Small Business Labs

Market Economics, Deregulation and Small Business in Yemen

Two underlying, but very powerful, long term trends are driving the growth of the global small business sector.  The first is the broad adoption of market economics.  Capitalism won its contest with communism and most countries have moved to market-based economic systems.  The second, related trend is business deregulation.  Most nations are lowering trade and business barriers and joining the increasing integrated global economy.

Many debate the merits of these shifts (my favorite book on this broad topic is Supercapitalism by Robert Reich).  But one clear outcome of these changes is the combination of market economics and deregulation is creating new small business opportunities around the globe. 

A good example is a recent article in the Yemen Times titled Small Business - The way to the future.  Yemen is a small country (population roughly 23 million) located on the Arabian peninsula due south of Saudi Arabia.  One of the poorest Arab countries, Yemen has limited oil reserves.  According to the CIA Factbook, Yemen's per capita GDP is $2,300 and 45% of the population lives below the poverty line.

The article discusses the importance of the small business sector to Yemen and the government's attempts to improve the small business climate.  Key quote:

"In 1998, the law of supporting small business enterprises was enacted and put into effect. The law aimed at removing all obstacles hindering the growth of small businesses, including limiting any taxation or fees paid by these businesses, while creating government agencies such as the Social Fund for Development, aiming at providing access to credit and technical assistance. The Social Fund for Development mainly aims at helping the growth of small business and the creation of new ones."

Yemen has a long way to go before it truly has a thriving small business sector.  But the recognition of the importance of small business in Yemen is part of this broader global shift towards encouraging and enabling the growth of this increasingly important economic sector.

Healthcare Costs Will Continue to Increase

Emory University has both a top rated business school and an outstanding medical complex, so it is not surprising that the Knowledge at Emory site would have a good article on health care costs.  Key quote:

"...total U.S. healthcare spending in 2007 was $2.3 trillion, or 16% of the country’s gross domestic product (GDP). By 2016, that number is expected to reach $4.2 trillion and represent 20% of the GDP. The U.S. Labor Department recently reported that healthcare benefits make up 30.2% of employers’ compensation costs. Last year, employer health insurance premiums increased over 6%—twice the rate of inflation—and the annual premium for an employer health plan topped $12,000 (for a family of four)"

Health care costs also contribute significantly to consumer bankruptcy.  From the article:

"A recent study by Harvard University researchers not only found that 50% of all bankruptcy filings were partly the result of medical expenses but that nearly 70% of those who filed for bankruptcy had health insurance."

Scary stuff.  The article goes on to discuss a number of options for improving care and/or reducing health care costs but makes it clear solutions won't be quick or easy. 

For small businesses health costs will continue to be a major issue.  The National Association for the Self Employed recently released a study on this topic.  Key quote from the study press release:

"..high cost continues to be the most significant barrier to offering health insurance.."

 

Cognitive Enhancement with Cogniceuticals

Cogniceuticals are brain enhancement drugs that improve human "knowing" functions such as memory, learning, and attention.  Think steroids for the brain.  The best known and most widely used are Ritalin and Provigil. 

While developed for other reasons - Ritalin to treat attention deficit disorders and Provigil to treat sleep disorders - both enhance concentration.  This makes them popular in settings where long periods of concentration are required.  Despite being illegal without a prescription, these drugs are commonly used in military settings, on Wall Street, in Silicon Valley and on college campuses.   

The British science magazine Nature recently polled their mostly scientist readers (paid subscription required) on their use of cognitive enhancement drugs and 1400 responded.  The poll results were:

• 20% used cognitive enhancement drugs
• nearly two-thirds said they knew of a colleague who used cognitive enhancement drugs

While Nature requires a paid subscription, there is a good summary of the study on WebMD that also covers the potential side effects associated with the use of these drugs.

The next decade will see the release of many more brain enhancing drugs to help the growing number of aging baby boomers afflicted with brain related diseases like Alzheimers.   While not directly related to small business, it is a longer term trend that is worth being aware of.   

Horizon Report on Teaching and Learning Technology

The New Media Consortium is a non-profit dedicated to the exploration and use of new media and new technologies.  Their members are mostly colleges and universities, but they also have corporate members.  They recently released their 2008 Horizon Report, which "charts the landscape of emerging technologies for teaching, learning and creative expression."  Their time frame is the next 5 years.

The report covers 6 key emerging technologies:

1. Grassroots video
2. Collaboration web
3. Mobile Broadband
4. Data Mash-ups
5. Collective Intelligence
6. Social Operating Systems

I found the section on social operating systems to be the most interesting.  They describe this as:

"The essential ingredient of next generation social networking, social operating systems, is that they will base the organization of the network around people, rather than content.  This simple conceptual shift promises profound implications for the academy, and for the ways in which we think about knowledge and learning."

Entrepreneur Magazine on Small Business Influencers

Intriguing cover story in Entrepreneur magazine on the "25 people, trends and events" that will matter most to small businesses in the coming year.  The mixing of trends with people and events is quite interesting.  I couldn't help comparing their list with our list of the 10 key trends that will impact small business in 2008, and there is a high degree of overlap.

While I think almost all of their choices are good ones, I found a few odd.  The auction of the TV airwaves, for example, will have no impact on anyone (outside of the bidders) for at least several years.  There a few others that made little sense to me.

However, that is the nature of lists and debating them is part of the fun. 

BoomtownUSA's Top 10 Small Town Trends for 2008

I was pointed to this really cool blog post on small town trends yesterday as a follow-up to my post on rural gentrification.  I don't know anything about the blogger, but he spends a lot of time in small towns.  His post says: "For the past four years I've been invited to tour over 300 towns in 44 states, a privilege that I've treasured in seeing this great country of ours."

I grew up in small town in Kansas and I find his trend list very interesting.   Also, because he is looking at trends from a small town perspective a lot are related to small business.  His trends include Gen Y entrepreneurs, unretiring boomers as entrepreneurs, enviropreneurs, and the growth of niche agriculture all as key small town trends. 

A couple of his trends are new to me:

"4. Promises-It started with Kalamazoo, MI which promised to pay the college education for anyone who attended its grade and high schools. Newton, IA, and El Dorado, AR have followed suit. Several others are looking to follow.

"10. Birds Beating Birdies-The fastest growing spectator sport in the USA is bird watching. Geo- caching, biking, hiking and extreme water sports are also growing in importance. Golf will still be important for some, but won't be as dominant as in the 90s."

I hadn't heard of the promises trend. I have two kids - a high school senior and freshman.  Is it too late for me to move?

I knew bird watching was growing, but what I find really interesting is the inclusion of the very techie term geo-caching. I didn't realize how much this term and activity had moved beyond Silicon Valley propeller heads. 

I've added this blog to my read list.  Given the broader trends around rural gentrification,retiring boomers and niche agriculture I want to keep up with small towns. 

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."

It's Prediction Season - 2008 Technology Predictions List

It's the time of year when people start making predictions for 2008.  Below is a list of 12 sets of technology related predictions for 2008.  Over the next month I will post on 2008 predictions in other areas. 

*** 1/03/08 Update - I've added a consensus 2008 predictions forecast based on combining the various predictions I am following***

1.  Lightspeed Ventures has 2008 predictions on cleantech, the consumer Internet, mobile computing and enterprise computing on their blog. 

2.  The Decker Marketing blog has predictions on online retailing. 

3.  Network World's Top 5 Security-Menace predictions for 2008.

4.  McAfee's Top Ten Security Risks for 2008.

5.  Gartner's Top 10 Strategic Technologies for 2010.

6.  PR Meets Marketing's 2008 online PR predictions.

7.  Eye on Apple Blog 2008 MacWorld predictions.

8. IDC on the 2008 "Post Disruption" IT Marketplace predictions.

9.  The Bivens Report on Nine Technology Predictions.

10.  GigaOm on 2008 Wireless Technology Predictions. 

11.  CNET's Magic 08 Ball.

12.  Nucleas Research's Top 10 IT Predictions for 2008.

Great Blog on the Future That Never Was

As someone who does forecasts I'm always interested in past forecasts and how they turned out.  Although reviewing past forecasts is very humbling - no one can predict the future and forecasts are often very wrong - it is a useful exercise. 

The Wall Street Journal recently had an article that mentioned the Paleo-Future blog, which tracks "The Future That Never Was."  The blog posts trend forecasts from the past.  It includes "futures" videos from the 80's and 90's which are very funny.  You can search by decade going back to 1880's. 

Very fun site for those interested in trends, forecasts and failed forecasts.