It has been an interesting year for small business. We have seen the stock market go from the highest of highs to the lowest of lows, affecting small business funding and bottom-line profits.
However, according to the latest quarterly Wells Fargo/Gallup Small Business Index survey, 77 percent of small business owners say they are more optimistic than pessimistic about the financial outlook for their business. Historic unemployment has stymied efforts to find top talent, yet 22 percent of business owners say they will hire or have hired at least one employee this year.
For most small business owners, 2019 has been a good year for business, but what trends will 2020 bring to existing companies? Will 2020 be a good year for entrepreneurs if they are planning on starting a new venture? Here are some trends will impact your business next year.
2020 Small Business Trends
#1. Online reviews will be more important than ever.
For the past few years, marketers have been alerting us to the importance of end-user reviews. Whether it is a tangible product or a service, what your customers say about you online is increasingly important. Bright Local's most recent survey of consumers in 2018 reports that 90 percent will research and read online reviews before frequenting your business. Beyond impacting your bottom line, customer comments on platforms like Facebook, Google, Yahoo!, Yelp!, TripAdvisor, OpenTable, and even the Better Business Bureau also impact your search engine rankings.
These trends will continue in 2020, which means that existing small business owners and entrepreneurs should solicit positive customer reviews on these sites and monitor social networks to ensure a more positive online presence. The good news is that small cash-strapped businesses that devote time to creating and maintaining a positive online presence will likely experience positive ROI.
#2. Customer experience will be crucial in 2020.
In the flurry of going to market, most entrepreneurs pay attention to the end-user experience with their product or services. If they do not, they are destined to fail, according to the latest data on customer experience. In 2020, how your clients perceive their interactions with your products will be a huge determinant of your success. The State of CX Management, 2019 shows that 71 percent of CX leaders report that their CX efforts had a positive impact on their financial performance over the previous year. Now imagine how important customer experience is for the new business that faces both start-up cash flow challenges and competition from established brands.
Entrepreneurs and small business owners should pay close attention to customer experience in 2020; landmark research from PWC in 2018 revealed that 86 percent of consumers would pay more for great customer experience. Walker also studied the issue and predicts that, by the end of 2020, customer experience will be the key brand differentiator, overtaking price, and product.
#3. Mobile-first will impact every part of your business.
The American obsession with the smartphone will most certainly continue next year. Part of it is because Millennials now make up the largest demographic cohort in the workforce today. By 2025, they will represent 75 percent of the workforce. As you have probably noted, this population is both tech-savvy and smartphone-driven. Small business owners must adapt their communication style to these trends by ensuring their efforts to communicate are mobile-first. This should include:
While focusing on Millennials is important, entrepreneurs should also note that the obsession over our devices spans demographics. The Society for Human Resource Management (SHRM) reports, “The number of job seekers across all age groups using mobile devices to search for jobs continues to grow.” While conventional wisdom may suggest a younger crowd accessing their cell phones for Internet searches, shopping, and job searches, a new study by Glassdoor shows that the use of smartphones is highest for ages 35 to 44 and the Generation X population uses their mobile devices more than Millennials.
The study revealed another important point: businesses of all sizes should make sure their job application process is mobile-friendly. The Glassdoor study showed that mobile job seekers complete 53 percent fewer applications and take 80 percent longer to complete them than those that apply via other methods.
Small business owners suffer from the low unemployment rate and resulting talent shortage just like enterprise organizations do. However, these companies are less likely to provide competitive salaries like the big players. Creating a mobile-friendly application process is just one way to stay ahead next year.
#4. Remote work will increase in 2020.
Infrastructure costs can be significant if you are a small or start-up business. The good news is that the employment model that uses remote workers shows no sign of slowing down. It turns out that not only do employees like it; employers are reaping the benefits, too. That is probably why remote work will become a standard operating procedure for most companies in 2020.
The fact that 70 percent of the world works remotely from an office setting is a business advantage for even the smallest employer. Business Insider says that roughly one-half of the U.S. workforce will be remote next year. Unless you are a brick and mortar storefront, this has positive implications for small companies trying to staff up.
Harvard Business Review says the next iteration of the work from home phenomenon is WFA or “work from anywhere.” Researchers studied the trend and discovered significant increases in employee productivity, lowered costs due to reduced commute times, and savings to companies on resources such as rent and electricity. PGI News reports a $10,000 savings per employee in real estate costs annually for employers with full-time remote workers.
Stanford researchers conducted a two-year study that showed home-based workers churned out a full additional days’ worth of work each week they stayed home. Allowing employees, the flexibility of work from home also increases retention according to the Stanford study.
Added benefits include a reduction in healthcare costs because employees not exposed to coworker germs are a little healthier. Working remotely can even reduce stress and improve morale in workers according to the American Psychological Association.
#5. Freelancing is the new full-time.
By next year, 50 percent of the American workforce will dip their toes (or their entire foot) into the gig economy. Freelance workers are growing, and that led Forbes this year to ask the question, “Are we ready for a workforce that is 50 percent freelance?” Small businesses should get ready; the article pointed out that by 2027, the majority of workers will freelance.
Today, there are 57.3 million freelancers, an increase of eight percent from five years ago. That growth is about three times the average growth rate of the traditional workforce. The benefit for employers is that these workers cut labor costs, marking the 1099-contractor a natural resource for most established and new businesses. The majority of enterprise organizations (66 percent) are already applying these workers toward a more positive bottom line.
The implication the small business owner should consider is that freelancers save cash-strapped companies the costs of benefits. Using freelancers can cut the volume of small business funding needed to launch. Too, freelancers serve an important role as the pinch-hitter, stepping in to help out with workload peaks without accruing additional FTEs (full-time employees). Watch for freelancing to heavily impact your business next year and in the future.
#6. The necessity of planning for a disaster will be ever more apparent.
Extreme weather events rocked many businesses in 2019. Small businesses, that employ roughly 60 million Americans, are at risk and vulnerable to disruption, according to a report by the Small Business Majority and the American Sustainable Business Council. Smaller companies must take precautionary steps to shore up their supply chains, create disaster recovery plans, and select the proper level of insurance coverage to counteract their risk.
Smaller companies lack the capital resources of large corporations, so extreme weather events could have a negative effect on bottom line income. MJ Bradley & Associates reports 30 percent of the small businesses affected by Hurricane Sandy failed as a direct result of the storm and 25 percent of small to mid-sized businesses never reopen following an extreme weather event. They also report the median cost of downtime for these companies is $3,000 per day.
Planning for a new year that will surely include unusually intense weather events is, unfortunately, less of a trend and more of a business necessity. Companies may need additional small business funding to shore up their defenses.
#7. 5G will improve your business.
Fifth-generation cellular wireless, or 5G, will have an impact on your business next year. C/Net says about half of the U.S. will have access to this next-gen faster network by 2020, with 5G cellphones rolling out heavily in the next two or three years. PC says the technology will:
The new 5G will fuel business innovation, particularly in the start-up sectors. Entrepreneurs will use 5G to create new disruptive business models using technology like artificial intelligence (AI), automation, robotics, virtual reality, drones, phone apps, and more. It will give small companies big tools and level the playing field to give them a chance to compete on a global scale.
To prepare for business ownership in 2020, focus on the best funding solutions to get you there. Download your copy of Innovative Funding Strategies for Entrepreneurs today.
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