***Update: Our 2012 Top 10 Small Business Trends List is now available***
It's prediction season and we've prepared our annual top 10 small business trends list. The economy is obviously the key issue facing small business in 2009. With the global recession and economic turmoil as our back drop, here is our list:
1. The Recession Drives Small Business Innovation: With the economy mired in a deep recession, small businesses will focus on cash flow, cost containment, customer retention and survival. But economic stress will also lead to a wave of small business innovation. Driven by the need to improve productivity and increase customer value, small businesses will re-evaluate, re-design and refine their products, processes and business models. Despite the adverse economic climate, innovation will create new opportunities for many small businesses.
2. Government Plays an Increasing Role in the Economy: Economic turmoil, corporate malfeasance and regulatory failure are leading to much greater government intervention in the economy. While we believe that the long term, global trend towards market capitalism continues to be strong, governments around the world will take a more active role in managing and regulating their economies. Small businesses will need to be aware of federal, state and local government policy and program changes and their impacts.
3. Global Infrastructure Spend: President-elect Obama and his transition team are preparing a massive, $850 billion economic recovery package. China, Japan, the EU and other countries are also developing large infrastructure spending programs. In the US bridges and roads, alternative energy, transportation, clean tech and education will likely see substantial federal spending increases with the impacts likely being felt in the second half of 2009. Small businesses will benefit directly through government contracting programs targeted at them and indirectly through providing goods and services to larger firms.
4. The Number of Small Businesses Will Increase in 2009: With job losses high and traditional employment options limited, many will turn to self-employment and small business in 2009. The prior three recessions have seen small business formation rates increase. And with it easier and cheaper than ever to start small or personal businesses, we expect a strong year for small business formation – especially personal businesses. Failure rates will also increase, but not enough to offset the number of new small and personal businesses.
5. Small Business Globalization Will Temporarily Slow: While we believe the long- term trend towards small business globalization is still strong, we expect small business globalization to slow in 2009. The primary reasons are the global economic slump, turmoil in currency markets and small businesses focusing on local markets. We expect small business exports to pick up in late 2009 as the global economy starts to recover.
6. Baby Boomer Retirement Problems Will Lead to Increased Interest in Small Business: We’ve long forecasted that baby boomers will stay in the workforce past the traditional retirement age. Current economic turmoil makes this trend even stronger. Baby boomer retirement has taken a series of major blows. The value of their homes, retirement savings and inheritances has all declined substantially. Many have lost or will lose their jobs. Boomers will have to extend their working years and small and personal businesses will be their best, and in many cases, only option.
7. Generation Y Will Turn to Small Business: Gen Y will continue to be be more entrepreneurial than youth in recent generations. The economic slump will make this trend stronger as many Gen Yers face limited traditional employment opportunities. With their risks and opportunity costs relatively low, many Gen Yers will choose to start or work for small or personal businesses.
8. Mobile Computing Continues Strong Growth: On our list last year, mobile computing is entering the US mainstream. Notebooks outsold desktop PC’s in the second half of 2008, smart phones sales continued their rapid growth and millions of netbooks (very small personal computers designed primary for mobile internet access) were sold. Adding the continued rapid growth of navigation systems, location-based services and mobile search results in mobile computing having a major impact on small businesses in 2009.
9. Cloud Computing Continues Strong Growth: Another trend that was on our 2008 key technology trends list. Cloud computing offers too many small business benefits not to continue its strong growth in 2009. In particular cloud computing lowers capital costs and turns fixed costs into variable costs – two powerful attributes that are very attractive in a down economy.
10. Small Businesses Will Expand Their Use of Online Marketing Tools: Despite the economic downturn, we expect the small business sector to increase its use of online marketing tools and methods in 2009. Online marketing is cheaper and often more effective than traditional approaches. And although online marketing can be complex, many tools and methods are accessible to DIY small business marketers. With small businesses focused on customer acquisition and re-defining their business methods, we expect their use of online marketing to grow in 2009.