48%
40%
30%
32%
22%
14%
57%
37%
27%
20%
10%
53%
20%
24%
28%
0%
Spring 1999
Communications & Information
Fall 1999
Spring 2000
E-commerce Transactions
Fall 2000
Banking & Payments

43
5.0 CONCLUSION
The collapse of the dot com bubble has not brought about a collapse of the
Internet or e-commerce for Canadian small businesses. It has slowed their
growth, and it has tempered some of the runaway expectations for the Internet
that existed at its peak last Spring.
However, while the number of Internet users and the number engaged in ecommerce transactions has remained flat, those using the Internet continue to
do so in greater depth and regularity. The breadth of Internet uses is expanding
across the board and the amount of business being conducted electronically is
growing rapidly.
The hype may be gone, but the Internet remains, and day-by-day it becomes
more and more entrenched in the daily fabric of business for Canadian
entrepreneurs.

44
6.0 DEMOGRAPHIC TABLES

TABLE 1
SCOPE OF INTERNET IMPACT ON BUSINESS

Id like you to think of the future of your business. Do you believe the Internet will have a major impact, minor
impact or no impact on your business?
Major
Impact
%
Minor
Impact
%
No
Impact
%
Unsure
%
All Respondents
40
41
16
Region
West
Ontario
Quebec
Atlantic
36
34
52
30
50
41
32
42
11
22
13
26
2
3
2
2
Internet Use
User
Non-user
46
20
42
38
10
37
2
5
Number of Employees
4 or less
5 to 9
10 to 24
25 to 49
27
43
41
47
35
41
46
40
35
13
12
11
4
3
2
3
Years in Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
29
26
38
42
57
36
41
42
14
35
20
14
0
4
2
3
Respondent Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
50
41
39
31
48
37
44
44
42
26
11
15
14
23
22
3
0
4
5
4
Respondent Gender
Female
Male
37
44
41
41
20
13
3
3
Note: Totals may not add up to 100 as a result of rounding.

45
TABLE 2
TYPE OF INTERNET IMPACT ON BUSINESS

Based on your current business plans, do you believe this future impact will be positive, negative or neutral?
Positive
Impact
%
Negative
Impact
%
Neutral
Impact
%
Unsure
%
All Respondents
64
20
16
Region
West
Ontario
Quebec
Atlantic
67
59
67
58
0
2
1
0
26
16
17
24
7
23
15
18
Internet Use
User
Non-user
72
37
1
0
18
26
9
37
Number of Employees
4 or less
5 to 9
10 to 24
25 to 49
43
68
65
74
1
1
1
1
27
19
21
11
29
12
12
14
Years in Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
43
40
65
66
14
4
1
1
29
31
14
21
14
26
20
13
Respondent Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
70
69
59
60
74
2
0
1
0
0
13
20
25
22
7
14
11
15
18
19
Respondent Gender
Female
Male
57
72
1
1
24
15
19
12

46
TABLE 3
PAST E-COMMERCE ACTIVITY

Have you bought or sold anything using the Internet for either personal or business use in the past twelve
months?
Yes
business
only
%
Yes,
personal
only
%
Yes, both
personal
and
business
%
No
%
Unsure
%
All Respondents
16
10
15
60
Region
West
Ontario
Quebec
Atlantic
13
14
20
12
10
9
10
14
16
13
15
14
61
64
55
60
0
0
0
0
Internet Use
User
Non-user
20
1
10
9
19
0
51
90
0
0
Number of
Employees
4 or less
5 to 9
10 to 24
25 to 49
9
15
16
23
7
13
7
13
6
15
17
20
78
58
61
44
0
0
0
0
Years in Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
29
7
18
16
0
6
10
10
0
13
14
15
71
75
58
59
0
0
0
0
Respondent Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
19
22
13
10
0
8
10
12
9
4
17
15
15
12
15
57
53
60
69
82
0
0
0
0
0
Respondent Gender
Female
Male
13
19
10
10
8
22
69
50
0
0

47
TABLE 4
FUTURE E-COMMERCE ACTIVITY

Do you plan to buy or sell anything using the Internet for either personal or business use in the next twelve
months?
Yes
business
only
%
Yes,
personal
only
%
Yes, both
personal
and
business
%
No
%
Unsure
%
All Respondents
21
19
44
12
Region
West
Ontario
Quebec
Atlantic
16
19
28
8
4
7
3
14
22
15
19
18
44
42
46
48
14
16
5
12
Internet Use
User
Non-user
25
7
6
3
23
6
36
72
12
12
Number of
Employees
4 or less
5 to 9
10 to 24
25 to 49
18
15
23
27
6
6
3
7
12
21
19
21
50
45
45
36
14
14
10
9
Years in Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
14
9
26
20
0
2
4
6
14
20
13
20
43
55
39
44
29
15
18
10
Respondent Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
25
23
18
13
26
4
7
6
3
4
21
22
17
15
11
35
39
44
59
56
16
9
14
11
4
Respondent Gender
Female
Male
16
25
6
5
12
26
51
37
16
8

48
TABLE 5
OUTSIDE CONSULTANT USE

Has your business ever hired or considered hiring an outside consulting firm to help do business on the
Internet?
Hired a
firm
%
Has
considered
%
No
%
Unsure
%
All Respondents
21
66
Region
West
Ontario
Quebec
Atlantic
22
13
31
14
8
7
12
10
66
73
57
66
4
7
1
10
Internet Use
User
Non-user
26
6
9
9
62
79
4
6
Number of Employees
4 or less
5 to 9
10 to 24
25 to 49
12
15
24
34
10
7
8
11
72
73
66
49
6
5
2
6
Years in Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
0
13
18
23
14
7
11
8
86
73
65
65
0
7
7
4
Respondent Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
22
25
20
17
37
6
12
6
12
7
62
61
72
69
56
10
3
2
2
0
Respondent Gender
Female
Male
14
30
7
11
74
57
6
3

49
TABLE 6
CURRENT INTERNET USE

Does your business currently use the Internet?
Yes
%
No
%
All Respondents
77
24
Region
West
Ontario
Quebec
Atlantic
82
75
73
76
18
25
27
24
Internet Use
User
Non-user
100
0
0
100
Number of Employees
4 or less
5 to 9
10 to 24
25 to 49
59
77
80
88
41
23
20
12
Years in Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
43
56
77
79
57
44
23
22
Respondent Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
85
84
77
61
70
15
16
24
39
30
Respondent Gender
Female
Male
78
75
22
25

50
TABLE 7
INTERNET AND BUSINESS SURVIVAL

Now Im going to read you some brief statements about the Internet and your business and Id like you to tell
me whether you strongly agree, agree, disagree or strongly disagree.
Statement: The Internet is critical to the survival of our business.
Strongly
agree
%
Agree
%
Disagree
%
Strongly
disagree
%
Unsure
%
All Respondents
30
47
16
Region
West
Ontario
Quebec
Atlantic
6
3
7
2
23
34
32
36
55
47
38
48
16
12
21
12
1
4
2
2
Internet Use
User
Non-user
7
1
34
19
45
51
13
25
1
5
Number of
Employees
4 or less
5 to 9
10 to 24
25 to 49
5
4
5
8
21
33
32
34
56
44
45
43
14
19
16
13
5
0
3
3
Years in Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
0
6
5
6
29
26
35
30
29
55
46
46
43
9
12
17
0
6
3
2
Respondent Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
8
5
4
5
4
34
32
28
26
41
47
48
46
49
37
9
15
17
15
19
2
1
3
5
0
Respondent Gender
Female
Male
4
7
32
29
47
46
16
15
2
3

51
TABLE 8
INTERNET AND NEW BUSINESS OPPORTUNITIES

Statement: The Internet opens new business opportunities for us.
Strongly
agree
%
Agree
%
Disagree
%
Strongly
disagree
%
Unsure
%
All Respondents
20
611
13
Region
West
Ontario
Quebec
Atlantic
17
11
33
12
63
68
51
60
15
15
9
16
1
1
4
6
4
5
2
6
Internet Use
User
Non-user
24
7
63
55
10
24
2
4
2
10
Number of Employees
4 or less
5 to 9
10 to 24
25 to 49
9
21
22
26
60
59
63
62
20
14
12
9
5
3
2
1
7
4
3
2
Years in Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
0
9
18
22
71
56
67
59
14
24
12
13
14
2
2
2
0
9
2
4
Respondent Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
24
20
18
16
30
62
66
63
52
48
9
12
13
18
11
2
1
3
3
0
3
1
3
10
11
Respondent Gender
Female
Male
16
24
61
61
17
10
2
3
5
3

52
TABLE 9
INTERNET AND PROFITABILITY THREAT

Statement: The Internet will threaten our profitability.
Strongly
agree
%
Agree
%
Disagree
%
Strongly
disagree
%
Unsure
%
All Respondents
12
62
21
Region
West
Ontario
Quebec
Atlantic
1
1
2
2
13
17
5
12
66
64
54
80
19
11
36
6
2
6
2
0
Internet Use
User
Non-user
2
0
12
12
63
60
22
19
2
10
Number of Employees
4 or less
5 to 9
10 to 24
25 to 49
2
0
2
1
13
13
12
10
64
65
61
58
13
17
23
30
7
4
2
2
Years in Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
0
2
2
1
0
16
13
12
71
66
61
62
29
9
19
22
0
7
5
3
Respondent Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
2
1
1
1
0
18
12
12
7
7
60
65
60
64
59
19
20
22
21
26
2
2
4
8
7
Respondent Gender
Female
Male
1
2
10
14
66
58
19
23
4
3

53
7.0 INTERNET & E-COMMERCE ACTIVITIES

TABLE 10
E-MAIL
Now Im going to read you a list of Internet services and activities. Id like you to tell me whether your
business is already engaged in or is currently planning to use them. (Businesses not engaged in the activities
were also asked whether they would consider the service or activity.)
All Business Respondents
E-Mail
%
74
All Business Internet Users

Engaged
Planning
Consider
Neither planning nor considering
97
1
0
1
Business Internet Users Not Engaged

Planning
Consider
52
5
43
All Business Internet Non-users

Planning
Consider
Not consider
30
20
50
BUSINESSES USING THE INTERNET
Yes
%
No
%
E-mail Use by Region

West
Ontario
Quebec
Atlantic
98
98
95
97
2
2
5
3
E-mail Use by Number of Employees

4 or less
5 to 9
10 to 24
25 to 49
94
99
98
96
6
1
2
4
E-mail Use by Years in Business

Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
67
90
97
98
33
10
3
2
E-mail Use by Respondent Age

18 to 29
30 to 39
40 to 49
50 to 59
60 plus
99
96
95
100
100
1
4
5
0
0
E-mail Use by Respondent Gender

Female
Male
97
98
3
2

54
TABLE 11
WEBSITE FOR EXTERNAL COMMUNICATIONS

External
Website
%
51
Engaged
Planning
Consider
67
10
6
18

Planning
Consider
29
17
54

Planning
Consider
Not consider
20
18
62
Yes
%
No
%
External Website by Region

West
Ontario
Quebec
Atlantic
70
67
65
61
30
33
35
40
External Website by Number of

Employees
4 or less
5 to 9
10 to 24
25 to 49
49
68
67
78
51
32
34
23
External Website by Years in

Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
33
77
65
67
67
23
36
33
External Website by Respondent Age

18 to 29
30 to 39
40 to 49
50 to 59
60 plus
68
71
58
73
63
32
30
42
27
37
External Website by Respondent

Gender
Female
Male
66
68
34
32

55
TABLE 12
WEBSITE FOR INTERNAL COMMUNICATIONS

Intranet
%
28

Engaged
Planning
Consider
37
5
10
48

Planning
Consider
8
14
79

Planning
Consider
Not consider
11
9
80
Yes
%
No
%
Intranet by Region
West
Ontario
Quebec
Atlantic
37
43
33
32
63
57
67
68
Intranet by Number of Employees

4 or less
5 to 9
10 to 24
25 to 49
23
37
38
48
77
63
62
52
Intranet by Years in Business

Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
33
39
38
38
67
61
62
62
Intranet by Respondent Age

18 to 29
30 to 39
40 to 49
50 to 59
60 plus
46
36
34
29
47
54
64
66
71
53
Intranet by Respondent Gender

Female
Male
38
37
62
63

56
TABLE 13
CONDUCTING BUSINESS RESEARCH

Business
Research
%
56
Engaged
Planning
Consider
73
3
5
19

Planning
Consider
12
15
70

Planning
Consider
Not consider
22
18
60
Yes
%
No
%
Business Research by Region

West
Ontario
Quebec
Atlantic
71
70
79
74
30
30
21
26
Business Research by Number of

Employees
4 or less
5 to 9
10 to 24
25 to 49
68
72
77
72
32
28
23
28
Business Research by Years in

Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
100
81
74
72
0
19
27
28
Business Research by Respondent

Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
81
71
68
74
79
19
30
32
26
21
Business Research by Gender

Female
Male
70
76
30
24

57
TABLE 14
SELLING YOUR GOODS AND/OR SERVICES

Selling
%
36

Engaged
Planning
Consider
47
12
12
29

Planning
Consider
23
22
55

Planning
Consider
Not consider
17
12
71
Yes
%
No
%
Selling by Region
West
Ontario
Quebec
Atlantic
53
47
37
66
47
53
63
34
Selling by Number of Employees

4 or less
5 to 9
10 to 24
25 to 49
42
48
45
51
58
52
55
49
Selling by Years in Business

Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
0
61
55
44
100
39
45
57
Selling by Respondent Age

18 to 29
30 to 39
40 to 49
50 to 59
60 plus
47
46
43
53
47
53
54
57
47
53
Selling by Respondent Gender

Female
Male
44
49
56
51

58
TABLE 15
MAKING TRAVEL ARRANGEMENTS

Travel
%
37

Engaged
Planning
Consider
49
5
14
32

Planning
Consider
10
25
63

Planning
Consider
Not consider
15
16
70
Yes
%
No
%
Travel by Region
West
Ontario
Quebec
Atlantic
59
52
32
58
41
48
68
42
Travel by Number of Employees

4 or less
5 to 9
10 to 24
25 to 49
33
49
51
55
67
51
49
46
Travel by Years in Business

Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
0
42
50
49
100
58
50
51
Travel by Respondent Age

18 to 29
30 to 39
40 to 49
50 to 59
60 plus
55
44
48
53
42
46
56
52
47
48
Travel by Respondent Gender

Female
Male
51
47
50
53

59
TABLE 16
PURCHASING COMPUTER EQUIPMENT AND SOFTWARE

Purchasing
Computers and
Software
%
28
Engaged
Planning
Consider
37
4
12
47

Planning
Consider
6
19
74

Planning
Consider
Not consider
9
10
81
Yes
%
No
%
Purchasing Computers and Software

by Region
West
Ontario
Quebec
Atlantic
36
35
40
42
64
65
60
58

by Number of Employees
4 or less
5 to 9
10 to 24
25 to 49
26
39
37
42
74
61
63
58

by Years in Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
0
36
40
37
100
65
60
63

by Respondent Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
30
39
40
37
26
70
61
60
63
74

by Respondent Gender
Female
Male
29
46
71
54

60
TABLE 17
PURCHASING OFFICE SUPPLIES

Purchase
Office
Supplies
%
24
Engaged
Planning
Consider
31
7
13
50

Planning
Consider
9
18
72

Planning
Consider
Not consider
12
6
82
Yes
%
No
%
Office Supplies by Region

West
Ontario
Quebec
Atlantic
33
34
26
32
68
66
74
68
Office Supplies by Number of

Employees
4 or less
5 to 9
10 to 24
25 to 49
19
37
31
32
81
63
69
69
Office Supplies by Years in Business

Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
0
36
39
29
100
65
61
71
Office Supplies by Respondent Age

18 to 29
30 to 39
40 to 49
50 to 59
60 plus
39
28
30
26
32
61
72
70
74
68
Office Supplies by Gender

Female
Male
35
27
65
73

61
TABLE 18
FINDING A NEW SUPPLIER FOR GOODS

Finding
Goods
Supplier
%
35
Engaged
Planning
Consider
45
5
13
37

Planning
Consider
10
22
67

Planning
Consider
Not consider
21
15
63
Yes
%
No
%
Finding Goods Supplier by Region

West
Ontario
Quebec
Atlantic
41
42
54
47
60
58
47
53
Finding Goods Supplier by Number of

Employees
4 or less
5 to 9
10 to 24
25 to 49
37
40
51
48
63
60
49
52
Finding Goods Supplier by Years in

Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
67
52
44
45
33
48
56
55
Finding Goods Supplier by

Respondent Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
37
49
47
44
53
63
51
53
56
47
Finding Goods Supplier by Gender

Female
Male
38
53
62
47

62
TABLE 19
FINDING A CONSULTANT FOR SERVICES

Finding a
Consultant
%
20
Engaged
Planning
Consider
26
3
15
57

Planning
Consider
4
18
76

Planning
Consider
Not consider
12
10
78
Yes
%
No
%
Finding a Consultant by Region

West
Ontario
Quebec
Atlantic
23
25
26
37
77
75
74
63
Finding a Consultant by Number of

Employees
4 or less
5 to 9
10 to 24
25 to 49
24
27
24
26
77
73
76
74
Finding a Consultant by Years in

Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
0
32
28
25
100
68
72
75
Finding a Consultant by Respondent

Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
29
24
24
27
16
71
76
76
73
84
Finding a Consultant by Gender

Female
Male
26
25
74
75

63
TABLE 20
SENDING ELECTRONIC INVOICES TO CUSTOMERS

Electronic
Invoices
%
18
Engaged
Planning
Consider
23
8
19
50

Planning
Consider
10
22
65

Planning
Consider
Not consider
12
15
73
Yes
%
No
%
Electronic Invoices by Region

West
Ontario
Quebec
Atlantic
23
25
23
11
77
75
77
90
Electronic Invoices by Number of

Employees
4 or less
5 to 9
10 to 24
25 to 49
14
27
27
20
86
74
73
80
Electronic Invoices by Years in

Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
0
26
29
21
100
74
71
79
Electronic Invoices by Respondent

Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
29
23
20
23
26
71
77
80
77
74
Electronic Invoices by Gender

Female
Male
25
21
75
79

64
TABLE 21
RECEIVING ELECTRONIC BILLS FROM SUPPLIERS

Electronic
Bills
%
25

Engaged
Planning
Consider
33
6
17
44

Planning
Consider
9
23
66

Planning
Consider
Not consider
12
11
77
Yes
%
No
%
Electronic Bills by Region

West
Ontario
Quebec
Atlantic
37
31
30
34
63
69
70
66
Electronic Bills by Number of

Employees
4 or less
5 to 9
10 to 24
25 to 49
26
30
36
36
74
70
64
64
Electronic Bills by Years in Business

Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
0
36
35
32
100
65
65
68
Electronic Bills by Respondent Age

18 to 29
30 to 39
40 to 49
50 to 59
60 plus
26
30
36
38
47
74
70
64
62
53
Electronic Bills by Respondent

Gender
Female
Male
32
34
34
66

65
TABLE 22
ELECTRONICALLY PAYING BILLS THROUGH YOUR BANK

Electronic
Paying
%
29

Engaged
Planning
Consider
38
5
11
45

Planning
Consider
9
16
73

Planning
Consider
Not consider
11
14
76
Yes
%
No
%
Electronic Paying by Region

West
Ontario
Quebec
Atlantic
38
43
31
47
62
57
70
53
Electronic Paying by Number of

Employees
4 or less
5 to 9
10 to 24
25 to 49
23
42
35
47
77
58
65
53
Electronic Paying by Years in

Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
33
32
39
38
67
68
61
62
Electronic Paying by Respondent Age

18 to 29
30 to 39
40 to 49
50 to 59
60 plus
43
36
38
36
21
57
64
63
65
79
Electronic Paying by Gender

Female
Male
38
38
62
62

66
TABLE 23
PROVIDING CREDIT CARD INFORMATION FOR PURCHASES

Credit
Card Info
%
25

Engaged
Planning
Consider
32
3
10
55

Planning
Consider
5
12
81

Planning
Consider
Not consider
12
12
77
Yes
%
No
%
Credit Card Info by Region

West
Ontario
Quebec
Atlantic
35
34
26
37
65
66
74
63
Credit Card Info by Number of

Employees
4 or less
5 to 9
10 to 24
25 to 49
25
33
33
35
75
67
67
65
Credit Card Info by Years in Business

Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
33
19
31
33
67
81
69
67
Credit Card Info by Respondent Age

18 to 29
30 to 39
40 to 49
50 to 59
60 plus
35
30
32
34
32
65
70
68
66
68
Credit Card Info by Gender

Female
Male
28
36
72
64

67
TABLE 24
ELECTRONICALLY RECEIVING PAYMENTS

Receiving
Payments
%
23
Engaged
Planning
Consider
30
7
13
50

Planning
Consider
10
16
72

Planning
Consider
Not consider
12
12
76
Yes
%
No
%
Receiving Payments by Region

West
Ontario
Quebec
Atlantic
32
31
26
29
68
69
74
71
Receiving Payments by Number of

Employees
4 or less
5 to 9
10 to 24
25 to 49
22
31
28
36
78
69
72
64
Receiving Payments by Years in

Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
0
19
33
30
100
81
68
70
Receiving Payments by Respondent

Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
35
25
28
37
26
66
75
72
63
74
Receiving Payments by Gender

Female
Male
29
30
71
70

68
TABLE 25
TRACKING BANK ACCOUNT BALANCE

Tracking
Bank
Account
%
39
Engaged
Planning
Consider
51
5
8
36

Planning
Consider
11
14
73

Planning
Consider
Not consider
23
14
63
Yes
%
No
%
Tracking Bank Account by Region

West
Ontario
Quebec
Atlantic
57
52
43
63
43
48
58
37
Tracking Bank Account by Number of

Employees
4 or less
5 to 9
10 to 24
25 to 49
37
54
51
57
64
46
49
43
Tracking Bank Account by Years in

Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
33
36
51
52
67
65
49
48
Tracking Bank Account by

Respondent Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
49
49
55
52
32
52
51
45
48
68
Tracking Bank Account by Gender

Female
Male
50
53
50
47

69
TABLE 26
SUBMITTING A BANK LOAN APPLICATION

Bank
Loan
%
11

Engaged
Planning
Consider
15
3
14
69

Planning
Consider
3
14
81

Planning
Consider
Not consider
6
9
85
Yes
%
No
%
Bank Loan by Region

West
Ontario
Quebec
Atlantic
16
19
8
21
84
81
92
79
Bank Loan by Number of Employees

4 or less
5 to 9
10 to 24
25 to 49
17
19
11
15
84
81
89
85
Bank Loan by Years in Business

Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
33
10
19
14
67
90
81
86
Bank Loan by Respondent Age

18 to 29
30 to 39
40 to 49
50 to 59
60 plus
15
14
17
12
11
85
87
83
88
90
Bank Loan by Respondent Gender

Female
Male
17
13
83
87

70
TABLE 27
SUBMITTING TAX RETURNS TO THE GOVERNMENT

Tax
Returns
%
24

Engaged
Planning
Consider
31
5
14
51

Planning
Consider
7
17
74

Planning
Consider
Not consider
13
9
78
Yes
%
No
%
Tax Return by Region

West
Ontario
Quebec
Atlantic
42
35
16
29
58
66
84
71
Tax Return by Number of Employees

4 or less
5 to 9
10 to 24
25 to 49
25
33
33
30
75
67
67
70
Tax Return by Years in Business

Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
0
16
32
32
100
84
68
68
Tax Return by Respondent Age

18 to 29
30 to 39
40 to 49
50 to 59
60 plus
27
29
36
26
32
73
71
64
74
68
Tax Return by Respondent Gender

Female
Male
33
30
68
70

71
TABLE 28
REMITTING TAXES TO THE GOVERNMENT

Remitting
Taxes
%
15

Engaged
Planning
Consider
19
5
15
61

Planning
Consider
6
17
75

Planning
Consider
Not consider
12
9
80
Yes
%
No
%
Remitting Taxes by Region

West
Ontario
Quebec
Atlantic
21
24
11
21
79
76
89
79
Remitting Taxes by Number of

Employees
4 or less
5 to 9
10 to 24
25 to 49
16
19
19
21
84
81
81
79
Remitting Taxes by Years in Business

Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
0
16
21
19
100
84
79
82
Remitting Taxes by Respondent Age

18 to 29
30 to 39
40 to 49
50 to 59
60 plus
21
18
22
14
0
79
82
78
86
100
Remitting Taxes by Gender

Female
Male
23
15
77
85

72
TABLE 29
ACCESSING GOVERNMENT SERVICES

Accessing
Govt Services
%
45
Engaged
Planning
Consider
59
4
9
28

Planning
Consider
10
18
68

Planning
Consider
Not consider
23
17
60
Yes
%
No
%
Accessing Govt Services by Region

West
Ontario
Quebec
Atlantic
60
55
62
68
40
45
38
32
Accessing Govt Services by Number

of Employees
4 or less
5 to 9
10 to 24
25 to 49
45
55
61
71
55
45
39
29
Accessing Govt Services by Years in

Business
Less than 1 year
1 to 4 years
5 to 9 years
10 years or more
67
58
57
60
33
42
43
40
Accessing Govt Services by

Respondent Age
18 to 29
30 to 39
40 to 49
50 to 59
60 plus
50
58
67
57
68
50
42
34
43
32
Accessing Govt Services by Gender

Female
Male
56
63
44
37

73
8.0 SURVEY METHODOLOGY

The purpose of public opinion research is to identify perceptions within
reliable and statistical margins of accuracy. One thousand telephone
interviews with small businesses were administered by SES Canada Research
Inc. and completed across Canada between December 7th and December 15th
2000.
Key methodological highlights include:
! the national random sample of small businesses was based on
number of employees, business SIC and geographic postal
codes;
! the aggregate results are accurate to within 3.1 percentage
points, plus or minus, 19 times out of 20;
! only individuals who made decisions regarding the Internet at
the target businesses were eligible to participate in the survey;
! respondents in Quebec and New Brunswick had the option of
conducting the interview in either of Canadas official
languages;
! the interviews were completed by telephone during standard
business hours; and,
! ten percent of the fieldwork was validated.
This research project was completed in accordance with the standards of the
Professional Market Research Society of Canada.
8.1
Sample Selection
Effective survey research must be based on a sample truly representative of the

universe of interest. A multi-staged sampling technique was employed to
gather the data for this study. The essential feature of this procedure is that
individual respondents are predetermined by the selection procedure itself.
That predetermination is made by a careful speculation of a series of controlled
choices.

74
For the SES Web Entrepreneurship Survey the key choices for generating the
sampling universe included:
1. Identifying Canadian businesses with fewer than 50 employees;
2. Selecting Canadian businesses from relevant SIC categories;
3. Sorting Canadian businesses within the first two criteria geographically to
ensure geographic representation.
Once the sampling universe was drawn, SES employed a random start and
fixed interval method to select potential respondents (nth select). Each member
of the universe had an equal random chance of participating in the survey.
A total of 5,000 small businesses were randomly selected from the sampling
universe and 1,000 sampling spots were identified. All selected members of the
sampling universe who were not available were called back five times before a
sample substitution was initiated.
In order to ensure that appropriate individuals participated in the study all
potential respondents were screened to ensure that the person at the small
business interviewed was responsible for making decisions in regards to the
Internet.
The regional breakdown of the 1,000 respondents, based on the selection
procedures, was as follows:
! Western Canada (Manitoba, Saskatchewan, Alberta, British
Columbia, Yukon, NWT) 290 completions
! Ontario 350 completions
! Quebec 310 completions
! Atlantic Canada (New Brunswick, PEI, Nova Scotia and
Newfoundland) 50 completions
8.2
Confidence Limits
The sample of 1,000 Canadian small businesses produces results which are
accurate within 3.1 percentage points, plus or minus, nineteen times out of
twenty for aggregate data. Please note that the margin of error for sub-samples
may be higher.

75
One of the key sub-samples for the project involved differentiating between
Canadian small businesses based on their use of the Internet. For the subsample of 765 businesses who did use the Internet as part of their business the
results are accurate to within 3.6 percentage points, plus or minus, 19 times out
of 20. For the sub-sample of 235 Canadian small businesses who did not use
the Internet, the data is accurate to within 6.5 percentage points, plus or minus,
nineteen times out of twenty.
8.3
Field Procedures
Good research is predicated on the assumption that the fieldwork and resulting
data are sound. For that reason, SES Canada Research believes in a process of
multi-level training, including the provision of detailed instructions, practice,
supervision and continuous validation in order to maintain the highest levels
of research professionalism and productivity. To follow is a review of the
firms training, validation and coding procedures for the Fall 2000 SES Web
Entrepreneurship Survey.
8.4
Training
All interviewers at SES Canada Research are given extensive training before
working on any study. Fundamentally, there are four elements of interviewer
training at SES Canada Research:
!
!
!
!
general field training;

job specific field training;
training on questionnaire; and,
providing a full set of written interviewer instructions.
Topics covered in the general field training sessions include:

!
!
!
!
the role of the interviewer;

research confidentiality and the reason for it;
the importance of reading each question exactly as written;
the importance of recording the answers exactly as given to you by
the respondent; and,
76
! the art of not biasing the respondent.

Job specific field training for The SES Web Entrepreneurship Survey was
conducted by the project director. The purpose of this training was to provide
a consistent understanding of the project and the data collection phase. The
briefing included a review of the following areas:
!
!
!
!
!
!
study objectives;
methodology;
sample size and composition;
timing;
security; and,
questionnaire in detail.
The briefing was also used as an opportunity to answer any questions or clarify
any procedures. The project director reviewed each question in the interview
and indicated any areas that may be a challenge and how to handle any
problems if they arise.
For any open-ended questions, the project director reviewed the standard
methods of clarification to ensure that all interviewers clarified responses in a
uniform way to eliminate any interviewer bias.
After the job specific briefing was completed the project director conducted
training on the questionnaire. This provided the project director with the
opportunity to clarify instructions. All interviewers were matched into pairs,
with experienced interviewers paired with less experienced ones. At the close
of the briefing, interviewers who were comfortable with the questionnaire went
live. Interviewers went live only after the approval of the supervisor
present.
8.5
Validation
Throughout the data collection phase, 15 percent of each interviewers work

was monitored. Interviewers were graded to assess work completed.
Apart from monitoring 15 percent of each interviewers work, 10 percent of all
the interviews were validated independently by a separate verification team.
77
During the validation, respondents were contacted by telephone and asked to

verify that the interview actually took place. Respondents were then asked to
answer a few questions from the questionnaire in order to check the accuracy
of the data collected.
All field staff were advised of the validation procedures in order that a clear
understanding of the firms quality standards occurred.
8.6
Coding
Once the coding lists were developed, interview data was transferred to SPSS
in order to generate tabulations.
Once the interviews were completed, the questionnaires were coded and
entered into the system by experienced data entry staff who were specifically
trained for each project. The project director reviewed the coding procedures
to ensure they were consistent with the research objectives of the study. Each
coders work underwent a 15 percent verification.

78

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The SES Web Entrepreneurship Survey

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SES Canada Research Inc.

Nikita James Nanos

SES Canada Research Inc.,

The SES Web Entrepreneurship Survey

INTERNET & E-COMMERCE ACTIVITIES ............................................................................. 54

8.0 SURVEY METHODOLOGY ......................................................................................................... 74

The SES Web Entrepreneurship Survey

SCOPE OF INTERNET IMPACT ON BUSINESS ............................................................. 45

The SES Web Entrepreneurship Survey

1.0 EXECUTIVE SUMMARY

The SES Web Entrepreneurship Survey

Who are the Internet Users?

What Impact Will the Internet Have on Business?

Canadian entrepreneurs remain enthusiastic about the potential offered by the

How Big is the Small Business E-commerce Market?

While the number of businesses engaging in electronic commerce has not

What are Small Businesses Doing on the Internet?

Key Findings Fall 2000 Survey

The SES Web Entrepreneurship Survey

Key Findings Six Month Trends

The SES Web Entrepreneurship Survey

2.0 MARKET OVERVIEW

The SES Web Entrepreneurship Survey

2.1 Decision-maker Profile

Buying and Selling Using the Internet

The SES Web Entrepreneurship Survey

Past E-Commerce Activity

Both Business and

The SES Web Entrepreneurship Survey

Internet and E-commerce Usage -- by Survey

Comparison of Past E-commerce Activity

Both business and

Comparison of Past E-commerce Activity:

The SES Web Entrepreneurship Survey

The number of small businesses engaged in actively buying or selling through

Comparison of Future E-commerce Activity

Both business and

The SES Web Entrepreneurship Survey

Both business and

The SES Web Entrepreneurship Survey

Past and Future E-commerce Activity - by Survey

Spring 1999 Spring 2000 Fall 1999

Fall 2000 Spring 2000 Fall 2000

The differences in e-commerce activity between the different demographic

The SES Web Entrepreneurship Survey

Future Business E-commerce Activity - by Business Size

Both business and

The SES Web Entrepreneurship Survey

Size and Scope of Electronic Commerce Activities

Comparison of Location of E-commerce Activity

The SES Web Entrepreneurship Survey

Small Businesses Internet Purchases

Small Businesses Internet Sales

The SES Web Entrepreneurship Survey

Size of the Small Business E-commerce Market

Based on the dollar values that respondents ascribed to their e-commerce

Incorporating the Internet, and particularly e-commerce, into your business is

The SES Web Entrepreneurship Survey

Yes, has considered

10% 20% 30% 40% 50% 60% 70% 80% 90%