Small business trends in 2010

What’s likely to shape the world of small business in 2010? James Ainsworth and Simon Wicks have looked into their crystal ball, spoken to the experts and come up with their predictions for the key trends that could be influencing your business over the next 12 months

1. More start-ups…
   This is a fairly safe prediction, since the British Bankers’ Association has already announced that 2009 produced more start-ups than 2008. We think that, with the economy slowly recovering, the numbers are likely to accelerate. George Derbyshire, chief executive of the National Federation of Enterprise Agencies, agrees: “It’s much better to start at the low point of the cycle,” he says. “Many great companies have done so before - Carphone Warehouse and John Lewis, for example. If you can operate successfully in the current conditions you will be flying as a business in a few years' time.”
    
   Dragons’ Den investor Theo Paphitis, on the other hand, thinks the forthcoming general election means we’re in an economic “no-man’s land” that is causing many would-be start-ups to hold fire for now. At least, that’s what he told the BBC’s Working Lunch recently.
2. …but a slow recovery - and more pain to come
   George is circumspect on the state of the economy. “We’re not out of the woods yet,” he points out. “The recovery is going to be fragile. Unemployment is likely to continue to rise, and I wonder whether some short-term working will come to an end and some employers will bite the bullet and make more redundancies.”
    
   Media coach Alan Stevens has high expectations for 2010, however, and predicts: “2010 will be a year of growth for many businesses, provided they know how to target and market their offerings. In hard times, people look for either low cost or high quality. Ideally, small companies should deliver both, but in my opinion quality is the one to go for every time.”
3. Full-time workers starting part-time businesses
   Emma Jones of Enterprise Nation is an evangelist for home business, so she’s bound to say that more people will start one on top of their full-time job. But it’s never been easier, so we agree.
    
   “We’re calling it ‘Working 5 to 9’,” she tells us. “Millions of people will hold on to the day job and build their business at nights and weekends. It’s the best way to start - you have the security of a salary whilst building confidence and cashflow in the business.”
4. “Social” technology creates a small business explosion
   We’re lumping a number of things in together here, but social media, cloud computing, mobile apps and social search are about to have the biggest impact on small businesses since ancient people first traded beads for bones.
    
   Social media are levelling the marketing playing field between small and large firms. Cloud computing means you can run a business from anywhere, so you can reduce premises expenditure. Mobile apps are branching into e-commerce and location-based marketing (so you can target customers who are round the corner from you right now). “Social” search is search engine rankings based on approval ratings, not links - so if you’re good at what you do, you can get to the top of the ratings.
    
   Collectively, these online phenomena could create an explosion in small business marketing and sales power. Online media expert James Gurd has this advice: “Areas to invest in are social technology for knowledge management and collaboration (wikis, blogs, etc), monitoring tools for customer services (Twitter based apps like Hootsuite and Tweetdeck and social media monitoring tools like Trackur) and apps to drive user-generated content and two-way engagement.” We suggest you take note.
5. Outsourcing and short-term contracts
   Emma expects to see more small businesses employing specialist workers on short-term contracts, rather than taking on full-time staff. There’s an element of managing risk and ensuring flexibility in an uncertain marketplace; but we also think the recession has created a glut of freelance workers who are happy to stay freelance while there’s demand for their services.
    
   “Small and home-based businesses are following the adage of ‘Do what you do best and outsource the rest’,” Emma explains. “Rather than hiring people, which comes with legal regulations and fixed costs, they are outsourcing and sub-contracting.”
6. Micro-businesses collaborating on contracts
   None of our experts mentioned this directly, but we’re throwing it in as hunch. Micro-businesses have long used the Internet to share experiences, knowledge and to team up informally. We think we’re going to see more small firms with a spread of expertise creating small business “cells” to take on bigger firms in all areas of the market. Why? Because small is the new big in the new niche economy. Plus, public sector organisations are under strict instructions from Government to make it easier for small firms to bid for contracts (although they do say that every year...).
7. Small firms exploring international markets
   We think 2010 will see savvy businesses trade more overseas. As Digby, Lord Jones put it during Small Business Week last October: “The only way we’re going to get ourselves out of the economic dicky-do we’re in is if we trade our way out of it. And that means to compete out there.”
    
   Take Trunki, Bristol-based provider of cool travel products for kids. “Next year we’re really focusing on international expansion,” says managing director Rob Law. “Although we’ve got Trunki in 40 countries we’re really looking to work a lot closer with our distributors to enable them to build the brand to the same level we have done in the UK.”
8. The return of bigger tax bills
   All this extra activity is going to create more sales, meaning more income, meaning… a bigger tax bill. James McBrearty, managing director of TaxHelp, sounds a note of caution: “People should be prepared for the upswing in income that will result in a significant 2010 tax bill - particularly as the payments on account will have been low, as well as the 2011 payments on account which will be based on this.
    
   “One effect of businesses minimising their costs is that unfortunately this also minimises their tax savings for business expenditure, as this is reduced. Owners of small businesses should be aware that thinking they are saving money by doing things themselves, rather than getting professional help, can have a significant cost - both in the value of their own time and the loss of tax savings for the expenditure.”

What do you think?

So that’s it – the Marketing Donut small business predictions for 2010. What are your thoughts for the comig year? We’d love to know what you think. Please post a comment beneath this article or in the small business trends forum discussion.