Small business owners may be wondering how important a Web site really is to their business. The short answer is, it depends.

For some small businesses, having a presence on the Internet can be an incredibly cost-effective way to expand their pool of customers and increase revenue. For others, a Web site can be just one more expense whose maintenance requirements outweigh the benefits to the company.

No matter what your company does, realistically weighing the potential costs and benefits of a Web site is an important step in determining your business and marketing strategies.

On one hand, developing a functional, professional-looking Web site is rarely cheap, and making sure that it’s constantly up to date requires a regular commitment of time and resources. On the other hand, a Web site can help your business:

• Generate awareness
• Conduct transactions online
• Improve communication with your customers
• Increase its competitive advantage

Generating awareness

In many ways, customers today use the Internet the way they rely on yellow pages listings. Having a Web site for your business means customers can have access to information about your products and services 24 hours a day, seven days a week. Depending on the nature of your business, this feature can be either a “nice-but-not-necessary-to-have” or an extremely effective way to generate new business.

For example, a small café well established with local residents would probably only see incremental increases in traffic if it created a Web site. On the other hand, a new bakery that specializes in wedding cakes could become more of a destination by developing a site that people could find when searching for wedding cake bakers in their neighborhood.

Companies that offer specialized or shippable products also may find a Web site can expand their typical customer base. Small business owners who sell unusual collectibles, for example, would likely be of interest to customers all over the country who would be more than willing to pay for shipping and handling costs. In such cases, the awareness that a Web site could generate could yield profitable returns that far outweigh the initial investment.

Conducting transactions online

Certain products and services lend themselves well to Web-based transactions. Amazon.com, the mega-online book retailer is the most obvious example of an extremely successful direct-selling retailer: selling books, CDs and other easily shippable products directly through the Web has made the company a leading online retailer.

Small businesses also can do direct sales over the Web, but set-up and maintenance costs are significantly higher than for a basic Web site. If your budget does not allow for direct sales, your business still can reap the benefits of conducting business online by providing order forms on the Web that can be phoned, faxed, mailed, or e-mailed to your company.

Improving communication with customers

Depending on how you currently stay in touch with your customers, a Web site can be an excellent way to keep your customers informed and maintain ties with them. Web sites instantly provide answers to the questions customers ask you most frequently and can keep your them notified of the most current product prices, class schedules, store hours, or delivery information. Customers then can access this information any time day or night.

Having a Web site also facilitates communication through e-mail, providing your customers one more way to reach you around the clock at their convenience – and providing you with an inexpensive way to reach virtually unlimited numbers of customers simultaneously.

Do you regularly mail information about promotions and products to your customers? Do customers regularly contact you for information about your business? If so, developing a Web site and utilizing e-mail can save you time and money.

Increasing competitive advantage

One of the most interesting effects of the Web on businesses has been its ability to level the playing field, so to speak. On the Internet, a large corporation takes up no more real estate and does not necessarily command any more importance than a one-person shop run out of a garage. If your business involves selling similar products and services as much larger competitors, taking your business online can be an important way to stay competitive.

Making the decision

While the potential benefits of a Web site are numerous, the reality is small business owners have more limited budgets and must consider the decision more carefully. Unless you have specialized resources and equipment in house, chances are your business will turn to outside vendors to design and host your Web site.

Rates and services vary widely among vendors. Finding out about other business owners’ experience can be incredibly helpful in negotiating this process. Spend some time talking to business owners whose companies are similar in size to yours. Ask about their experiences with hosting services and see who they recommend you use.

If you decide to move forward with building a Web site, think carefully about what you want it to accomplish, but build it from your customers’ perspective, not yours.

Finally, think about how you will maintain the Web site and keep it relevant to customer needs. Very few sites need to be updated daily, but at the very least, all the information on your site needs to be accurate and up to date. Will you have the time to do that maintenance yourself? If not, do you have a specific person who can, or are you willing to pay an outside firm to do so?

Web sites are far more than just online brochures. By realistically assessing your ability to develop and maintain a quality site, you can successfully harness the benefits of technology to boost your growing business.