Small Business Labs

Beauty Trends for 2012

We like following industry specific trend sources.  They provide a different perspective on the general trends likely to impact small business.  Because of this, we were quite excited by this month's trends articles in Beauty Store Business Magazine.

The beauty store industry is quite big.  According to the U.S. Census Statistics of U.S. Businesses (2009), about 1,000,000 Americans work for the roughly 170,000 shops and businesses that provide beauty services. 

This includes barber shops, beauty salons, nail salons and hair, nail and skin care services (for those of you into government data, NAICS codes 812111 - 812113). 

December's issue of Beauty Store Business magazine has several articles on beauty trends.  Retailers Have the Ball describes the changing nature of the retail beauty industry and the growing role technology is playing.  Key summary quote from the article:

"... consumers are still insecure about spending; the luxury market is taking off; technology is increasingly integral to retailing; consumers are starting to keep it local."

5 Beauty Trends, from the same issue, covers the 5 key product categories expected to be important in 2012. 

As an aging baby boomer I can most relate to the trend towards at-home skin care.  Boomers are increasingly worried about aging and looking old.  This is leading to a boom in anti-aging products.

Beauty trends are important for several reasons.  They reflect consumer trends in general.  They reflect what is going on in retail -and especially small retail - and they show the growing role technology is playing across the economy. 

Check out the articles for more details. 

Non-Profit Sector Added Jobs During the Great Recession

Non-profits were hit hard by the Great Recession.  But despite the negative impact of the recession on grants, donations and other sources of funds, the overall sector managed positive job growth from 2008 to 2010.

The chart below, from the Johns Hopkins Non-Profit Economic Data Project, shows that while non-profit job growth slowed, the sector way out-performed the for-profit sector of the economy.

 

The non-profit segment is large, employing 10.5 million U.S. workers in 2010.  This is roughly the same size as the oil and gas industry.  About 50% of non-profit employees work in health care, with education (13%) and social services (11%) also large sectors.

Few non-profits are large (more than 500 employees) and these are mostly hospital chains and universities.  The vast majority of U.S. non-profits have less than 20 employees and the growth of social entrepreneurship helped lead to this increase in jobs. 

See our Overview of the Non-Profit Sector for more details. 

The What Workers Want Disconnect

The Towers Watson 2011/2012 Talent Management and Rewards study has some fascinating insights on the disconnect between what workers want and what employers think they want.

As can be seen from the chart below, the biggest disconnects are around job security and stress. 

Workforce has a good article on the study and this topic.  Key quote on their explanation of the disconnect:

"Why are employers burying their heads in the sand on job security and stress? It may be that companies feel powerless to do much about either. They can't guarantee absolute job security in an uncertain economy and may feel compelled to demand more and more of their workforce to stay afloat."

The lack of job security and increase in workloads and employment stress - the Workforce article calls this the "work-more economy" - are drivers of the growing interest in becoming independent or starting a small business. 

The Rise of Big Coworking

The recent European Coworking Conference was hosted by two coworking spaces, Club Office and Betahaus.  Both of these are very large compared to most coworking facilities.

Betahaus is housed in a 4 story building and has a cafe, several floors of open coworking space and a big events space on the top floor.  I didn't find out their exact size, but my guess is they have around 10,000 square feet. 

Club Office is even bigger.  It's a 9 story building with over 80,000 square feet housing multiple coworking spaces, a restaurant, events spaces, traditional office space and even hotel rooms.  The building is so big and so much is going on it's a bit overwhelming. 

To put this in perspective, most coworking facilities are between 1500 and 5000 square feet and most have fewer than 60 members. 

Here in the U.S., WeWork has established large coworking facilities in New York and will soon open a large facility in San Francisco.  They just secured 74,000 square feet in a NY building and their SF location will have around 50,000 square feet.  Like Club Office, WeWork is a hybrid with coworking spaces mixed in with more traditional office space and capable of hosting hundreds of members.

We think the emergence of Big Coworking is an important development for the coworking movement.  It's hard to see how the industry and movement could scale and serve a large segment of the potential market with just small spaces. 

After all, even if there were 11,000 U.S. coworking spaces - roughly the number of U.S. Starbucks - with 50 members, they would only be serving 550,000 workers.  This is less than 1/2 of 1% of the U.S. workforce and less than 4% of the number of independent workers. 

While we believe small spaces will continue to thrive, larger spaces are going to be required for coworking to reach the mainstream.  Larger spaces provide alternative and potentially more lucrative business models, appeal to and tap into the real estate industy, and will make corporations more comfortable with coworking. 

The rise of Big Coworking is yet another signal that coworking is at a growth inflection point. 

Is 3D Printing the Future of Small Manufacturing?

3D printing is similar to paper printing, except the printer creates 3D objects by spraying layers of plastic, metal or ceramics into shapes. 

The technology has been around for a long time, but reductions in costs and improvements in sprayable materials is making it viable for a growing number of small manufacturing and personal production applications.

There's been a spurt of press around this topic of late:

Shapeways, a leader in personal production using 3D printer technology, has announced the opening of a New York city production facility.  Shapeway users will be able to create their designs online and have them printed (manufactured) by Shapeways 3D printers in their new facility. 

Shapeways has a nice video (at bottom of page) showing how 3D printing works.  You can also take a look at their marketplace to see and purchase printed products. 

Also, the Institute for the Future has an excellent, if challenging to navigate, website on 3D printing.  It's called The Future of Open Fabrication and it's well worth wading through. 

The recent article A Strategist's Guide to Digital Fabrication, from Strategy + Business, is another good resource on this topic. 

3D printing gets a lot of press as the future of manufacturing.  We agree it will play a key role in the future, especially for small run manufacturing.  But it's just one of many technologies making small and personal manufacturing more viable.  We cover these in our small manufacturing category. 

For more on this topic, see our 3D Printing Comes of Age post from last year. It covers 3D printing in more detail and has links to other resources on 3D printing. 

For Retirement, 80 May be the New 65

We've long been forecasting and writing about the growing trend of Americans working past traditional retirement age. 

But even we're surprised by a Wells Fargo survey showing that 75% of Americans plan to work in their retirement years - and 25 percent saying they'll need to work until at least age 80 because they will not have enough money to retire comfortably. 

According to a Business Week article on the study, this means 80 is the new 65. 

I haven't had a chance to review the entire survey, but 75% saying they plan on working in retirement is quite a bit higher than 55%-65% shown by past surveys on this topic. 

Also interesting is only 35% said they'll work because they want to.   Past surveys have had this percentage closer to 50%. 

These results reflect the realities of the Great Recession and the related downturns in the housing and stock markets.  For good or bad, many Americans are waking up to the reality that they aren't financially prepared for retirement.

The good news is at least one group of seniors is happy to still be working.  The survey results from the MBO Partners State of Independence study (Emergent Research partnered on this study) reflect this. 

Over 90% of senior independents (freelancers, contractors, consultants, etc. aged 65+) reported being highly satisfied with their work.

Let's hope others find similar work satisfaction levels in the coming years.

Startup Accelerator Dogpatch Labs' Impressive Numbers

Polaris VC Dave Barrett's A Deep Dive Into Dogpatch Labs provides an interesting view and set of numbers on the startup accelerator.

According to Dave (who is a former Lotus collegue):

• To date, over 350 emerging companies have been residents.
• Right now, there are more than 70 teams in the Labs.
• Team quality has never been higher & incredibly-interesting stuff is being worked on.  The waiting lists in each location range from over 60 to over 100 interested teams.
• About 100 total DPL companies — or about one third — have received funding. Rounds have ranged from $100K to $10M.

The article also says that Polaris - who started Dogpatch Labs several years ago - has invested in about 10% of the resident companies.

One of the most interesting aspects of the article is Dave's focus on the importance of community in making Dogpatch Labs a success.  Key quote:

"... we believe that a fundamental part of Dogpatch’s value comes from catalyzing connections between innovators & their peers, advisors and investors.  Lots of entrepreneurs & their friends. Polaris’ network.  Other networks. And other investors ... We’ve put a lot of emphasis on building strong @dogpatchlabs communities ..."

This, of course, is pretty much the same thing you hear when you ask coworking facility owners about the importance of community.

Dogpatch Labs is a good example of how startup accelerators and business incubators are embracing coworking and communities to build businesses.  Yet another reason why we think coworking is at a growth inflection point. 

Using Satellite Imagery for Investment Analysis

DigitalGlobe is a fascinating company.  According to their website:

DigitalGlobe owns and operates the most agile and sophisticated constellation of high-resolution commercial earth imaging satellites. Add to that our aerial program offering wall-to-wall coverage of the U.S. and Western Europe.

DigitalGlobe's imagery has mostly been used to study the physical world.  Their primary applications include identifying natural resources, understanding the earth’s environmental condition, responding to emergencies and natural disasters and studying crop or land conditions.

But they've expanded their product line to include investment analysis.  They recently did a study of parking lot traffic patterns at Walmart stores across the U.S. and found that traffic to the stores increased modestly in October. 

According to their analysis traffic fell in both August and September, so October showed a positive turnaround (and yes, the pun was intentional if not good). 

**Update - Walmart reported a revenue turnaround in Q3 as predicted by DigitialGlobe**

This is a great example of how Big Data and related analytics are fundamentally changing business and how we work. 

It's also an example of how actual data is replacing surveys and other forms of market research.  In the old days (say 5 years ago), to understand traffic patterns at Walmart a research firm would sent people to a subset of Walmart stores to count cars.  Using this subset they would've projected traffic for the entire chain.

This approach has a number of drawbacks relative to using satellite imagery.  It's slower, more expensive and prone to errors (do you really think those folks kept an accurate count of cars over the course of a couple of days?). 

The rise of the cloud and Big Data is leading to many situations where actual data is replacing surveys, government data and other forms collected market research data for use in analytical applications. 

We see this in our own work.  We are increasingly analysing actual data related to small businesses instead of survey data.  Payroll and financial data are good examples.  Intuit now provides both aggregate actuals for both data types and we use this data instead of government data.

The shift to Big Data-based actual data is a trend that will continue to grow.

Gartner's Top 10 Strategic Technologies for 2012

Gosh, is it already time for 2012 top 10 prediction lists?  I guess so since Gartner recently released their list of the top 10 technologies and trends they think will be strategic for most organizations in 2012.

Gartner's top 10 are:

1.  Tablets:  No great shock here, tablet sales are booming.

2.  Mobile-Centric Applications and Interfaces:  Good quote on why this is important - "The user interface (IU) paradigm in place for more than 20 years is changing. UIs with windows, icons, menus, and pointers will be replaced by mobile-centric interfaces emphasizing touch, gesture, search, voice and video."

3. Contextual and Social Experience:  Fancy name for computers and programs being aware of the user's context and using that information to improve the experience or results.  Local search is an example.  The program knows your location and uses that information to improve search results.

4.  Internet of Things:  Describes a connected world where most man-made things have sensors or some form of a computer chip and are connected to the Internet.  This trend's been on everyone's list for at least the last decade - maybe this year will be the year.

5.  App Stores and Marketplaces - Where you buy your mobile-centric applications to use with your smartphones and tablets.

6.  Next-Generation Analytics:  Another good paragraph from Gartner: "In 2011 and 2012, analytics will increasingly focus on decisions and collaboration. The new step is to provide simulation, prediction, optimization and other analytics, not simply information, to empower even more decision flexibility at the time and place of every business process action."

7.  Big Data:  To do next-generation analytics, you need a lot of data.

8.  In-Memory Computing:  This mostly refers to the growth of flash memory, which is solid state and much faster than traditional hard drives.  Flash memory is why so many people love the MacBook Air. 

9.  Extreme Low Energy Servers:  A good idea given how much energy servers use.

10.  Cloud Computing: Continues to mature and spread.

All of these trends are interesting and it's hard to argue with any of them. 

We've just started a research project on how the combination of Cloud Computing, Big Data and Next-Generation Analytics will impact small businesses and consumers.  It's good to see they all made Gartner's list. 

World Population - 7 Billion, But Slowing

There's a lot of discussion these days around the world's population reaching 7 billion.  The chart below is from A tale of Three Islands, an excellent Economist article on the topic. 

The chart on the right, which is from the article, shows the amazing growth in population over the last 150 or so years. 

The UN is projecting the world's population will hit 10 billion in 2100. But a growing number of demographers are starting to think the world's population will peak around 9 billion and then start to decline.

The reason is lower global fertility rates.  As the second chart from the Economist article (below and to the right) shows, global fertility rates have dropped substantially over the last few decades.

The world's fertility rate has declined so much that without Africa and its high fertility rate (almost 5), the world would roughly be at replacement levels today. 

If Africa's economy improves as many expect, it seems likely their fertility rate will drop just as it has done in other developing economies (India and Indonesia are good examples). 

If this happens, the world's population will likely start to level off in the 2050-2060 time frame and potentially even decline from there.

Can the earth support 10 billion people?  We think so.  But we're also in the camp that says we won't find out because the population will peak around 9 billion - and do so without a Malthusian crisis. 

Here at Small Business Labs we find demographics more interesting than most people do.  The reason is demographic trends are often highly inter-related with other trends.