FEATURE
PAPER
An
Incremental E-Commerce Model and Planning Guide for the
Small Firm
The
following paper was presented at the 2006 USASBE/SBI Conference.
It was written by Diana Maguire, Richard Nelson, and Don
Lewicki of University of Pittsburgh at Bradford.
Abstract
This paper emphasizes
an iterative approach to E-business. It offers a “maturity
model” advancing the notion that a
firm may adopt E-business incrementally. It provides a logical
series
of steps as a firm moves toward full E-business functionality.
Beyond offering this model as a
guide through the various phases of the process, the paper
suggests crucial issues that overlay the
typical small firm’s consideration of E-business. Among
these are the following: the critical
importance of a firm’s assessment of it customers and
a genuine understanding of its competitive
position; the often exaggerated view of the costs, risks, and
the degree of expertise required for
initial steps into E-business; and the need for an informed
approach when a firm evaluates
proposals by external providers of IT and management consulting.
Executive Summary
This paper offers a planning guide
intended for the small firm in the form of an E-commerce
maturity model. The model reflects the launch of E-commerce as an incremental
or iterative
approach. The paper suggests a series of critical questions that should be
posed at each stage.
This guide stresses a requirement that the most elemental functions of a small
firm – e.g.,
manufacturing and sales – should be tied to the creation of a Web site
and the management of
that site. As a firm move through the model and into the final stage or “level”,
a somewhat more
sophisticated view of implementation is offered, including the likely union
with ERP and SCM
systems.
The paper attempts to strike a
balance between two extremes. On one hand, some firms are
unable to begin the process for fear of neglecting some possible contingency.
At the other
extreme are those firms that reflexively jump into E-business without sufficient
preparation.
Critical issues implicit in this
guide include the following:
1. E-business success is often a function of the accuracy of a firm’s
assessment of it customers
and a genuine understanding of its competitive position.
2. Small firms typically have an exaggerated view of the costs,
risks, and the degree of expertise required for initial steps into
E-business.
3. Successful uses of the Web are carried out as an extension
of the firm’s
core activities, rather
than as discrete or separate projects.
4. This guide is designed to assist
a firm in the evaluation of the following: its strategy for
launching an E-commerce initiative; its internal capability
to do so; and proposals by external
providers of IT and management consulting.
Read
the Entire Paper...
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TIP
OF THE WEEK
Accounts
Receivable
The first place to look for ways to improve cash
flow is in accounts receivable. The key to an effective cash-flow
management system is the ability to collect receivables quickly.
If customers abuse your credit policies by paying slowly, any
future sales to them will have to be COD (cash on delivery)
until they prove that you will receive your money in a reasonable
amount of time.
Receivables have inherent procedural problems in most small businesses.
Information often gets lost or delayed between salespeople, shipping departments,
and the accounting clerks who create the billing statements. Most firms
bill only once a month and may delay that step if workers are busy with
other activities.
Managing your accounts receivable is an important step in controlling
your cash flow. You need a healthy stream of cash for your small business
to succeed. The following tips can help you accelerate the flow:
• Establish
sound credit practices. Never give credit until you are comfortable with a customer's
ability to pay. You can get a credit
report from Dun and Bradstreet to indicate a purchasing
company's financial health.
• Process
orders quickly. Ensure that each order is handled on or before the date specified by
the customer. Unnecessary delays can add
days or weeks to a customer's order.
• Offer
discounts for prompt service. Give customers an incentive to pay sooner. Trade discounts
typically amount to 1 to 2 percent if the
bill is paid within ten days.
• Aggressively
follow up on past due accounts. Call the customer as soon as a bill becomes
past duel ask when payment can be expected.
Keep a record of conversations and customer responses,
and follow up. For customers with genuine financial problems, try to
get even a small
amount each week.
• Deposit
payments promptly. Accelerate receipt of checks by using a bank lockbox.
• Negotiate
better terms from suppliers and banks. Improving cash flows also includes money going
out.
• Keep a
tight control on inventory. Items sitting in inventory tie up money that be used elsewhere.
Be sure that deep discounts on volume
purchases can be financially justified by the drain they
will put on cash flow.
• Review
and reduce expenses. Take a hard look at all expenses. What effect will an expense have on
your bottom line?
• Pay bills
on time, but not before they are due. Unless you receive enough trade discount
incentive to pay early, don't rush to send payments.
• Be smart
in designing your invoice. Make sure that the amount due, due date, discount for
early payment, and penalty for late payment
are clearly laid out.
Timothy
S. Hatten. Small
Business Management - Entrepreneurial and Beyond
3rd Edition.
2006. Houghton Mifflin Company. pg 239-240.
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ANNOUNCEMENTS
Request for
Papers & Reviewer Volunteers
The
Small Business Institue is now requesting papers and paper
review volunteers for the Small Business Institute Journal.
If you are interested in submitting a paper or becoming a
volunteer, please let us know. The first issue
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here or email us at sbij@uca.edu.
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CONFERENCES
AACSB
|
| Who: |
AACSB
Communications
|
| What: |
World
Class Practices in Management Education
|
| Where: |
Beijng,
China |
| When: |
May
20-22, 2007 |
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USDC
|
| Who: |
U.S.
Department of Commerce
|
| What: |
Inaugural Americas Competitiveness
Forum
|
| Where: |
Atlanta, Georgia, USA |
| When: |
June
11-12, 2007 |
|
|
|
ICSB
|
| Who: |
International
Council for Small Business
|
| What: |
World
Conference
|
| Where: |
Turku,
Finland |
| When: |
June
13-15, 2007 |
|
|
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ASBBS
|
| Who: |
American
Society of Business and Behavioral Sciences
|
| What: |
10th International Conference
of the American Society of Business
|
| Where: |
Waikiki Beach, Hawaii, USA |
| When: |
June
28-30, 2007 |
|
|
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MEI
|
| Who: |
MEI
|
| What: |
3rd
International Symposium on Management, Engineering
and Informatics
|
| Where: |
Orlando,
Florida, USA |
| When: |
July
8-11, 2007 |
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CALLS FOR PAPERS
TAPMI
|
| Who: |
International
Research Meet on ‘Entrepreneurship in India & China’&
TAPMI-Alumni Entrepreneurs’ Meeting |
| What: |
Entrepreneurship
in India and China
|
| Where: |
Hotel Valley View, Manipal, Karnataka State (India) |
| When: |
December
14-15, 2007 |
Submission
Deadline:
May 15, 2007
|
|
|
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ASBBS
|
| Who: |
American
Society of Business
and Behavioral Sciences |
| What: |
10th
International Conference of the American Society
of Business
and Behavioral Sciences
|
| Where: |
Waikiki
Beach, Hawaii, USA |
| When: |
June
28-30, 2007 |
Submission
Deadline:
May 20, 2007
|
|
|
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USASBE
|
| Who: |
United
States Association for Small Business and Entrepreneurship
|
| What: |
USASBE
2008 Annual Conference
|
| Where: |
The
Westin La Cantera Resort - San Antonio, Texas |
| When: |
January
10-13, 2008 |
Submission
Deadline:
August 15, 2007
|
|
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ACME
|
| Who: |
Association
of Collegiate Marketing Educators
|
| What: |
Annual
Meeting
|
| Where: |
Hyatt
Regency, Houston, Texas, USA |
| When: |
March
4-8, 2008 |
Submission
Deadline:
September 30, 2007
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