Offline firms 30% more likely to fail

Businesses that do not trade online are 30% more likely to fail, a new report has claimed.

Businesses have been told they must do more to provided customers with easy online access to products and services if they want to ensure long-term survival.

Some 33 million consumers made an online purchase last year, an increase of 21% on 2008, according to accountancy and advisory firm RSM Tenon. However, half of small businesses still do not have any kind of web presence.

Tenon figures suggest that 6% of all 2009 insolvencies were in the retail sector and the firm estimates that businesses could lose as much as 37% of additional annual revenue by not trading online.

“Even a basic online service can make a considerable difference to businesses,” said Carl Jackson, head of recovery at RSM Tenon.

“Online operations are cost-efficient to run and can substantially increase a firm’s revenue stream by expanding its customer base.”

Jackson said many firms had underestimated the importance of providing a sufficient online offering.

He added: “The recession may have officially ended but conditions remain tough for businesses. It is vital that owners-managers take advantage of every opportunity to increase cashflow levels in order to weather the difficult year ahead.”

© Crimson Business Ltd. 2010