Small Business Labs

Laurel Delaney's 2008 Global Trends Toolkit

We often look to small business trade expert Laurel Delaney for insight and information on small business globalization.  Her Global Small Business Blog has a great post with lots of resources and lists related to small business exports. 

You can also read her list of 12 global small business trends to watch in 2008 on the Small Business Trends site.   

Cars as Mobile Computing Platforms

I'm at the Consumer Electronics Show (CES) in Las Vegas.  One of the areas I'm spending time at is the automotive section of the show.  MSNBC has a great article on CES and autos and Newsweek also covers cars in their article on CES.  Key quote from MSNBC:

"The Consumer Electronics Association projects that sales of electronic gear for automobiles will exceed $12 billion this year, having doubled over the last five years."

Navigation and GPS systems are driving (bad pun intended) the growth of auto electronics:

"Music and entertainment technology has made up the bulk of in-car products, but the fastest growth is in GPS and video navigation; 2007 sales are projected to be up 41 percent to seize nearly a quarter of all car technology sales, the CEA said."

Auto electronics are going play a key role in the local web and location based services.  Small businesses need to be aware of the growth of navigation systems and their impact on local commerce.

NY Times on Career Status and Entrepreneurship

The Fashion and Style section of the NY Times has an article on the declining prestige of doctors and lawyers called "The Falling Down Professions".  Key quote on this decline comes from Richard Florida, the author of the book The Rise of the Creative Class:

"This decline, Mr. Florida argued, is rooted in a broader shift in definitions of success, essentially, a realignment of the pillars. Especially among young people, professional status is now inextricably linked to ideas of flexibility and creativity, concepts alien to seemingly everyone but art students even a generation ago."

The article suggests that entrepreneurship and finance are careers that are growing in prestige.  Key quote on college students and careers:

"Students are focusing now on starring in their own creations, their own start-up businesses, said Trudy Steinfeld, the executive director of the Wasserman Center for Career Development at New York University.

“There’s a sexiness to starting something cool,” she said. “Now we have people trying to start a Facebook or a MySpace. You might be working like a maniac, but it’s going to pay off in status. You’re going to be famous, providing something people are going to know and use all over the world.”

More evidence that Belmont University Entrepreneurship Professor Jeff Cornwall is right when he calls Gen Y the greatest entrepreneurial generation ever.

NY Times on Home Office Life

The NY Times has an article called "Home Office Life and It's Discontents."  It covers a number of the disadvantages of home office work.  Key quote:

".... is one of many of the millions of Americans now working outside traditional workplaces who have found themselves surprised by how difficult home-office life can be. It requires strict self-discipline and an ability to tune out spouses, children and pets. For the more sociable or emotionally needy, it can feel like house arrest, especially if the phone hasn’t rung in a while."

Our research (and personal experience) on working at home - which closely echos the research of others and the information in the article - indicates 4 major issues/problems come with working at home: (1) loneliness; (2) a feeling of being "out of the loop"; (3) lack of support and back up; (4) issues around procrastination, focus and distractions. 

Technology and especially the Internet has made working at home both easier and more social.  Corporations have discovered it is much cheaper to have their employees work from home, and they've also discovered through outsourcing that they can manage remote work and workers.  And, of course, economic change has resulted in a lot more folks working from home as independent business people. 

The lack of social contact remains a big issue for many home workers.  This is why we think coworking facilities (cooperatively shared work environments) of all types are to become increasingly common.  Big companies will develop their own coworking facilities by creating "office hotels" and worker "drop in centers" to provide home based employees with social and infrastructure support.  Independent coworking facilities will support small businesses, independent workers and networks of workers.  (For more on coworking take a look at the coworking blog)

Humans are fundamentally social creatures and most resist working alone.  While online technology and community certainly help, face to face contact remains an important component of work.  Coworking facilities will play an increasingly important role in providing social environments for both corporate and independent home based workers. 

The NY Times also an article on outfitting your home office.

Small Biz Labs Really is a Lab

We started Small Biz Labs as project blog for our research work on the future of small business.  We wanted a place to record and share information and studies on small business.  This blog has accomplished this goal quite nicely, but along the way it has also turned into a true small business lab.

Owned and operated by a "Mom and Pop" who work from home, we use this blog to experiment and play with online technologies.  Having a real small business site gives us perspectives that our research and consulting work simply cannot provide.   Through this site and our related online efforts we've gained first hand experience with running a small online business. 

This really hit home for us while writing our post about the Business Week article "Tech Solutions Your Small Business Can't Use."  Reading the article we quickly realized our small business effectively uses many of the technologies listed as bad for small business.  Without real experience with these tools we likely would have been willing to take the article at face value. 

Our next major experiment is evaluating joining a blog advertising network.  We have several options.  This will require a slight re-design to our blog and accepting advertising on what has been an ad free zone.  Revenue is not driving this effort  - our traffic is not going to generate much in the way of advertising dollars.  Our goal is to learn more about online advertising and what it means for small business. 

We will keep you informed on our progress and the results of other "lab" work - we are currently trying to understand why our organic search results are so much better on Google than Yahoo or MSN and we hope to have time to try Facebook advertising and community building again this quarter. 

US News On Best Careers - Small Business Owner Not One of Them

US News and World Report has their Best Careers feature out this month.  The analysis of best careers is interesting on many levels.  But what jumped out at me is their view of small business.  They list small business owner as one of the most overrated careers. Key quote:

"Most new businesses fold within a few years. There are good reasons. For one thing, running a small business requires you to be good at many jobs: salesperson, buyer, accountant, marketer, operations manager, even janitor. Few people can do it all."

They suggest being the #2 person at a small business is a better choice.  They say "you'll go home with fewer headaches than the owner does. And probably go home earlier."

Business Week on Tech Solutions Your Small Biz Can't Use

Interesting opinion piece by Gene Marks in Business Week called "Tech Solutions Your Small Biz Can't Use."  The gist of the article is a lot of technology is over hyped and not appropriate for small business.  It goes on to list 10 technologies that the author claims don't work for small business.

The article was clearly written to be controversial and generate discussion and response.  Because of this, it is a bit over the top in terms of complaining about technology.  However, I agree with premise that technology is often over hyped and often underperforms.  I also agree that small businesses need to be careful in choosing technology. 

One issue this article highlights is that the small business sector is too broad and too diverse to make generalized statements about.  There are lots of small businesses that shouldn't use the technologies on the list.  But at the same time, it is obvious that lots of small businesses are effectively using these technologies. 

For example, RSS, spam filters, blogs, SEO, CRM and Web 2.0 tools are all very important to my small business and work quite well.  They also are cheap (mostly free) and easy to use.  I don't use adwords, but I know of many, many small businesses that consider adwords crucial to their small business.  The same is true for online video and mobile applications. 

The bottom line is blanket statements about technology and small business are going to be wrong.  What makes sense and what will work depends on the specific needs and requirements of the business. 

European Car Companies Consider US Manufacturing

Article in the International Herald Tribune about Fiat and Volkswagon considering moving some of their manufacturing to the US.  The article sites the weak dollar as the driver.  Key quote:

"Currency becomes a critical profitability lever when you're a globalized business," said John Hoffecker, managing director of AlixPartners, a consulting and reorganization firm based in Southfield, Michigan. "The way that you keep currency out of it is by having manufacturing facilities around the world. With the U.S. being such a good market to play in, I think you'll see more and more companies put facilities here."

While currency rates fluctuate, the dollar has fallen pretty consistently against the Euro for the last 5 years.  This is true for most other free floating currencies.  Given this long term decline, companies are starting to look at moving manufacturing to the US - and US firms are starting to move manufacturing back to the US.  We've posted in the past about the possibility of manufacturing picking up the US.  The falling dollar is making this scenario more likely.

2008 Small Business Trends and Predictions

Paul Saffo's excellent Havard Business Review article on forecasting points out that "The goal of forecasting is not to predict the future but to tell you what you need to know to take meaningful action in the present."  Keeping this goal in mind, below is a list of 10 trends that we think will impact small business in 2008.  The trends are in no particular order. 

1.  The declining dollar accelerates the long-term trend towards small business globalization: Several long-term trends are driving the growth of small business cross-border trade and the globalization of small business.  These include increased global economic growth, reduced trade barriers and the growth of the Internet and other connective technologies.  Adding to these longer term trends is the decline of the US dollar versus almost all free-floating currencies.  The dollar's decline is creating broad, new cross-border trade opportunities for small businesses and 2008 will see substantial growth in small business exports.

2.  Economic uncertainty leads to increased small business formation: 2008 is likely going to be a year of economic instability.  The combination of the sub-prime loan problems, housing price declines and high oil prices have most economists suggesting 2008 will be a year of sluggish growth, and many are forecasting a recession.  Economic downturns and periods of economic uncertainty often lead to increased small business formation as workers turn to entrepreneurship as an alternative to a traditional job.  With technology making it easier and cheaper to start a small or personal business, many will choose to do so in 2008. 

3.  Mobile computing takes off:  Mobile computing is the #1 forecast in our consensus 2008 technology forecast.  The impact of the iPhone on the cell phone industry coupled with Google's Android annoucement and 2008 shipment plans have most technology forecasters predicting 2008 will be the year mobile computing breaks out in the US.  Adding the impact of the rapid growth in navigation systems, location-based services and mobile search, and mobile computing should have a banner year in 2008. 

4.  Online social networking becomes mainstream:  This is the #2 forecast in our consensus 2008 technology forecast.  While most discussions of online social networks focus on Facebook and MySpace, small businesses are increasingly using and being impacted by a wide range of social networking forums.  These include small business community sites where enterpreneurs exchange information and knowledge (Intuit's JumpUp site is a good example), review sites where customers talk about small businesses, and sites where small businesses use networking to find customers or business partners (eLance, for example).  So while is may or may not make sense for a specific small business to be on Facebook, the majority of small businesses will be impacted by online social networks in 2008.

5.  The emerging "buy local" coalition expands and gains momentum:  We first posted on the the emerging "buy local" coalition last year.  This group includes a range of consumers who are looking to buy locally made, handcrafted and/or highly customized or unque products.  This group includes consumers who are choosing to buy locally produced goods because of concerns about the environment; concerns about US jobs; concerns about the safety of foreign produced goods; and/or a strong interest in buying unique or highly customized goods. 

2008 will see this trend gain momentum as product customization expands, more US consumers become aware of online shopping sites likes Etsy, and more foreign buyers take advantage of the weak dollar and online access to buy goods handcrafted or customized in the US.  Small and personal businesses are ideally suited to fill the demand for these types of products, and will greatly benefit from this trend.

6.  Small manufacturing expands and gets redefined:  We've posted in the past on small manufacturing growing in the US.  Despite the economic uncertainty, we think 2008 will see this sector expand.  Technology will continue to make it cheaper and easier to manufacture in the US, the weak dollar will lead to strong export markets and raise the price of competitive imported products, and online marketing will improve the ability of small manufacturers to reach customers and sell products.  The rise of small automotive companies is a good example. 

Also driving this market is growth of highly customized goods that members of the buy local coalition are seeking out.  The small artisans or specialist manufacturers that produce these products are redefining manufacturing.  Instead of requiring large plants to make things, technology has advanced to the point that small firms and even home-based businesses can build sophisticated products.  There are hundreds of thousands of artisan manufacturers in the US, and their number will increase substantially in 2008. 

7.  Large corporations focus more on small businesses:  Generating over half of the economic output of the US - and growing faster than the overall economy - the small business sector has become too important a market for large corporations to ignore.  Also, large corporations are increasingly looking to small business for innovation and demand and supply chain partnerships.  2008 will see large corporations increase their small business activity across all aspects of their operations. 

8.  The greening of small business:  The trends driving large corporations to adopt sustainable business practices also impact small businesses.  2008 will see small business customers and employees focusing on sustainable business practices.  Small businesses will need to respond both in how they run their businesses and how they create, produce and deliver their products.  Many small businesses will also find new market opportunities in delivering innovative "green" product solutions to the marketplace.

9.  Media and entertainment continues to fragment:  2008 will see the continuation of media fragmentation and the growth of small media companies.  Small online publishers and bloggers will continue to thrive as their highly targeted niche audiences grow and monetization via advertising and affiliate product sales becomes easier. 

10.  Demographics continue to drive small business growth: The demographic drivers of small business growth we discussed in our forecast report last year - aging baby boomers, Gen Y entrepreneurs, immigrant entrepreneurs and women entrepreneurs - gain strength in 2008. 

Consensus Top 10 2008 Technology Predictions

I've collected 2008 technology predictions from over 30 sources.  From these lists I've culled the top 10 technology predictions for 2008.  The list below is in order of popularity - the more the trend was mentioned the higher it is on the list.  For each trend I've included a quote from one of the forecast sources that I think best represents the consensus. 

1.  Mobile Computing Takes Off - on almost every list in some form, mobile computing is by far the top trend.  From the ReadWriteWeb blog:

"Mobile web usage will be a big story in 2008.  It's already big in many parts of the world; and Westerners are about to get hooked.  With new mobile devices that makes web surfing less painful, people will be more and more connected away from their computers."

2.  Social Networking Becomes Mainstream - the second most popular trend, most feel that online social networking will continue its torrid growth and be used by almost half of all Internet users.  From eMarketer:

"(In 2008) about 44% of consumers will use social networking at least once a month.  Although MySpace and Facebook will continue to dominate the market, changes are afoot that will extend social networking activities beyond a single desitnation stie and inton many other facets of the consumer Internet experience"

3.  Mobile Social Networking Arrives - Ok, this is redundent with the top 2 predictions.  But it was mentioned as a separate trend by most of the forecasts.  Ypulse describes this as it relates to teens, but their description also represents what the predictions say in general:

"2008 is the year this will really begin to take off with teens - mostly as another way to check email, comments, etc. via cellphone since MySpace and Facebook have replaced email as the way teens message each other."

4.  Industry Consolidation - most prediction lists include some form of industry consolidation occurring in 2008.  A number of different segments are mentioned - Web 2.0, software, hardware, old media, new media - as well as start-ups in general.  From Adam at Mashable:

"As someone that reads through countless startup pitches and looks at hundreds of new web sites weekly, I can say with some sense of authority that there are too many companies chasing too many of the same ideas."

5.  Cloud Computing/Web Services/Software as a Service - this topic got a lot of publicity in the second half of 2007 so it is no surprise to see it on the list for 2008.  The ReadWriteWeb said:

"Web services platforms will be a fierce battleground in '08, with Amazon, Microsoft, Google, Mozilla and other competing to provid 'Web OS' and online storage to consumers.  Unfortunately this may spell the end of a number of startups in this space."

6.  Facebook and Google - normally I wouldn't include companies on a trend list, but these two were consistently mentioned in almost all the prediction lists.  Facebook was mostly mentioned for becoming mainstream in 08 as well as the web home for many.  Google gets mentioned across a wide range of areas.

Also interesting is who is not mentioned.  IBM, Oracle, Microsoft, MySpace, SAP and Yahoo are barely mentioned or not mentioned at all. 

7.  Internet Disruption - several forecasts talked about the Internet slowing due to increased traffic and the increasing amount of online video.  Several talked about broader disruptions due to terrorist attacks or wide spread criminal activity.  From the Economist:

"The Internet is not about to grind to a halt, but as more and more users clamber aboard to download music, video clips and games while communicating incessantly by email, chat and instant messaging, the information superhighway sometimes crawls with bumper-to-bumper traffic."

8.  Green IT - I thought this would be higher given all the publicity given to the environment in 2007.  Gartner did have it first on their list, saying:

"This one is taking on a bigger role for many reasons, including increased awareness of environmental danger; concern about power bills; regulatory requirements; government procurement rules; and a sense that corporations should embrace social responsibility."

9.  Gadgets - the iPhone and Kindle sparked a lot of interest in new gadgets in 2007, and Google's announcement of the Android mobile development platform led many to forecast a wide range of new computing devices in 2008.  From IDC:

"Web gadgets will further extend the Internet.  Following in the footsteps of Apple's iTouch and Amazon's Kindle, a new class of devices will fill the gap between notebook PCs and smartphones.  These will radically change the online marketplace, including fueling the acceleration of location based services. 

10.  Unstructured Data Tools Will Emerge - this was mentioned in several forms including forecasts around meta data and early forms of the semantic web.  Some of the predictions in this area were quite techy, but IDC said:

"The sudden expansion of social networking will lead to a tsunami of unstructured data.  This will lead to the emergence of "Eureka 2.0" software that combines text analytics, sentiment extraction, and related technologies to distill the "wisdom of crowds."