THE ULTIMATE GUIDE TO SMALL BUSINESS TRENDS IN 2020AND BEYOND

A lot of SMBs are winning in today’s economy, and 67% of owners say they expect revenue to continue improving throughout 2019.1 But will the current prosperity carry over to 2020 and beyond? Several trends indicate that it will.

Source: 1Insureon.com

WHAT’S ON THE HORIZON FOR SMALL BUSINESSES?

1.6x

8 SMALL BUSINESS TRENDS IN 2020 AND BEYOND:

1. TECHNOLOGY AND AUTOMATION SOFTWARE WILL LEVEL THE PLAYING FIELD

Automation has taken some time to unfold, but it’s beginning to establish a strong foothold among small business owners. Whether it’s for accounting, data entry, email marketing, customer experience management, or any number of business processes, entrepreneurs are achieving more with less, thanks to automation.

Some observers associate the term “automation” with people losing their jobs or being replaced by machines. But, according to a recent World Economic Forum report, machine learning and algorithms in the workplace could create 58 million net new jobs by 2022.1

The benefits of AI are especially relevant for small businesses because automating manually intensive processes and appearing just as professional to customers as larger organizations levels the competitive playing field.2

TECHNOLOGY AND AUTOMATION

According to a Salesforce report on small and medium-sized business trends, growing small businesses were “1.6 times as likely as their stagnant counterparts to say they’re using technology to automate business processes.”3

Sources: 1World Economic Forum; 2Entrepreneur.com; 3Salesforce 3

38%

“Our employees will primarily

work remotely”

REMOTE WORKERS

According to a recent report by Intuit, 38% of small businesses’ hiring managers said their full-time, permanent employees will work mostly remote in the next 10 years.2

2. REMOTE WORK IS THE NEW NORM

Although some believe workers are more effective in a traditional office setting, most of the evidence suggests the opposite. Rather than becoming distracted or slacking off when working from home, research shows that employees that work remotely can be more productive.

In fact, a nearly two-year Stanford study showed “a remarkable productivity boost among telecommuters in a test group equivalent to a full day’s work.”1 The report found that remote employees put in a full day of work (or more) because they didn’t have to fight traffic only to be late to work or leave early for personal errands.

In addition, employee attrition was reduced by about half, saving the test group about $1,900 per employee in annual retention costs. Total operating costs also decreased by roughly $1,400 per employee since workers weren’t taking up office space or using as much company power, water, and facilities.

Sources: 1Entrepreneur.com; 2Intuit 4

3. YOU NO LONGER NEED CASH TO START A BUSINESS

In 2020, starting a small business will be easier and more affordable than ever.1 Smaller, lighter, and smarter systems and manufacturing methods will drive down the costs of starting and running a small business. 2

Even in areas where business infrastructure costs don’t decline, technology accessibility will increase. Plug-and-play features and a variable-cost basis will provide affordable access to large-scale business infrastructures for large and small firms.

According to a recent Intuit study, over the next decade:

• Lightweight infrastructures will drive capital costs down by increasing industry operating speed, agility, and flexibility.

• Firms will use lightweight infrastructures to enter adjacent markets, blurring industry lines.

• A shift from fixed-cost to variable-cost business models combined with a pay-as-you-go approach will allow small businesses to minimize investment risk and lower upfront cash requirements.

• Economies of scale will no longer be entry barriers for SMBs.

Microbusiness

Home-based Franchise

+/- $3k

$2-5kSources: 1Business News Daily; 2Intuit; 3U.S. Small Business Administration

AVERAGE STARTUP COSTS

According to the U.S. Small Business Administration, most microbusinesses in 2018 cost around $3,000, while home-based franchises cost $2,000 to $5,000 to start.3

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+870 Million

4. IT’S A SHE-CONOMY

The number of women in leadership roles within areas of business, government, and education will continue to increase on a global scale, especially in emerging markets. Urban migration, mobile technologies, increased access to education, micro-credit, and low market entry costs will lead to women starting businesses more readily than ever.

In the industrialized world, women are already making significant education, economic, and political advances. The gender gap in earnings have narrowed significantly in the past decade, and is expected to reach parity by 2020.1

The knowledge economy will likely be dominated by women as they enter and graduate from college at a higher rate than men. They will be the primary workforce in the health, education and service sectors, which are all expected to grow significantly in the next 10 years.

Sources: 1Intuit; 2Booz & Company

WOMEN IN THE WORKFORCE

According to analysis by Booz & Company, 870 million global women who haven’t previously participated in the mainstream economy will gain employment or start their own businesses.2

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5. SOCIAL INFLUENCERS ARE A HOT COMMODITY

Numerous sources cite small business marketing as an area in which many entrepreneurs plan to spend time and money in the years to come. As a specific marketing strategy, social media seems to be leading the pack.

As social media channels continue to become more accessible, small business owners will be demanding more and more space on Facebook, LinkedIn, Twitter, and other platforms.

A growing number of SMBs are extending their social reach with the help of micro- and nano-influencers—those with 30,000 or fewer followers.1 A recent study by influencer marketing agency HelloSociety found that micro-influencers deliver “60% higher engagement rates and are 6.7 times more efficient per engagement than influencers with more followers.”2

Facebook, LinkedIn, Instagram, and others are in an arms race to become the most lucrative social media publishing platform.

Use Social Media

70%

Sources: 1Forbes.com; 2Hello Society; 3Clutch.co

SOCIAL MEDIA STRATEGY

Over 70% of small businesses used social media in 2018, according to a survey of more than 350 small business owners. That number is expected to grow over the next several years.3

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6. GEN Z WILL TAKE OVER

Today, nearly all successful businesses—large and small—are aware of the need to understand and engage with millennials. However, as we approach a new decade, the next generation is set to take over. Gen Z are true digital natives and their preferences will dictate the future of a business’s success for years to come.

Born between 1997 and 2016, this group of 86 million people is expected to represent 40% of all consumers by 2020 and potentially influence $166 billion - $333 billion of family spending each year. By some estimates, they have already contributed about $44 billion to the U.S. economy.1

Forward-thinking small businesses are already looking to this generation for future opportunities. In addition to adapting their marketing strategies, small businesses should also evaluate their hiring processes and how they engage talent as this young generation enters the workforce.

Whether you are building a sales team or hiring technical talent, 2019 is the beginning of the Gen Z takeover in the workforce, and small businesses should be prepared.

Freelance by choice rather than necessity

73%

Sources: 1Entrepreneur.com; 2Upwork

GEN Z FREELANCING

Upwork’s Freelancing In America Gen Z study revealed that 73% of Gen Zers started freelancing by choice rather than out of necessity.2

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7. THE GIG ECONOMY IS THE ECONOMY

According to a recent survey by Bankrate, nearly 40% of all Americans now have a side hustle.1

A full-time employee who drives for Lyft after work, a stay-at-home mom who sells her art on Etsy, and a musician who teaches piano for extra cash are all examples of common side hustles.2

Per the same Bankrate survey, the average side hustler earns about $8,000 a year. Add to that the fact that 42% of respondents cited “fun” and “something to do in [their] spare time,” as their main incentives, and it’s easy to see that the gig economy is the new norm.3

$715Billion+

Sources: 1Bankrate; 2USA Today; 3Jobble.com

THE GIG WORKFORCE

The gig workforce is adding $715 billion annually to the economy through their freelance work.3

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8. TECHNOLOGY WILL HELP SMBS KICK CUSTOMER SERVICE UP A NOTCH

According to a 2019 study by Nextiva, 57% of patrons would rather contact companies via digital media rather than use voice-based customer support. Interestingly though, for more complicated interactions, such as payment disputes, 40% of customers prefer talking to a real person.1

Additionally, nearly 1 in 3 customers report sending a mobile/SMS message to the company requesting assistance.

In a world that’s increasingly dominated by large companies, statistics like these demonstrate the importance of knowing how and when to use different communication methods. Striking a balance between automation and personalization is critical.

Small businesses might not be able compete against big companies on price, but great customer service and a personal approach resonate with consumers. Also, technology can help. When leveraged properly, these technologies help small business owners improve on their hallmark: customer service.

#1 Goal: Increasing

current customer satisfaction

51%

Sources: 1Nextiva; 2First Citizens Bank

CUSTOMER SATISFACTION

According to the fifth annual First Citizens Bank Small Business Forecast, 51% of small business owners cited increasing current customer satisfaction and loyalty as their number one growth strategy.2

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ARE YOU READY FOR YOUR SMALL BUSINESS’S FUTURE?

With real-time manufacturing, virtual stores, web access to a global market, and the marketing reach of mobile technologies, small businesses are poised to compete with larger firms at an unprecedented level.

Is your small business ready for success in 2020 and beyond?

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