The new wave of web-based businesses look for a niche to attract customers and the lower startup costs can help them get up and running more quickly, say analysts.

"We're looking at a generation of entrepreneurs who have had a grounding in technology," said Info-Tech Research Group analyst George Goodall. "They have that savviness, they understand tech."

The spinoff from that era a decade ago has helped foster a real diversity in personal taste and what people are willing to pay for, helping web-based businesses, said Goodall, senior research analyst in London, Ont..

Some of these businesses also use social networking to find potential customers and spread the word about their sites.

Online job referral service Bohire.com is designed for social networking and wouldn't be in business without the Internet, says Vincent Tsang of the Toronto-based web company that has been up and running for almost a year.

Ten years ago, Tsang said he would have been calling "200 of his friends" to refer people to job postings.

"Do you know how long that would take me?" asked Tsang, the company's vice-president of business development.

Bohire works on a system of cash rewards for people who have successfully referred someone for a job and it gets a percentage of a fee if someone is hired. Tsang said the company has signed up more than 300 companies to post jobs on its site.

The weak economy is helping his business because Tsang said there are even more job seekers out there.

Other recent Canadian web-based startups include drugstore well.ca and cruise site Tripharbour.ca.

Canadians are becoming more comfortable buying online. Statistics Canada has reported that almost $12.8 billion worth of orders were placed online in 2007, an increase of 61 per cent from 2005.

IDC Canada analyst Kevin Restivo said it's relatively easy to start a web-based business and entrepreneurs have figured that out.

"All you need is a home office and an Internet connection, a computer and perhaps some web development skills," Restivo said. "Hosting space for your storefront is cheap."

The challenges for Canadian web startup businesses are getting financing in this economy and finding a niche as the market becomes more saturated, he said.

The head of online shopping site Wishabi.ca left a job in business development at Microsoft to start the Toronto-based site. Wishabi.ca also uses social networking and has tailored itself to how Canadians like to make their purchases.

CEO Wehuns Tan, an engineer by training, said the slowing economy wasn't a factor.

"In a downturn, it's actually one of the best times to start a company because everything is shrinking, but that means competition is shrinking," said

Tan said he also believes a weak economy helps keep employees loyal and "gets the right people on the boat" to build the company.

He also noted how much cheaper technology has become over the last decade, making it possible to outsource looking after the website and eliminate expensive purchases of equipment which lower startup costs and help get businesses online faster.

Lynda Leonard of the Industry Technology Association of Canada said the growth of web-based businesses is set to continue because laid-off employees with entrepreneurial skills will recover.

"These people just don't go away to golf courses," said Leonard, senior vice-president of the Ottawa-based organization.

Copyright The Canadian Press