5 Trends That Will Help Shape Small Business in 2010

Here come the 2010 predictions.  This one comes the way of the OPEN Forum and focuses on 5 trends that will shape the small business landscape in 2010.

Real time is big time.  People want instant access to fresh data.  I buy this and I think a critical mass of consumers are ready for it.  However, I still see major national businesses ramping up on the real time aspects of their marketing.  Small business are going to be several years behind them.  I agree there big opportunity for small business, but I don’t expect to see a mass movement in this direction by small businesses anytime in the next 2 or 3 years.

Location as plumbing.  Mobile is making this one happen.   Location is becoming a piece meta-data with more and more online actions.  Knowledge of where I am when I search, write a review, tweet, etc. is becoming more commonplace.  This (can) make the data richer and the results more precise.

Filtering gets social.  Companies in the business of connecting people with data (e.g., Google) have the mixed blessing of a rapidly expanding data set.  The ‘social graph’ is one of the tools that will help these companies find the data you are actually interested in.

Kitchen sink in the cloud. Most applications we use on a daily basis are going to move off  our personal devices and into the ‘cloud’.  This trend is accelerating and I believe it will continue…but with a few hiccups.  Expect a mini-backlash against these hosted applications as news of a few major failures starts to materialize.

Fusion boosts offline.  “No matter how wired we get as a society and business, there will always be a need for face to fact trust, building engagement.”  Right!  Online and mobile are just means to an end…and one of the many tools a small business owner has at their disposal.

How People Really Use the Yellow Pages

MSN Money has a fun article about how people can actually put those Yellow Pages books to work.  Notice none of them are finding a local business!  Yet another reason that small businesses need to be optimizing their online presence.

Here are some of the more fun uses:

  • Wrap in duct tape to create oversize building blocks
  • Use to make up names when writing fiction

And some of the more practical:

  • Tear out pages to start fires in wood stoves
  • Create Papier-mâché or decoupage projects
  • Mulch vegetable gardens

Yahoo! Singles Out the Local Opportunity

At UBS Investment Bank’s annual Global Media and Communications Conference, Yahoo! CEO Carol Bartz singled out the opportunity and growth in the local market when discussing the future of her company.  Specifically addressing “hyper-local” advertising and noting that Yahoo! sales people have begun to promote marketing tailored to location-detecting capabilities in smartphones.  Full article from AFP here.

Opportunity in Locally Targeted Display Ads

At allLocal, we believe locally targeted display (a.k.a. banner) ads are a huge opportunity for local businesses.  When done properly (i.e., good creative, proper targeting, proper optimization) a small business can see significant ROI from display advertising and reach an entirely new market.

BIA/Kelsey estimates that the local display advertising market will reach $1.9 billion by 2013, over double the $879 million spent in 2008.  The locally sourced portion of the market (as opposed to national players buying locally targeted ads)  is estimated to have the highest growth with a target of $565 million by 2013, up from $45 million in 2008.  See MarketingProfs summary for more details.

Growth in Locally Targted Display Advertising

Local Sourced versus National Sourced

Favorite Places on Google

Like many of its competitors in the local search and review space, Google is launching a window sticker campaign that will allow a local business to share in a small piece of the glory of the Google brand, while also building a connection between Google and local business discovery in the eyes of the consumer.  The Google enhancement over similar programs seems to be a QR code on the sticker that will allow a consumer to quickly find the Google Places page for the location from a smart phone.

Recession and the Small Business

Undercapitalization is one of the primary drivers of the high failure rates for small businesses.  Of all the impacts the recession has had on small business, the magnification of this particular issue is the greatest.  Of course, sufficient capitalization by itself does not guarantee success nor does undercapitalization guarantee failure.  However, what a business gets with sufficient capitalization is room…room to experiment, room for the economy to slow and, most importantly, room to make mistakes.  No business executes flawlessly, and the amount of operating capital that a business has access to dictates how close to flawless they have to execute in order to ‘make it’.  The more cash (or credit) a business has, the further from the path of perfection they can explore and still find success.  This path to success has been further muddied for small business by two simultaneous and dramatic impacts on operating capital:

  • Reduction in customer spending (less cash in the door)
  • Reduction in lending (less access to cash through borrowing)

This means the small business segment, already undercapitalized in many instances, is seeing its position further weakened.  The result?  Increased bankruptcies and continued job cuts.  In fact, businesses with less than 50 employees cut 68,000 jobs in November (according to ADP and CNN).  This represents 40% of the 169,000 total private sector job cuts that ADP reported (PDF) for November.  Looking for a bright spot?  How about this: according to the same report small businesses with less than 50 employees account for 44% of total employment, so the 40% number represents a contraction rate slower than businesses with 50 or more employees.  A stretch?  Yeah, a bit…but still something to consider as I believe it will be the small and local businesses that lead out us of the recession.