Top 10 Small Business Trends for 2011

***Update:  our Top 10 Small Business Trends for 2012 is now available.***

Continuing our annual tradition, below is our Top 10 Small Business Trends list for 2011.  To see our past lists, click on the year: 2010, 2009, 2008. 

Our overall economic outlook is for continued moderate growth with U.S. GDP increasing 3%-3.5%.  While we expect hiring and the job market to improve, unemployment will remain stubbornly high, finishing the year around 9.2%. 

Economic

1.  The Small Business Economy Recovers from the Great Recession:  Despite the Great Recession officially ending in 2009, and moderate overall U.S. economic growth in 2010, the small business sector of the U.S. was still in recession last year.  We're optimistic the economy will continue to improve in 2011 and economic growth will be more widespread.  In 2011 small businesses will see stronger demand and better business conditions, resulting in the small business economy emerging from the Great Recession. 

2.  Variable Cost Business Models:  Small businesses will continue to focus on cost containment, bootstrapping and business flexibility in 2011.  More small businesses will shift from fixed cost to variable cost business models, adopting a pay-as-you-go approach to minimize cash requirements and increase business agility.  Fixed costs and fixed assets will increasingly be avoided. Small business outsourcing and the use of contingent workers in place of full time employees will increase substantially.

3.  Small Firms Reinvent U.S. Manufacturing:  The recovering economy and 4 key trends are driving the growth of small and micro manufacturing, redefining how we think about manufacturing: (1) technology and variable cost business models are making it cheaper and easier for small and micro businesses to manufacture niche and customized products; (2) the weak dollar and rising overseas costs are making U.S. manufacturing cost competitive; (3) developing world economic growth is leading to stronger export opportunities; and (4) the Internet and online systems are improving the ability of small manufacturers to find, sell and support customers. 

4.  Alternative Financing: While the improving economy is leading to increased small business access to financing from banks and other traditional sources, capital will still be tight in 2011.  This will lead to increased use of alternative credit sources - merchant advances, micro-lending, community lending, crowd funding, factoring, etc.  Online micro-lending in particular will see a substantial increase in 2011. 

Social and Social Media

5.  Social Media Moves to the Small Business Mainstream:  Despite the hype, the vast majority of small businesses haven't used social media on a regular basis for business purposes.  This is changing as small business users become more comfortable with social media, its benefits become clearer, and social media's positive results become more obvious.  The growth of social commerce (see 6 below) and Facebook (see 7 below) are key drivers of the growing interest in and use of social media by small businesses. 

6.  Social Commerce:The amazing growth of Groupon and other social commerce sites in 2010 heralded the shift towards the integration of social media and sales.  2011 will see this this field continue to explode as small businesses see clear, measurable, positive results from their social commerce/media efforts.

7.  Small Businesses Friend Facebook:  The epic growth of Facebook is hard to overstate.  With over 500 million active users, including 200 million mobile users, Facebook has passed Google and become the Web's most visited site.  Small businesses are embracing and adopting Facebook as a key part of their web presence, and in growing numbers using Facebook as their primary website. 

8.  New Localism Continues to Flourish:  Driven by changing demographics, new technology, economic pressures and growing concerns about the environment, more Americans are focusing on their families, friends and local communities.  Small businesses benefit from the growing number of locally-oriented customers and the opportunities created through "Buy Local" campaigns. New localism was on our list last year.  It is a long-term trend whose impact has been accelerated by the recession and makes the list again this year because of its growing importance.

9.  Freelancers Realize They're Small Business Owners:  The last few years have seen strong growth in the number of contingent workers - freelancers, part-timers, temps and contractors.  Many of these new contingent workers are embracing freelancing and choosing to stay contingent.  Others will stay contingent due to a lack of options.  Both groups will increasingly see themselves as long term freelancers and realize to be successful they will need to view themselves as small business owners.  This shift in thinking will improve their businesses and result in a stronger, more successful freelance community. 

Technology

We see 2011 being a year of technology maturation and consolidation.  By that we mean a number of technologies that have been impacting small businesses for several years are becoming mature and mainstream.  Because of this, we are going to limit our technology trends to one broad trend. 

10.  Working in the Cloud:  No trends list would be complete without mentioning mobile, cloud, local and social computing.  While each of these trends is important, the growing convergence of these trends and technologies is amplifying their impact and fundamentally changing how business is done.  Work is moving to the cloud, and small businesses are embracing this shift and related technologies.  

Comments

[Live Virtual Receptionist]

This is an interesting list. The use of social media has played a big part in small businesses . A lot of different people use these services everyday and having different information being passed on or shared from one person or one place to another.

[Andrew]

Great list - manufacturers in particular need to see the amazing opportunities in front of them. Just this week three of our small manufacturing clients sold significant jobs in Germany, Taiwan and Brazil - all generated with inbound marketing and the Internet, set up by 'free agent' partners using the cloud to work collaboratively.

[Supra Shoes]

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[Eric Myers]

Great list. It is interesting to see how many small businesses are joining the social media team, and what they are doing there. I think its great that so many are using innovative tools like social shopping tabs to maximize their efforts there. I am excited to see where small business goes by the end of the year!

[Me]

The trend of going local also had support in the internet in the form of local marketing. Google's launch of it's local (now Places) service brought localism to the fore front of internet marketing.

[invoice factoring services]

Invoice factoring is has a long history in financial community but the service is not popular.

[TweetRightOn]

Number 2: Economic value added (EVA) business models are a great way for small businesses to maximize financial performance because it can simultaneously weigh the variable cost component and the cash or capital component. This KPI is working its way into business analytics to optimize inventory levels in the cloud at http://www.rightoninventory.com. With procurement representing as much as 55 percent of a company's total costs, an effective supply chain depends on efficient suppliers. But streamlining procurement is just the beginning.Using the right metric is vital.

[Geri Stengel]

I'm not sure the economy will recover, but I agree that social media and technology will bring about changes in the way business is done, which will benefit small businesses and create new opportunities, particularly variable business models and alternative financing. Technologically based tools, such as the cloud and the crowdsourcing, will open door to new business models and change the business model of existing companies.

To take advantage of these opportunities, entrepreneurs must keep learning! Colleges and community colleges offer classes in entrepreneurship, new business models and ways to use technology. Now city government (NYC Business Solutions) and even Goldman Sachs are recognizing the importance of training in starting and sustaining a business.

[Karla]

Fantastic tips! Thanks for sharing your thoughts to all of us. I should say, this is such a great help especially to us people who are into business. I love every bit of it and the points that you expressed. Keep posting and looking forward to the next one!!!

[Rodney Prinsloo-Enterprise Support]

Read in conjunction with 2010's list this is fairly comprehensive. However when looking at trends in South Africa businesses are resorting to outsourcing, subcontracting and joint venturing in order to weather the recession. As a result of retrenchment there is an upsurge in micro/survivalist low cost, low risk type businesses.

[Todd Hockenberry]

Great list - manufacturers in particular need to see the amazing opportunities in front of them. Just this week three of our small manufacturing clients sold significant jobs in Germany, Taiwan and Brazil - all generated with inbound marketing and the Internet, set up by 'free agent' partners using the cloud to work collaboratively.

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