More and more people today are geared towards starting their small businesses and turning these into profitable platforms. Both millennials and Generation Zs are taking action, especially with all the digital opportunities and the vast resources available. It’s now a race of who creates and markets first.
That is because the internet conjured a boom of countless entrepreneurial ideas. People can easily access these for free. From eCommerce and information marketing, to providing services like SaaS and consultancy, the internet has made it possible for ordinary people to create successful income streams.
Based on recent studies, around 35% of current and aspiring small business owners are within the age bracket of 50-59. Among these, 73% are males, and 25% are females. Asked on what motivates them, 26% mentioned that they feel they’re prepared to be their boss while 23% wanted to pursue their passion. Moreover, 73% showed that they are pleased with where they are now, and 78% of them reported profitability.
In the United States, 52% of aspiring and current small business owners are not that anxious about the prevailing political situation. Even millennials are riding the trend, indicating that higher education is not necessary to start your own business. That means, every person can potentially begin a very successful business regardless of the niche.
If you’re planning to start one this 2020, it’s essential to know the trends that may affect the way you run your business. Here are some of them.
1. Beyond the Outlook: Too Much Brightness?
As cited earlier, the common outlook to putting up a small business today is bright. You have to know, however, that you’ve got to tame over-enthusiasm and keep track of compelling figures. What does that mean? Well, studies show that only about a third of establishments survive ten years or longer. Moreover, only about half of small businesses survive five years or longer.
If you’ve saved enough for a modest retirement beforehand, said figures should not bother you. Take note, for the businesses which began in 2006, the rate of failing business stood at 45.4% while those who started in 2011 reached 51%. Furthermore, 2015 saw about 414,000 startups that are less than one year old. But that same year also saw the closure of 396,000 firms.
Such cases show that the outlook may be bright, but it does not reflect the realities. After all, there are hindrances and challenges to starting a small business that every aspirant or even existing owners should know and understand. That means, every person should learn to balance bright possibilities with actual happenings or figures. Don’t just jump into something because you’ve filled your mind with the options you can imagine. That is fine, though. Just make sure that you also considered the other side of it so you’ll know how to manage when things suddenly don’t go your way correctly.
Consider this. The younger generations may be pursuing ownership of a small business. However, the rate of self-employment among those within the age bracket of 15 to 34 have been gradually plummeting since 1990. What does that tell us about the difference in feasibility and optimism? It means that we can still address undue enthusiasm.
Small Business Challenges
Multiple challenges are facing small businesses or startups.
The primary problem for small businesses today is the lack of capital or cash flow. A recent study showed that 33% of small businesses cited this problem. Around 15% mentioned that they’re having issues when it comes to marketing and advertising, while 13% cited time management, recruiting and employee retention, and administrative concerns. As a result, only 10% of small businesses outsource bookkeeping, 17% outsource a CPA for accounting, while around 15% outsource payroll procedures.
Another major problem of small businesses is the lack of necessary specialised skills. Although most business owners have more education under their belt, around 33% of them only completed high school level. Although we mentioned that a higher education degree is not needed, a lack of further education may also mean a lack of specialised skills among small business owners.
Taking the Bright Side
Now that we’ve covered the downsides and adverse realities of starting your own business, it’s time we focus on the bright side of it. That is, more and more startups today are seeing new business survival rates. From 2016 to 2017, for example, four out of five startups survived after one year of operations. The US also saw a staggering 78.6% survival rate of small businesses from 2005 to 2017.
Moreover, the changes in the number of high-tech small business firms in different industries showed a modest percentage increase. For example, the percentage points of small firms in software publishing showed a 12.3% increase. Besides, small firms within the pharmaceutical and medicine manufacturing industry witnessed a 6.3% rise while those in scientific research and development recorded a 4.1 and 4.0 increase rate.
Yes, it’s okay to get your hopes high with your small business. But make sure you are prepared to handle strikes and thoroughly know what you are getting.
2. The Surge in Amazon FBA
What is trending among small businesses? If you’re to ask this question, most would probably give eCommerce as the answer. And which eCommerce platform is the most popular of them all? Well, Amazon may top the list of answers. Yes, Facebook has its marketplace while eBay has been here for quite some time. However, if you aim to sell products without the hassles of storage, packing, and shipping, then turning to Amazon FBA may be the right option.
Today, more and more businesses are integrating Amazon FBA into their business models. A few resorts to have FBA as the primary avenue of marketing. Based on the latest surveys, around 54% of units sold globally are accounted for by Amazon during the second quarter of 2019. This trend is likely going to increase as more and more sellers are joining Amazon. To date, more than 54% of brands have eCommerce sites, and this is expected to balloon to a staggering 74% in the stated period.
There are three primary ways of selling products and services at Amazon
First, you can apply as a first-party seller. With this mode, you produce the goods and sell wholesale to Amazon. It’s up to the eCommerce giant to do the purchasing, handling, storage, shipping, fulfilment, and returns.
Second, you can be a third party seller and sell your products on Amazon. You can look at this approach as a brick-and-mortar shop or just another online marketplace.
The third approach is called hybrid selling. Here, you can register some of your products for a first-party arrangement while having a third party seller relationship with others. While this may be an excellent mixed strategy, one needs to be really on top of everything by applying for due diligence and ownership with all the business processes.
3. Here Comes the Gigs Economy
In 2018, studies revealed that 57.3 million workers in the United States engaged in some form of independent work for the past 12 months. Since 2014, freelancers composed up to 36% of the overall workers in the country. They engage in temporary employment relationships somewhat sporadically to either have an extra income or to escape the 8-5 system. Somehow, it makes them feel like they own their time, and are their boss. Moreover, they can choose to work on projects aligned with their passion and interests. Because of technology, gig-work has become the new normal for more and more people.
Today, companies that support gig-works or freelancing are valued at more than $10 billion in the United States alone. Among the most popular platforms are Uber, WeWork, Airbnb, and Stripe. Many more local and global versions of these are mushrooming in different countries. These companies offer more or less support to temporary freelancing in the form of marketplaces and payment management. That means, there are numerous opportunities out there for companies that provide gig-work management and support. If you can offer these things, then you can join this rapidly growing market.
Furthermore, it is a given that this trend offers a ton of implications. Here are a few of them which directly relate to small businesses.
The Darwin Award: Phasing Out
One of the most significant advantages of having marketplaces for contractors is that it fosters healthy competition. It is a standard free-market tenet where high-quality goods and services are preferred over inferior ones. If you believe in this view, like those who evaluate Decacorn companies, then it is time to assess the gig economy. That is because a lot of things may get phased out as it continues to grow.
Outsourcing Matters: 9-5 Jobs Fading Out
Perhaps, you may want to phase out some employment setups for your small business such as doing away with some desk spaces and outsourcing jobs to online platforms. By doing that, you can save resources and time by outsourcing expertise and equipment. Who knows? There might be freelancers out there who can do the work better and faster for a lesser time and pay.
Turn to Substitutes: You May be Phasing Out
Consider your very products and services vis-a-vis the substitutes that can be found from freelance marketplaces. If you’re into installations or deliveries, you may settle in online marketplaces for freelancers. They may have already taken a slice of your shares and perhaps, you can have them back by engaging on popular platforms. After all, you would not want to win a Darwin award and get disadvantaged from the rapidly evolving market.
4. The Rising Waves of Remote Work
Similar to the gig economy, remote work is rising like a series of powerful waves. Even gig workers choose to do remote work. Although both are somehow interlinked, they are not necessarily the same. There are several practical reasons to note why remote workers are more driven than those working on an 8-5 setup. A significant survey revealed that most remote workers have invested in creating dedicated spaces for what they are doing. Moreover, around 67% of remote workers seek further training.
This year alone showed a growing acceptance for remote work with 66% of companies allowing so. Further, 16% of companies have full-time employees who work remotely. As everybody joins the digital company, including entire systems and blue-chip companies, expect this number of remote workers to continue rising. So how does this affect small businesses? Here are things you should reflect on.
Save Time, Save Resources
Overhead costs can drag companies down. There are inevitable costs beyond control, especially during the first years of your business. Among the standard expenses are electricity for AC, the wear-and-tear of office equipment, and other supplies. Sure, these are all part of maintaining an organisation. However, you can lessen these using different approaches. One strategy is to design a remote working day scheme for your employees. By doing so, you’ll save a great deal on electricity, paper, and lessen the wear-and-tear of your office equipment.
That mechanism does not apply to everybody, though. Restaurant owners could not just do so for their wait staff or line cooks. Design companies, digital marketing agencies, and tech companies, on the other hand, can very much resolve to remote working schemes. That also helps save time for both the owner and the employees. After all, there is no reason to be late since you don’t have to get up to your desk. You can do tasks assigned digitally.
Leverage Highly-Motivated Employees
If you did not experience remote work before, imagine this situation for yourself. First, you get to keep the same job that you have with the same rate and range of benefits. The only difference is you work at your home, wear whatever clothes you have, or maybe work while eating. Interesting, right? Well, that also applies to your employees.
A lot of people who work remotely have this sense that their company trusts them. It boosts an employee’s motivation and lets them puts so much heart into their work. Some of the biggest companies out there, such as British Telecom, Dow Chemical, and Best Buy revealed that teleworkers are more productive by 35% to 40%. That means, breathing down on knowledge workers’ necks leads to nowhere.
The American Psychological Association also showed that employees who have more control over their work tend to be more motivated to create better outputs, acquire skills, and experience less stress. In short, remote work helps reduce attrition and boost employees’ physical and mental health.
Now, those are just some of the most common trends you need to lookout for. Make sure you put them to heart and actualise them in your operations. In that way, you’ll ride the waves of the future sustainably and successfully. To help get you started, you can check out the funding opportunities of Bizzloans. You can receive a free quote below without hassles and receive funding within 24 hours.