IT and Business Insights for SMB Solution Providers

Home-Based Businesses Ready To Spend In 2009

Home-based businesses will increase IT spending to $1.3 billion in 2009, says Jacqueline Atkinson of AMI-Partners. Find out what is driving that investment and how you can capitalize on it. By Cecilia Galvin

The economy notwithstanding, home-based businesses (HBBs) in the United States are on target to increase spending to $1.3 billion on IT security and storage solutions in 2009, according to a new study by research firm AMI-Partners. To find out what's driving that sizable investment, Executive Editor Cecilia Galvinalvin spoke with Jacqueline Atkinson, research analyst at AMI.

ChannelPro-SMB: First, how do you define an HBB, and how many are there?

Atkinson: There are close to 15 million home-based businesses in the United States, and they are owned by someone who works full- or part-time on a primary, income-generating business from the home. It's not what they do after work.

ChannelPro-SMB: If the economy continues to sour, will there still be serious spending by HBBs?

Atkinson: Yes, because you have to look at what these HBBs are purchasing: security and storage. They're not spending lots of dollars on different solutions. So if you have one that spends about $1,500 to $2,000 on IT and telecom, that's quite significant because of the sheer size of the market.

ChannelPro-SMB: Why the spending increase on security and storage?

Atkinson: There are a lot of things, but one of the biggest is the expanded use of the Internet. A lot of HBBs are trying to legitimize their businesses by adding a Web site and doing e-commerce to extend their business reach. So they use the Internet more, even when it comes to deploying applications. With this increase in Internet use, HBBs are becoming more aware of security issues. Just storing and securing customer-sensitive data or even personal information becomes more relevant for them.

Also, nearly 40 percent of HBBs experienced loss of company data as the result of an electronic attack, and 33 percent had hard drive failures. Now you can get PC systems with so much capacity that you end up storing more and more things on them. So rather than put the company at risk of losing information, they are turning to these systems to keep that from happening.

Home-based businesses are now very heavily reliant on compact discs and external disk drives for storage, but the trend is toward off-site, online storage solutions'the remote handling of their documentation and things like that.

ChannelPro-SMB: Was there anything in the study findings that surprised you?

Atkinson: Most surprising was of the home-based businesses that experienced a loss due to attack or hard drive failure, it cost them an average of $690 to try to recover or save some of their data, or make another equipment investment. When you think about how much it costs to get a subscription to an anti-virus security solution online, $690 is a significant loss for an HBB. So not only are they seeing the advantages, but in hard dollars they see this as a reasonable investment, and one that may even be less expensive than risking data loss.

ChannelPro-SMB: Do you have any advice for solution providers that might target this market?

Atkinson: They have to start looking at HBBs more like microbusinesses. People try to align HBBs with someone who has a consumer mindset. And while with some IT telecom solutions they do, with others they resemble more of a business that's run in a commercial setting, and they handle a more vast number of customers. There are a lot of sophisticated HBBs. The average revenue of a PC-owning HBB is $106,000 per year. There's room there to make significant IT investments.

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