As an entrepreneur you should always be on the lookout for what is on the horizon that might impact your business either positivity or negativity. The challenge is that given the current economic climate you might be so heads down trying to survive you don't have time to see the forest for the trees. I'm here to help! Here are ten trends you need to be aware of for the rest of this year.
Economic Downturn Continues to Impact Business: I know your first reaction is "tell me something I don't know". Do you really know the impact of the economic downturn on your business? Unless you have positioned to fight through tougher times and are focused on survival you may not be truly taking the economy into account in running your business. Here are the facts:
Most businesses are not hiring...they are downsizing. This is true even for small businesses. You have to be prepared and take action in adjusting your staffing and operation to meet the demand for your product. It may be hard but if you need to reduce staff do it now don't wait hoping things will pick up. Payroll makes up the biggest portion of business expense and and it can take the whole business down if you are over staffed for your sales levels.
Capital spending is down on items not vital for survival.
If you want an indicator of the health of the economy look at consumer spending. Consumer spending is down...regardless of how far down the supply chain you are some consumer needs to make a purchase.
The economic downturn is impacting businesses downstream which will eventually make it back to you. If your supplier's supplier goes out of business you will be impacted.
Competition for scarcer dollars will intensify.
This is a global crisis...international governments actions will have an impact on what happens in the US.
The Number Of Small Businesses Will Increase: Many downsized from corporate America will look to go into business for themselves. It is estimated that 7 percent of those downsized will start a business instead of try to fight back into the job market. Many of these will be "Solo-preneurs" working for themselves providing consulting services. If you provide services to business watch for individual consultants with minimal overhead to undercut your prices.
GenY Looks to Small Business Ownership As An Option: Back when I started in this business it was often time a struggle to get recent college grads to consider entrepreneurship as an option because there were many high paying corporate jobs available...those days are over. GenY also sees what is happening with the corporate downsizing and wants more control over their future.
Green Technology Becomes a Business Strategy: No longer a trend, "Green" is truly an important component of a business strategy. What was once viewed as an unnecessary expense has become a must have in the eyes of many. Whether a company uses the fact that they are "Green" as a way to differentiate themselves from their competitors or a cost containment strategy "Green" is here and it is real.
Small Businesses Turn To Mobile Solutions: Mobile solutions are becoming more and more ubiquitous in our society. You as a business owner are no longer tied to your desk or even a laptop. With technology like the iPhone you can handle much of your business wherever you are. In addition your customers demand to access you from mobile devices. If your website is not "mobile friendly" many consumers will by pass it and not see what you are offering. You need to stay abreast of mobile trends and modify your practices accordingly to compete.
Social Media Becomes The New "Word Of Mouth": Social media continues to gain traction in business regardless of what you do or where you do it. Social media requires little money to implement and is a great way to develop qualified business leads. Social media is perfectly adapted for both the GenY and mobile trends mentioned earlier. Yes I've heard the arguments about the time it takes and the difficulty in establishing a hard "ROI" for social media. If you look at how you are spending your time and money now on sales lists, cold calling and advertising and compare that to the outcomes associated with a well-defined social media strategy you will quickly see the value of the interaction developed through social media.
Government Intervention Impacts Small Business: Stimulus...The buzzword of 2009. Well intended yet difficult to execute and create the desired effect. Simply remember this:
Stimulus = Spending + Oversight + Regulation
If you are a small business don't run out to the mailbox looking for your check. Until I see the detail I will assume much of the money will go to stabilize the job market either keep people in jobs or put people back to work. That is a good thing but it will be a longer term process. Until the consumer feels comfortable enough with their job situation to start spending the economy will remain weak.
Banks...What Does Liquidity Mean? Listen to this...The bank stimulus package has been successful in what it was intended to do. It was intended to increase liquidity between banks and get them to lend to each other to avoid a full fledged banking system collapse. Having said that, the business borrower was certainly left out in the cold with the previous stimulus efforts.
I worked in banking for 10 years and I have a pretty good idea of how banking works...Be nimble and count on yourself and your ability to bootstrap to succeed, don't count on your bank to pick you up. This isn't really as bad as it initially sounds, I've always said banks in the commercial/small business lending area are conservative. The challenges created by the sub-prime practices of some institutions have caused them to become ultra-conservative. I'm telling you this will NOT change. I can't see how the government can force banks to make loans to businesses that have been weakened by the economy. What I was told when I first started in banking was "However you look at it a bad loan is a bad loan".
Cash Is King!: Cashflow is more important now than ever. You can't pay bills with receivables. I have seen several businesses that have performed a service or sold and installed products and the customer has gone out of business and not paid. Focus on your budget and monitor your cash position. Also, know the strength of both your customers and suppliers. Make sure all parts of your business process from beginning to the end customers can take care of their responsibilities.
Innovation Rises: Economic stress leads entrepreneurs to come up with creative ways to do business. Many will look to add value to current processes and create new and innovative processes and products. Many will see this down economy as an opportunity to flex their entrepreneurial muscles and do things different and better.
Entrepreneurs and small businesses are what will pull the economy out of the recession not the government or corporate America. Everything is always impossible before it works. That is what entrepreneurs are all about, doing what people have always told them is impossible.