Small Business Trends for the 21st Century
Running a small business requires a focus on the present daily operations. With time restraints, looking ahead becomes difficult. However, in order to succeed you need to know what’s ahead to better plan and avert danger. The 21st century presents plenty of changes that will impact your small business in the future. Here are some of the biggest small business trends for the 21st century.
The Small Business Revolution
The face of entrepreneurship is changing from the white middle-aged college educated male to a new class consisting of immigrants, women, baby boomers, and the younger digital generations. These groups are better prepared for success.
The boomers have a vast repertoire of skills and experiences while the youth possess a risk-taking attitude with very few financial commitments. According to the Kauffman Foundation, Americans aged 55 to 64 start a business at the highest rate of any age group—28% higher than the adult average. A growing number of employees will value the path to entrepreneurship continuing the small business revolution. Look for greater political clout and financing for small business.
An Empire of One
Forget the hiring headaches, managing problems, and added paperwork of running a business with employees. According to the Census Bureau, small business without payroll makes up more than 70 percent of America’s 27 million companies, with annual sales of $887 billion.
An empire of one can operate in a low-cost of location such as the home office and be more nimble than larger companies. One-person businesses can take advantage of outsourcing many functions while focusing on core strengths. The empire of one model will be appealing to more and more corporate employees leaving behind big companies with limited pensions and job security. Small businesses built around the empire of one model will be able to weather the perfect talent storm on the horizon.
The Perfect Talent Storm
A fast aging population, a rapid declining pool of younger workers combined with global competition creates the perfect storm for a serious labor shortage. Unlike past labor shortages, this is a global phenomenon impacting workers in many areas and businesses of all types. It will continue for much of the future regardless of economic cycles.
Immigration provides little comfort with other countries facing similar talent crunches; retaining citizens will be a top priority. This storm means small businesses will have to compete aggressively for talent and learn how to fully engage the hearts and minds of employees.
The Innovation Age
The most important asset that will be fully realized in the future is the 3-pound creative universe in our heads. Our true competitive advantage is our ability to create and execute new business ideas. Although we have mastered the fundamentals of business such as sales or marketing, we have yet to grasp the concept of innovation. Smarter companies will leap ahead with the understanding that innovation is a process dependent system as opposed to a flash of genius.
The current perceptions of innovation are it’s all about big ideas and primarily technological. Big ideas have a lower success rate than small innovations. Innovations can occur in all aspects of business from new customer service ideas to improvements in operations. An idea isn’t an innovation until it is applied and turning a profit. The future belongs to small businesses that can turn innovations into profits.
The Customer Voice
Marketing has primarily been a one-way communication to the customer. The rise of Web 2.0 with blogs, Twitter, wikis, and community websites has created a powerful mechanism for customers to shout back.
The time is limited for companies to hide behind poor service and imperfect products. Company and people searches on search engines such as Google will continue to be a means for buyers to discover the truth behind marketing copy. Consumer opinions good and bad will shape the success of business. Savvy small businesses will monitor what is being said, use the feedback to improve and manage their reputation. Listening to your customer is more than an overused term but part of the new reality of business.
The Heath Care Crisis
The only hurdle to speed up the small business revolution is the health care crisis. The current malaise of the heath care system in countries around the world will see no signs of dissipating. With more expensive medical advances and aging populations living longer, the price of quality health care will continue to be a burden on small business.
Leaving behind company medical benefits to a start a business is risky. With new programs such as Health Savings Accounts, the ability of workers to leave corporations and be self-employed could be improved. A shift in treating disease through prevention will be needed to reduce costs and risks in the current system.
Like a carton of milk, the usefulness of knowledge expires over time. In any field, new discoveries over throw theories to create new ways of thinking. In the world of business, the assumptions and facts of today are tomorrow's old way of thinking. As our world accelerates in knowledge creation, information will continue to change.
Nimble small businesses have the opportunity to learn new ideas and immediately apply them to their companies. Successful companies will learn how to unlearn and constantly challenge procedures, skill sets, and ways of doing business.
The Angry Planet
The global warming crisis is creating havoc in all parts of the world; interrupting supply chains, closing operations, devastating lives and businesses. Insurance firm Swiss Re predicts weather disasters will reach $150 billion per year in economic cost in a decade more than double of today's costs.
Without the resources of large corporations and limited government aid, small business will be the most vulnerable to the fickle demands of Mother Nature. According to a recent NFIB National Small Business Poll, man-made disasters affect 10% of small businesses, whereas natural disasters have impacted more than 30% of all small businesses in America. Disaster planning will be a necessary component of business survival in the 21st century.
These trends are already set in motion. Take the steps today to set your business goals and direction around foreseeable events emerging.
Edited by Alyssa Gregory