Small Business Labs

Multifamily Households Increasing

Good article in the NY Times on the growth of multifamily households.  Called "doubling up" in the social service world, the recession has caused a large increase in the number of households with multiple families. 

Key quote from the article:

Census Bureau data released in September showed that the number of multifamily households jumped 11.7 percent from 2008 to 2010, reaching 15.5 million, or 13.2 percent of all households. It is the highest proportion since at least 1968, accounting for 54 million people.

The numbers are actually higher.  The Census does not include siblings living together or when a childless adult lives with his or her parents, or a parent/parents lives with adult children. 

While the recession amplified the impact of this trend, doubling up started becoming more common in the in 1990s.  A combination of higher costs of living, the need to care for aging parents and 2 income families looking for childcare assistance resulted in the formation of more multifamily and multi-generational households. 

The growth of multifamily and multi-generational households is one component of the broader new localism trend. 

Old (Smallbiz) Professions That Are Making a Comeback

I ran across a slideshow on CNBC on Old Professions That Are Making a Comeback.  It lists 8 professions that are making a comeback due to increasing demand for hand crafted and local products. 

Of the 7 professions listed, 6 are small business professions:

1. Farming and related food products
2. Letterer: the hand creation of signs and posters
3. Shoemaker
4. Butcher
5. Beekeeper
6. Barber

The 7th profession is traditional animator, which could be a small business profession but their examples are Disney and other larger movie companies. 

All of the small business professions in this list relate to the growing new localism trend, which we cover in our Local category. 

Is Data Analysis the Future of Journalism?

The trend spotting site PSFK has a short article on data analysis becoming a key skill for journalists.  This is a big shift for a group that has traditionally been data challenged.   

The trend towards the growing role of data and analytics is powerful.  Our most recent work - The Intuit 2020 Report - includes a section on data becoming critical for competitive advantage. 

We also believe that companies with the best data and analytics are increasingly going to be the winners. 

This is not just a large company trend. 

Small businesses also will need to effectively collect and analyze business data to be successful.  This is harder than it looks and most small businesses don't have a good handle on their data.  The recent NY Times article on cash versus profitability nicely illustrates the problem.

Despite Low Unemployment Rate, Sole Proprietorships Growing in South Dakota

A professor at South Dakota State University analyzed non-farm wage, salary and sole proprietorship data for 2000 and 2008 by county for South Dakota.  He found the number of non-farm business sole proprietors grew during this period. 

Key quote from an article in Sioux Fall's Argus Leader:

"The bottom line is that the number of self-employed South Dakotans is increasing faster than those in hired positions. Statewide, nonfarm proprietors grew by 25 percent and total jobs increased 9 percent."

I find this really interesting.

South Dakota has one of our nation's strongest economies.  The unemployment rate is only 4.5% and only North Dakota's unemployment rate is lower (3.8%). 

Unlike many parts of of the country, it seems unlikely that a lack of jobs and necessity entrepreneurship is driving the growth of solopreneurs in SD.  People appear to choosing to be self-employed over traditional employment. 

How and why people choose between traditional employment and self-employment is something we are constantly examining.  I look forward to learning more about what is happening in South Dakota.

Should Small Businesses Use Twitter?

The quick answer is yes -  if you see a positive return from the time and effort required to maintain a Twitter presence.  Having said that, we believe the answer will be no for most small businesses. 

The reason is simple.  A very small percentage of adult Americans are regular users of Twitter. 

A recent Pew Internet study reports that about 8% of online, adult Americans use Twitter.  Only about 75% of Americans are online, which means about 6% of all adult Americans use Twitter.

As the chart below from Pew shows, about 36% of all Twitter users check the site on a daily basis or multiple times per day.  About half check infrequently or never.

The obvious conclusion from this data is about 3% of adult Americans are active Twitter users who check the site at least once per week.  If your business serves this group, Twitter will likely be a good way to interact with your customers.

But if your small business serves a subset of the 97% of Americans who don't use Twitter on a regular basis, or the 94% that don't use Twitter at all, it's probably not going to be a good way to interact with your customers.

 
I'm starting to feel like a social media Scrooge by pointing out data like this. 

Social Media, including Twitter, can be a powerful and valuable tool for small businesses.  We strongly recommend small businesses experiment with, test and evaluate multiple forms of social media (blogging, Facebook, Twitter, LinkedIn, etc.). 

But we also recommend small businesses do this with a focus on ROI and fully measure the time and expense required to maintain a social media presence.  Understand the benefits and make sure they are worth the investment required. 

Like any tool, if social media works use it.  If it doesn't work, don't let the hype and coolness associated with social media sway you into using it. 

Review of Our Top 10 Small Business Trends for 2010

Each year we publish a Top 10 Small Business Trends list for the coming year.  Our 2011 list will be out in the coming weeks. 

As part of the process of putting together next year's list, we review last year's list.  Here is how we did in 2010:

1.  The Shift to Contingent Workers Turns Employees into Entrepreneurs:  If anything, the shift to contingent workers (part-timers, temps, contractors, freelancers, etc.) has been even more pronounced than we expected.  Since the recession officially ended, about 68% of all new jobs created have been contingent. 

2.  Personal Businesses on the Rise:  We forecast that the number of personal businesses (one employee businesses) would increase and drive an overall growth in the number of small businesses.  We won't have the final data on this for another couple of quarters, but I'm confident this forecast will prove to be correct.

3.  Small Business Lending Returns to Pre-Bubble Levels:  We forecast that only highly credit small businesses would be able to borrow and that alternative sub-prime credit sources - merchant advances, micro-lending, factoring, etc. - would expand.  Not a tough trend to forecast and we expect pre-bubble credit standards will continue to be in force in 2011.

4.  The New Local Movement:  One of my favorite trends, new localism accelerated in 2010 as buy local campaigns, the local food movement and other local initiatives increased in numbers. 

5.  There is No Place Like Home for Small Business:  Again, we won't have the numbers for a few more months but I'm confident the number of home-based businesses increased in 2010.

6.  Clean and Green Creating Small Business Opportunities:  I consider this a miss.  While the number of green small business opportunities probably increased in 2010, overall the weak economy hurt the sector.  We are optimistic that this forecast will start to be realized in 2011. 

7.  Social, Mobile and Cloud Computing Converge:  This was an easy forecast to make and get right. 

8.  Location Technology and Services:  At the time this seemed like another easy forecast to make.  Many would also say this forecast came true.  But I think location technology and services under performed our expectations.  This is another case where I think we were a year too early with the forecast.

9.  Analytical Tools Lead to Data-Driven Decisions:  The shift to data and evidence-based management did accelerate in 2010.  The focus on testing and measuring online marketing campaigns in particular became more common in the small business sector.

10.  Online Training Brings Professional Education to Small Business:  Another miss.  Online training did advance in 2010.  But due to the weak economy and a lack of developed programs it did not have the small business impact we were forecasting.    

Our final score - 7 out of 10, which is pretty good for the forecasting business.  Our misses were due to the classic forecasting error - overestimating the rate of change. 

One of my favorite forecast related quotes comes from Roy Amara, one of the founders of the Institute for the Future.  He said "we tend to overestimate the near term impact of new technologies, and underestimate their long term impact."  He was so right.    

A Flurry of Articles on the She-conomy

Several good articles on the growing role women are playing in the economy this week. 

Huffington Post's The Decade of the Women is Upon Us covers the She-conomy trend from the Intuit 2020 Report and adds the very important point that women doing better does not mean men have to do worse. 

Economics is not a zero sum game.  The growing economic power of women means more economic growth.  This will create more opportunities for everyone.   

Time's Women Power: The Rise of the Sheconomy focuses mostly on the growing power of women as consumers.  I think this is the least interesting part of this trend, but it is still important.

The New York Times' Keeping Romance Alive in the Age of Female Empowerment covers the shift in gender roles due to a growing number of women out earning their partners.

The NY Times article is in their Europe section, which I like because we get a lot of questions asking if the She-conomy is only a U.S. trend.  Quick answer - no.

GobiSOFT Webinar on Reducing Carbon Emissions

GobiSOFT, from Gobi Carbon Management Solutions is a web-based tool that enables small-to medium-sized businesses to easily and affordably measure, report and reduce their carbon footprint.

They are holding a free webinar this Wednesday, December 8th at 10:00am PST.  The webinar will provide an introduction to measuring greenhouse gas emissions and what steps to take to begin saving money by tracking and reducing your organization's carbon footprint.

As we discuss in the Intuit 2020 report, sustainability is becoming a competitive business requirement as firms use sustainable business practices - like reducing their carbon footprint - to cut costs and respond to customer and employee demand. 

Click here to register for the GobiSOFT webinar.

Sustainability: A Competitive Requirement for Small Business

One of the key business trends for the next decade is the growing importance of sustainable business practices.  Put simply, sustainability is moving from a "nice to have" to a competitive requirement. 

The key reasons sustainability is becoming a business necessity are:

• Customer demand:  Over 40% of consumers say they prefer purchasing products from eco-friendly companies.  This is up from less than 20% 5 years ago and we expect the number of consumers basing purchasing decisions on environmental impact to grow rapidly.
• Employee demand:  Employees are increasingly looking to their employers to improve sustainable business practices. 
• Cost reduction:  Business of all sizes are realizing sustainable business practices save money.

The poster child for using sustainable business practices to save money is WalMart.  Anyone familiar with their culture knows WalMart cares a whole more about saving money than saving the environment.

This makes Walmart's massive sustainability efforts so telling.  They've realized sustainable business practices makes their customers and employees happy.  But more importantly, it saves them money and makes them more competitive. 

There are a growing number of tools available to small businesses to help them develop sustainable business practices. 

For example, Gobi Carbon Management Solutions Inc. recently announced the launch of GobiSOFT, a new web-based tool that enables small-to medium-sized businesses to easily and affordably measure, report and reduce their carbon footprint. 

The best news about reducing your carbon footprint?  The only way to do it is to use less energy, which saves money. 

In the coming years rising commodity and energy prices, resource constraints, consumer and employee demand will combine and require small businesses to be like WalMart and aggressively pursue sustainable business practices.  Not being sustainable will mean not being competitive. 

Don't get me wrong.  I think improving the environment is a good thing. 

But even better is saving money and gaining competitive advantage by improving the environment. 

The Project Economy Webinar With MBO Partners

I was at HR.com's Contract Workforce and Talent Exchange event yesterday.  It was an excellent conference that continues today. 

Not surprisingly, there was a lot of discussion on the changing nature of work.  I thought one of the best talks on this topic came from Gene Zaino, CEO of MBO Partners. 

Gene's presentation focused on the shift to project-oriented work in both large and small organizations, and the growing role consultants and other contingent workers are playing in these projects.

I made a note to myself to post on Gene's presentation.  But when I opened my email this morning it included an invitation to a MBO Partners webinar on this topic.  So instead of reading my interpretation of Gene's talk, I suggest you attend the webinar.

It is Tuesday, December 14th from 1:00 to 2:00pm Eastern.  Click here to register.