** Our 2013 Small Business Trends List is out and available here **
Below is our fifth annual Top 10 Small Business Trends list. Links to our prior lists are available here.
Our overall economic outlook is for continued moderate growth with U.S. GDP increasing 2.5%-3.0%. We expect hiring and the job market to improve, but unemployment will remain high and finish the year around 8%.
1. Being Human: A trend that has rippled through our research the past couple of years - and especially in 2011 - is the growing dissatisfaction with our de-humanized world. Corporate employees tell us they are tired of being cogs in the enterprise machine. Independent workers tell us they highly value the work/life flexibility and control independence provides. Consumers tell us they are looking for authenticity and honesty from the companies they buy from. People in general tell us they are focusing more (or would like to focus more) on human relationships with their families, friends, business associates and communities.
Because of their size, scale and customer intimacy, small businesses are able to offer employees, business partners and customers stronger human-based relationships than large corporations. 2012 will see more small businesses recognize and take advantage of this key competitive advantage.
2. One is No Longer the Loneliest Number: The Internet, online distributed work tools, social media and the growth of coworking are eliminating the loneliness and lack of social and business contact traditionally associated with working independently. Telecommuters, home-based business people, road warriors and independent workers are increasingly using these tools and resources to “work alone together”. This growing ability to network, collaborate and socialize is making independent work more attractive, and 2012 will see the trend towards independent work continue to grow.
3. Senior Independents: Also driving the growth of independent workers is the increasing number of mature workers (those aged 55+) becoming independent (freelancers, consultants, temps, etc.). Most of these older workers will choose independence because of the stimulation, freedom and flexibility it provides. Others will become independent because they have no other job options, and/or financial pressure to continue working beyond traditional retirement age.
4. Loyalty Meets Daily Deals: There’s a lot of debate about the merits of daily deals. We think 2012 will see daily deals morph beyond shotgun-style attempts to bring in new business to more targeted methods and systems designed to attract, retain and reward loyal customers. Part of this is simply the maturation of daily deal business processes and technology. But a bigger part is the growing recognition by both deal companies and their small business customers that repeat business, not new business, is the key objective.
5. Smartphones, Tablets and the Cloud Oh My!: Smartphones, the Cloud and mobile computing have been on our top 10 lists in one form or another for years. 2012 is no exception and we expect mobile computing devices (smartphones and tablets) to substantially outsell traditional computers. These cloud-supported devices are changing the way business is done and creating vast, new demand for apps, online video and audio, games, ebooks, magazines, newspapers, social networking – the list goes on and on. 2012 will see a growing number of small businesses embracing and leveraging these technologies.
6. The Empire Strikes Back with Big Data: The rise of the Internet and ever cheaper information technology enabled even the smallest of businesses to look, act and compete like a large company. Big Data – the collection, manipulation and analysis of large datasets – allows large companies to look, act and compete like a small business by using data and analytics to provide personalized products and services. It also increases their ability to aggressively compete on price. Amazon’s controversial smartphone-based Price Check app is just the beginning of larger corporations using data, analytics and mobile computing to attack small business markets.
7. Big Data Gets Small: 2012 will also see growing small business use of powerful yet inexpensive cloud-based data and analytical tools. These tools will enable small businesses to organize, mine and analyze their data to improve their results. In particular, the small business use of software and systems that combines and analyzes data from websites, customer purchases, marketing campaigns and social media activity will grow and greatly improve small business efficiency.
8. The Rental Economy Expands: We’ve long covered the growing use of variable cost business models. Also called Collaborative Consumption, the concept behind the rental economy is to increase the efficiency of goods by providing them on a variable cost basis (sharing their use).
Obviously this is not a new trend. But the Rental Economy is rapidly expanding because the Internet, the Cloud and advanced analytics are enabling cost effective renting/sharing of a growing array of goods and services historically available primarily through ownership.
9. Location, Location, Location: A range of trends that have been building for a long time are converging to make location a key small business issue in 2012. These include the growing power of the buy local movement, the increasing use of location in social media, a continued focus on sustainability and local food, and the growing use of cell phone and cloud enabled location-based services. We used to think the Internet made location less important. It also makes location more important.
10. It’s the Best of Times and the Worst of Times for Startups: The maturation of the Internet and other technologies (genomics, clean tech, robotics, Big Data, etc.) is creating vast new opportunities. It’s also cheaper than ever to start and grow a company, venture funding is available, valuations are high, large companies are in acquisition mode and the IPO market is opening up. In many ways, it’s never been as easy or rewarding to be a startup than it will be in 2012.
But 2012 will also be a year of reckoning for many startups. The last couple of years have produced almost a frenzy of new tech companies. Many of these firms will need additional funding in 2012, and those not able to show strong customer traction will not be able to find it.