IN THIS week's visual case study (which can be accessed on http://www.irishtimes.com/business/education), we find out how Chris Watson transformed his family's bicycle business from a small local shop in Antrim into a global success by harnessing the power of the internet.
When Watson took over the saddle at Chain Reaction Cycles, he made the strategic decision to focus on high-end bikes. Supermarkets had entered the lower end of the market and it was getting harder to compete.
But, he recalls, "few people were specialising in high-end products, so we got a lot of the niche market very quickly". Rather than trying to develop the customer base by opening a chain of shops, he concentrated on developing an online sales channel.
"We went online about five years ago. It made us accessible to the rest of the world." The website, www.chainreaction cycles.com, is now available in four languages and the business has expanded into new areas such as snowboarding. As Watson has shown, the internet has the potential to revolutionise a business, but not all small businesses are as successful at leveraging this potential.
"A lot of Irish SMEs [ small and medium-sized enterprises] have websites," says Fergal O'Byrne, chief executive of the Irish Internet Association, an organisation that aims to increase the use of the internet as a business tool in Ireland.
"My concern is that they're not [ always] optimised to get them the best return on their investment. They've spent money on doing their website and some of them have been slow to see a return on that, possibly because they haven't devoted enough of their ongoing energy and resources into marketing the website."
A business may have a fantastic website but, unless it's marketed properly, it will languish unvisited in cyberspace.
"Five years ago, the feeling was that you just had to have a website and magically people would turn up," O'Byrne says. "There's too much competition now . . . so you have to have a good website, but you also have to drive traffic to the website in a proactive way."
Fortunately for small firms, there are cost- effective ways to market a website. Take Google AdWords, for example. A business can create advertisements and choose "keywords" - words or phrases related to that business. When people search on Google using one of these keywords, the advertisement will appear next to the search results. This type of advertising model is known as pay per click, as the business only has to pay when a user clicks on its advertisement.
According to Denis Hegarty of internet consultancy WSI, a common mistake is carelessness with the wording of the advertisement. If the words used in the advertisement do not match the searches carried out by your target audience, you won't get any results. O'Byrne has also noticed that a lot of Irish firms are starting to use social media sites such as Facebook to promote their business.
Simply directing traffic to your website isn't enough, though. Unless you can convert visitors into buyers, your marketing campaign will have been in vain.
The key, according to O'Byrne, is website usability. Simple things such as making the payment process easy can be effective in reducing the visitor "drop-out" rate. O'Byrne has one major caveat for small businesses hoping to sell online, however: he says they must have the necessary security measures in place and have a strong privacy policy.
Support panel Chain Reaction Cycles
This week's case study ties in with the following areas of the Leaving Certificate business studies curriculum:
Unit 2: Enterprise - Chris Watson displays a number of entrepreneurial characteristics, and explains the attraction of running your own business.
Unit 5: Expansion - Watson grew Chain Reaction Cycles from a small shop into a global business by identifying new markets, acting on initiative and developing an online sales channel.
