2009 Top 10 Small Business Trends

***Update: Our 2012 Top 10 Small Business Trends List is now available***

It's prediction season and we've prepared our annual top 10 small business trends list.  The economy is obviously the key issue facing small business in 2009.  With the global recession and economic turmoil as our back drop, here is our list: 

Economic Trends 

1.  The Recession Drives Small Business Innovation:  With the economy mired in a deep recession, small businesses will focus on cash flow, cost containment, customer retention and survival.  But economic stress will also lead to a wave of small business innovation.  Driven by the need to improve productivity and increase customer value, small businesses will re-evaluate, re-design and refine their products, processes and business models.  Despite the adverse economic climate, innovation will create new opportunities for many small businesses.

  

2.  Government Plays an Increasing Role in the Economy:   Economic turmoil, corporate malfeasance and regulatory failure are leading to much greater government intervention in the economy.  While we believe that the long term, global trend towards market capitalism continues to be strong, governments around the world will take a more active role in managing and regulating their economies.  Small businesses will need to be aware of federal, state and local government policy and program changes and their impacts. 

  

3.  Global Infrastructure Spend:  President-elect Obama and his transition team are preparing a massive, $850 billion economic recovery package.  China, Japan, the EU and other countries are also developing large infrastructure spending programs.  In the US bridges and roads, alternative energy, transportation, clean tech and education will likely see substantial federal spending increases with the impacts likely being felt in the second half of 2009.  Small businesses will benefit directly through government contracting programs targeted at them and indirectly through providing goods and services to larger firms.

  

4.  The Number of Small Businesses Will Increase in 2009:  With job losses high and traditional employment options limited, many will turn to self-employment and small business in 2009.  The prior three recessions have seen small business formation rates increase.  And with it easier and cheaper than ever to start small or personal businesses, we expect a strong year for small business formation – especially personal businesses.  Failure rates will also increase, but not enough to offset the number of new small and personal businesses. 

  

5.  Small Business Globalization Will Temporarily Slow:  While we believe the long- term trend towards small business globalization is still strong, we expect small business globalization to slow in 2009.  The primary reasons are the global economic slump, turmoil in currency markets and small businesses focusing on local markets.  We expect small business exports to pick up in late 2009 as the global economy starts to recover. 

  

Demographic Trends

 

 6.  Baby Boomer Retirement Problems Will Lead to Increased Interest in Small Business:  We’ve long forecasted that baby boomers will stay in the workforce past the traditional retirement age.  Current economic turmoil makes this trend even stronger.  Baby boomer retirement has taken a series of major blows.  The value of their homes, retirement savings and inheritances has all declined substantially.   Many have lost or will lose their jobs.  Boomers will have to extend their working years and small and personal businesses will be their best, and in many cases, only option.

  

 7.  Generation Y Will Turn to Small Business:  Gen Y will continue to be be more entrepreneurial than youth in recent generations.  The economic slump will make this trend stronger as many Gen Yers face limited traditional employment opportunities.  With their risks and opportunity costs relatively low, many Gen Yers will choose to start or work for small or personal businesses.

  

Technology Trends

  

8.  Mobile Computing Continues Strong Growth:  On our list last year, mobile computing is entering the US mainstream.  Notebooks outsold desktop PC’s in the second half of 2008, smart phones sales continued their rapid growth and millions of netbooks (very small personal computers designed primary for mobile internet access) were sold.   Adding the continued rapid growth of navigation systems, location-based services and mobile search results in mobile computing having a major impact on small businesses in 2009.

9.  Cloud Computing Continues Strong Growth:  Another trend that was on our 2008 key technology trends list.  Cloud computing offers too many small business benefits not to continue its strong growth in 2009.  In particular cloud computing lowers capital costs and turns fixed costs into variable costs – two powerful attributes that are very attractive in a down economy. 

10.  Small Businesses Will Expand Their Use of Online Marketing Tools:  Despite the economic downturn, we expect the small business sector to increase its use of online marketing tools and methods in 2009.  Online marketing is cheaper and often more effective than traditional approaches.  And although online marketing can be complex, many tools and methods are accessible to DIY small business marketers.  With small businesses focused on customer acquisition and re-defining their business methods, we expect their use of online marketing to grow in 2009.

1.  The Recession Drives Small Business Innovation:  With the economy mired in a deep recession, small businesses will focus on cash flow, cost containment, customer retention and survival.  But economic stress will also lead to a wave of small business innovation.  Driven by the need to improve productivity and increase customer value, small businesses will re-evaluate, re-design and refine their products, processes and business models.  Despite the adverse economic climate, innovation will create new opportunities for many small businesses.

  

2.  Government Plays an Increasing Role in the Economy:   Economic turmoil, corporate malfeasance and regulatory failure are leading to much greater government intervention in the economy.  While we believe that the long term, global trend towards market capitalism continues to be strong, governments around the world will take a more active role in managing and regulating their economies.  Small businesses will need to be aware of federal, state and local government policy and program changes and their impacts. 

  

3.  Global Infrastructure Spend:  President-elect Obama and his transition team are preparing a massive, $850 billion economic recovery package.  China, Japan, the EU and other countries are also developing large infrastructure spending programs.  In the US bridges and roads, alternative energy, transportation, clean tech and education will likely see substantial federal spending increases with the impacts likely being felt in the second half of 2009.  Small businesses will benefit directly through government contracting programs targeted at them and indirectly through providing goods and services to larger firms.

  

4.  The Number of Small Businesses Will Increase in 2009:  With job losses high and traditional employment options limited, many will turn to self-employment and small business in 2009.  The prior three recessions have seen small business formation rates increase.  And with it easier and cheaper than ever to start small or personal businesses, we expect a strong year for small business formation – especially personal businesses.  Failure rates will also increase, but not enough to offset the number of new small and personal businesses. 

  

5.  Small Business Globalization Will Temporarily Slow:  While we believe the long- term trend towards small business globalization is still strong, we expect small business globalization to slow in 2009.  The primary reasons are the global economic slump, turmoil in currency markets and small businesses focusing on local markets.  We expect small business exports to pick up in late 2009 as the global economy starts to recover. 

  

Demographic Trends

 

 6.  Baby Boomer Retirement Problems Will Lead to Increased Interest in Small Business:  We’ve long forecasted that baby boomers will stay in the workforce past the traditional retirement age.  Current economic turmoil makes this trend even stronger.  Baby boomer retirement has taken a series of major blows.  The value of their homes, retirement savings and inheritances has all declined substantially.   Many have lost or will lose their jobs.  Boomers will have to extend their working years and small and personal businesses will be their best, and in many cases, only option.

  

 7.  Generation Y Will Turn to Small Business:  Gen Y will continue to be be more entrepreneurial than youth in recent generations.  The economic slump will make this trend stronger as many Gen Yers face limited traditional employment opportunities.  With their risks and opportunity costs relatively low, many Gen Yers will choose to start or work for small or personal businesses.

  

Technology Trends

  

8.  Mobile Computing Continues Strong Growth:  On our list last year, mobile computing is entering the US mainstream.  Notebooks outsold desktop PC’s in the second half of 2008, smart phones sales continued their rapid growth and millions of netbooks (very small personal computers designed primary for mobile internet access) were sold.   Adding the continued rapid growth of navigation systems, location-based services and mobile search results in mobile computing having a major impact on small businesses in 2009.

9.  Cloud Computing Continues Strong Growth:  Another trend that was on our 2008 key technology trends list.  Cloud computing offers too many small business benefits not to continue its strong growth in 2009.  In particular cloud computing lowers capital costs and turns fixed costs into variable costs – two powerful attributes that are very attractive in a down economy. 

10.  Small Businesses Will Expand Their Use of Online Marketing Tools:  Despite the economic downturn, we expect the small business sector to increase its use of online marketing tools and methods in 2009.  Online marketing is cheaper and often more effective than traditional approaches.  And although online marketing can be complex, many tools and methods are accessible to DIY small business marketers.  With small businesses focused on customer acquisition and re-defining their business methods, we expect their use of online marketing to grow in 2009.

Comments

[Curtis Gray]

What about the growth of the Mainstreet Internet, where traditional non-internet businesses look for opportunities to sell online?

Seems a growth trend for 2009 would be in pre-packaged website services for e-commerce, much more so that in past years. After the traditional business owners check out the open-source software offerings, they will turn to online providers in droves.

- Curtis
http://ShipItOnTheSide.com - Learn to ship profitable software as a side job.

[Tim Berry]

Thanks Steve, great list. I'm most worried about your number 4, hoping that you're right, and that it isn't just wishful thinking. While starting your own business might be a natural counter to job losses and increasing unemployment, I hope we don't see crunch factors -- like credit squeeze, business failures, declining sales -- cut into new businesses. I want you to be right, so I've got my fingers crossed. Tim.

[Chaitanya Sagar]

Steve, I like the way you separated economic, techno and demographic trends. On 10, it's actually a lot of work to use online tools. Take blogging for example or for that matter even google ads. It takes a long time to understand and use the tools effectively. Do you think, in the long run, small businesses will be successful in using the tools?

[Ken Kaufman]

On number 6, I beleive that baby boomers will be the most interested in small businesses that can create an automated income stream. When a person gets ready to retire, they are looking for fixed or even annuitized payments to help them meet their monthly expenses.

If the small business is going to require 60-80 work weeks, then baby boomers will not be itnerested. We see an opportunity in this area for baby boomers to use their skills for about 20-30 hours per week and get paid well. Anyone who can shift their business model to attract this demographic could be rewarded handsomely.

[jfg17]

Hi Steve - Can you share your references for these two observations, please?

"The prior three recessions have seen small business formation rates increase."

"Failure rates will also increase, but not enough to offset the number of new small and personal businesses."

It would be great to know the figures that support these statements too. They are powerful.

[Katie Langston - Small Business Marketing Wizard]

Steve, interesting list. Re: #7, I think you're right. As a Generation Y-er myself, I can tell you there's a lot of concern among my peers that the jobs and career opportunities we thought we could count on are disappearing. As a result, I know several people personally who have decided to go into business for themselves. I actually think this ties in pretty nicely with your #10. Our relative comfort with web-driven technologies provides an opportunity many in my generation will find difficult to ignore.

Happy New Year!
Katie Langston

[Matt]

I think number one is key. Hardship drives innovation, and is the reason we always bounce back from down economic times.

Matt

[Account Deleted]

Great post. Times are so different than previous recessionary periods, which makes this time so unique. Technology and globilization has made a totally different playing field. The world will not let us fail. However, if we do not think what the future will bring, then we have no idea how to prepare for it. My fear is that most small business owners do not have enough personal tools to do enough out of the box thinking. Blogging, social media, and other inexpensive marketing methods take more discipline than time. Business owners need advisors and help to overcome these difficult times.

[@mattwilsontv]

You hit it right on: Gen Y will seek other opportunities outside the corporate realm. Why would we want to be bored in a cubicle working our normal 9-5's when we can work on startups with people our age really looking to achieve something big!

There's far less risk involved and some of our parents are slowly warming up to the idea. To us it's about doing what we love, and doing what challenges us.

[Voice from home]

this is absolutely great post :)

[Steve]

Thanks for the comments. Sorry for the slow response, but I've been on vacation and not online for the last week. Here are my reactions:

Curtis: I love the term "Mainstreet Internet." Can we steal it:). On our research agenda for 2009 is work looking at what we call "The Local Internet." We think it this is a major trend that could easily have been on our list.

Tim: Lot's of people are telling us our forecast that the number of small businesses will increase is too optimistic. It, of course, could be (all we really know when we do a forecast is that we are going to be wrong:)). I'm going to post on this topic and provide more info.

JFG17: the data can be found at http://www.sba.gov/advo/research/data.html#ne I will talk about it more in a new post.

Chaitanya & Allen: lots of research shows that most small businesses struggle with using online marketing tools. And many are hard to use. But this is a powerful trend based on clear and measureable benefits.

Katie & Matt: Gen Y's online skills are quite impressive - expecially compared to the folks my age. No doubt these skills are a great Gen Y asset.

Steve

[Peter Caputa]

I agree that a compounding list of factors will result in the growth of small business creation. I also think it's the right thing to encourage economic growth.

[Internet Marketing]

I think we are going to see something similar to the rush of "we need a website" for every business. Except this time businesses will be rushing to and some internet marketing savvy.

For local businesses who combine some simple IM strategies along with some offline help the results can be staggering - and they tell all their friends and business neighbors.

Maybe the Internet Marketer will be the next Web Designer......

Just my 2 cents!

[samuel de vera]

i think i will have to agree on that steve,infact i myself is planning to put up a business that will remedy my financial constraints.i am currently employed but my gut is telling me to execute plan b.hope you can send me some top notch business ventures for 2009.

[Jeff Paul Internet Business]

I was just looking around for material on internet marketing and stumbled on your post. Nice post. I’m still looking for materials for my research.

[David]

Businesses objectives in acquiring a loan is to ensure that business operations continue till the revenues of the business ensures sufficient cash flow to cover operational costs. Working capital loans are ideal for companies or pursuing a new ventures or to cover short term cash flow problems.

David from http://jumplanet.com the Get a Business Loan site

[Tom Troughton]

I definately have seen more creativity for new businesses springing up around me in response to the econonmy. The creativity also seems to be a healthy way to face the world around us rather than be pulled down by gloom and doom.
Tom Troughton
http://www.startablogwebsite.com?CK

[Internet Marketing Athens, GA]

Well I am certainly doing my part to help make your prediction of increased small business come true. When my "day job" salary was cut by approximately 60%, in 2007, I decided to make my part time internet business full time.

Turns out that was a great idea to make my hobby my bread winner... it went so well in fact that I've started a second small business this year.

http://InternetMarketingAthens.com

[seo for small business]

Good List. I agree with all of them too. As a matter of fact, I'm banking on an increase of small biz expanding to the internet.

[PPC Management]

It really is quite a list. People need to start adapting to this economic let down and change their strategy a little.