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What's in store for small firms in the next twelve months?
What's in store for small firms in the next twelve months?
December 03, 2010
The face of small business will change dramatically over the next twelve months.
The small business and sole trader community will be closely watching what’s happening in the economy as we either move out of recession or we double-dip. Either way, we’ll be ready to change because we’ve had to already over the past two difficult years.
Firstly, we believe that there will be an increase in the size of the small business marketplace as there will be many new small businesses, consultants and sole trader start-ups coming through. This is because the large corporate and medium businesses won’t grow — they will plateau — and without a doubt they will shed employees. More businesses will go into administration. The public sector will also shrink — and again — shed employees. With the shortage of jobs for teenagers, young adults and graduates they will have no option but to start a small business or become a sole trader.
Career coaching will grow. People with redundancy funds will have to invest with small career coaching companies who run transition courses teaching how to start a small business. The small business creative economy will grow because small business marketing advisers and creatives will be in demand to create the new businesses and market them. The small business financial community will grow because small business independent financial and business advisers will be in demand, not the banks.
The new start-ups will increase the numbers of small business and sole traders in the UK. This may create a busier and more competitive marketplace but will also encourage businesses joining together to work on bigger client projects together.
Successful ways of marketing and selling services through face-to-face networking means that networking organisations such as Athena, The Best of and 4Networking will grow and new networks will be founded.
Secondly, innovation. Existing small businesses and sole traders will have an opportunity to grow by taking on more business.
This will take the shape of:
- having more than one business
- outsourcing to trusted suppliers in strategic alliances
- increasing revenue from networking marketing opportunities aligned to an existing business
- innovating products and services
- creating passive income streams that work 24/7/365, such as e-books and e-courses.
With the arrival of younger entrepreneurs in the small business marketplace, many more innovative products and services will come to market – and quicker
Traditional ways of purchasing traditional goods and services from the multiples will be challenged and changed by the hands of the small business community.
Small business and sole traders will continue to embrace the use of social media and blog sites to promote themselves. Promotion through social media optimisation (SMO) suits the speed of the small business marketplace. SMEs can deliver useful and regular new content into our potential customers’ smartphones and into the search engines at the drop of a hat.
Small firms can control multiple business communications with a preferred social media dashboard such as ping, tweetdeck or hootsuite and they will be demanding technological enhancements.
Any reliance on email will change as it is an increasingly slow and outdated mode of communication as opposed to Twitter and Facebook.
Customers will increasingly buy from small businesses because of their values and social responsibility. Small businesses will change to return the favour and buy small business products and services and also buy local too to support the local marketplace.
Alison Davey is an expert contributor to Marketing Donut and runs Real Eyes Marketing, a London-based consultancy that specialises in advising small businesses.
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Comments
Great article Alison and I totally agree. I also think it's a great time for startups with all the knowledge, IT and outsourced services available these days. It's easy to set up a business from home, they key to success will be good marketing and building strong client relationships.
Thanks Nick and yes, the key to success is continuous marketing and communication. You get just one chance to create a good brand. Relationship building face-to-face with people through meetings and networking is imperative.
This is the 2nd piece I've read that suggests we'll see more and more start ups next year, but I'm interested to know what you think these new businesses will be doing?
What products will they sell or services will they provide and is there a market for them?
Running your own business isn't easy, I've been freelancing as a web designer for 3 years and have recently taken a full time position with a previous client of mine.
It's tough, you have to run a tight ship to make any real money. If everyone is busy starting up companies, husbanding their resources as many start ups do. Who's going to be spending their money?
Hello,thanks for your comments. What I'm seeing in the market place is people moving away from traditional careers and starting up businesses around what they enjoy doing - using the skills learned in past careers. It could be anything - services or products or they've identified a gap in their local market. I'm constantly surprised at the client sectors I work in.
Services are easier to set up and have less start up costs than products. With marketing planning and testing - often using a marketing expert - and - testing - often using researchers or surveys or talking to people at the school gates people can prove a concept before launch.
Running your own business has challenges with cash flow but the rewards and creative freedom is immense. As I see it freelancing is different to running a business. You either freelance on a contract basis or you set up on your own and win your own clients.
Most successful small businesses have 4 distinct revenue streams and work in strategic alliances with trusted colleagues in similar professions.
We are seeing changes in consumer purchasing - on values. I'm a small business and I purchase from other small businesses - it's all about communication too - recommending local suppliers and not buying from invisible suppliers.
"recommending local suppliers and not buying from invisible suppliers." I totally agree, but "starting up businesses around what they enjoy doing" that isn't enough.
You have to have a product/service that is in demand, which is why I'm interested in your opinion on what these may be?
Thousands of people will be facing job losses, they can't all have a brand new great ideas that they can build a business from, can they?
Rich - thanks for your questions.
Yes, you need to have products and services that are in demand however businesses are extending their offerings to maximise demand and profit. For example, sometimes people are working with similar revenue streams in one business, other people have different revenue streams in more than one business.
Let's take a look at the top 10 most popular second careers - 1-plumber, 2-teacher, 3-florist, 4-PR, 5-interior designer, 6-complementary medicine practitioner, 7-chef, 8-web designer, 9-nurse, 10-garden designer.
As real examples, I've met people re-training and setting up plumbing and central heating businesses - one then started a boxing club and outsourced the running of the business to his son. I've met people going into teaching from the corporate world or moving away from teaching and setting up training businesses such as employment law and coaching, teaching business English and presentation skills. I've met people running different floristry businesses - retail and mobile, people re-training as interior designers and commercial interior designers and setting up on their own, many different therapists starting their own mobile/studio or retail businesses in different holistic areas, chefs and cooks starting businesses (cupcakes etc) and nutritionists helping with people with nutrition and diet and opening up their own kitchens for meetings. I've met many different web designers who have set up on their own and a nurse who has set up a residential care nursing business and an NHS trainer who set up a sewing business. I've also met people setting up garden design businesses - one concentrating on an eco-gardening business and the other on a themed gardening business. I believe anything to do with personal development, personal branding and coaching will continue to grow also.
Secondly, we have people such as lawyers and financial advisers setting up on their own using existing skill set to set up sole trader consultancies or small businesses with others.
Thirdly, we have people who are innovating with different products for a particular consumer need - Dribblebuster, Sanare per Aquam, Yummy Mummy Tummy are good examples.
Fourthly, we have people that are going after customer service as the number 1 priority - Richer Sounds have done a good job here.
In conclusion, we have people who are going after products and services that are in demand or there's a gap in the market - these will include - health, fitness, children's products and services, entertainment, the environment, technology, food, drinks, travel, leisure, personal development amongst others.
We are going to need health and fitness people, we're interested in renewing clothes and goods, we'll need support with technology and we'll need creative teams to visualise and promote new businesses, legal teams to support IP and agreements and business and finance consultants.
I think we'll also see a return to the high street where independent new businesses will come on board - with accessory type shops such as chocolate shops, delis, bakeries etc. My local high street is a mix between the chains and independents -there's a popular cigar and chocolate shop, a coffee roaster and accessories shop, a vintage clothes and accessories shop, a gelateria and chocolate shop and a brilliant small award winning business that designs, manufacturers sells and also exports wind sensors.
While I don't doubt your research into which sectors people will move into, I simply do not see there being enough pieces of the cake for all of these people to take from.
In addition, not everyone is cut out for being self employed either. It may seem like an easier lifestyle, but the fact is completely opposite. You think about your own business 24 hours a day, any holidays you take you lose twice ove: loss of earnings and the money you spend.
The majority of people, IMO, don;t have the drive to get up day in and day out and establish a business. The first few weeks may be really rewarding, but take a look at those business owners when they haven't paid them selves for 3 months.
"1-plumber, 2-teacher, 3-florist, 4-PR, 5-interior designer, 6-complementary medicine practitioner, 7-chef, 8-web designer, 9-nurse, 10-garden designer. "
While I agree we need more tradesmen, with money getting tighter the requirement, IMO, for florists, interior and garden designers will diminish.
Moving into teaching is laughable, there aren't enough jobs as it is, the hours are crap and it's more paperwork than teaching. My girlfriend teaches in a North Wales Primary and 3 of the Teaching Assistants are Qualified teachers that cannot find teaching posts. This will only worsen if they start filling education roles with members of the Military.
NHS cuts will see departments closing, which will see a lesser need for Nurses and everyone has a a son-in-law or cousin that can throw a website together, which is why I've pulled out of freelance. People are not prepared to pay the money.
It's obvious that we have very different opinions of what the immediate future will bring, but I am really enjoying our debate :-D
Hi Rich, Happy New Year. Thanks for your further comments and I'm enjoying the debate too :)
I would comment that people are being proactive with 'getting a slice' of the pie. There is optimism and innovation in the UK small business market - in spite of the current debatable economic strategy, the proposed size and speed of speed of spending cuts, the cuts in the public whilst tax havens are not being tackled.
It is a constant surprise to me, at the new areas that people want to launch businesses in - and good luck to them all. My advice to clients is to ensure that people have 4 revenue streams - niche is not always a relevant or ethical route to market to talk to people about.
Yes, not everyone is cut out to have their own business - but again - I'm seeing people mixing income streams - part own business and part self-employed - which gives regular income.
I agree with your comments on websites - this is one service that could be regulated.
Best wishes.
Alison
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