SmallBizResource Blog -- Research

Home-Based Businesses & Web Apps: We've Only Just Begun

Posted by Gayle Kesten Tuesday, Mar 17, 2009, 03:34 PM ET

The cloud-based software-as-a-service (SaaS) model can go a long way to level the playing field for small businesses, which are getting their hands on useful applications for their growing companies minus the headaches and high cost of ownership. And by small businesses, remember that includes those based at home.

In its just-out report, "2008-09: U.S. Home Based Business Market Overview -- Impact of Economy: Changing Dynamics, Opportunities & Challenges," AMI says online software services aimed at home-based businesses (HBBs) represent a fertile field for SaaS providers: "SaaS applications such as accounting/finance applications, online data storage/backup and contact management will continue to gain traction. Other SaaS applications, such as project management, payroll, time, travel/expense management and Web conferencing/document sharing, are gaining popularity."

I've written about such applications here on SmallBizResource; so has sister site bMighty -- most recently accounting apps like Outright and IAC-EZ, and data backup app Egnyte. But while the cloud is clearly in our view, AMI says SaaS is still in its infancy, with 15% market penetration and 13% planned penetration.

Assuming in-search-of-new-revenue-streams software vendors are paying attention, I think it's safe to say more Web-based goodies will be raining down on us.

"Today's economic reality is driving businesses of all sizes to seek the most cost-effective and easy ways to use and manage IT solutions. This is especially true for HBBs that have bare-bones or no IT support. SaaS offerings fit the bill as HBBs look for solutions that are both appropriate to their needs and do not require significant upfront financial investment," according to Sau Lam, the AMI-Partners senior analyst who wrote the report, in an statement.

AMI, which surveyed 529 primary business decision makers or owners of PC-owning HBBs, defines its respondents as "income-generating entities operated from the home" on either a part-time or full-time basis. The category doesn't include telecommuters, those with formal work-at-home arrangements with their employers, or after-hours work done at home. As for a quick composite of an HBB -- 16.8 million in total, according to AMI:

• 58% are sole proprietors
  
• nearly three-quarters work full-time
  
• more than two-third of them are male
  
• the majority of their businesses are in retail (23%), professional business services (20%), and "other" services like tourism, childcare, and hospitality (27%)
  
• the average revenue is $108,000, through the majority of respondents (32%) say that figure falls in the $25,000 to $49,999 range.

One finding that stood out to me: Despite all the talk about the growing number of displaced workers who are launching their own businesses, a mere 5% of survey takers said that's why they started an HBB. The top five reasons before that one:

• Entrepreneurial mindset/freedom to run one's own business: 30%
  
• Work-life balance - more control over person/family time: 19%
  
• Greater financial opportunity: 16%
  
• Passionate about new business/data: 12%
  
• Greater independence from corporate bureaucracy: 12%

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