Business Insights
By Sonjui L. Kumar and Kirtan Patel
The business world as we know it has turned on its head in the last few months. So many of the mega companies that grew and prospered in the 1980s and ¢90s have come tumbling down, sometimes through their own fault but often due to global circumstances. Many service providers find themselves captive to the industries that are now crashing.
The key to success for many small businesses in the next few years will be their ability to keep up with the trends of the day. Here is our list of likely trends and opportunities to watch for:
The smaller (and cheaper) the better. Everyone is tightening their belts and the businesses that take advantage of that mindset will succeed. Customers are looking for any way to save a few pennies. Give them what they are looking for: group discounts, early bird specials and package deals.
Finding the pork in the trillion-dollar barrel. The government has earmarked a ton of money to be released into the economy by second quarter of 2009, budgeting dollars for clean tech, infrastructure, alternative energy, education and the arts. Find out how you can get your share of those tax dollars and bid on a government contract for your business.
Be fast and nimble. In these uncertain economic times, the businesses that can cut costs, work with fewer people and look for opportunities will come out ahead. Adapt quickly to the changing environment as businesses look for creative ways to stay within their budgets, retain customers and generally stay alive until next year.
Eco-responsibility and social responsibility. Although the “greening” of American businesses will take a backseat to the economy, companies will continue to institute policies and products that highlight their commitment to a cleaner, greener planet. Similarly, businesses that help or partner with non-profit organizations and social causes still have an edge with consumers. Even in this tight economy, people like to feel good about the companies that they buy from or support. “Greening” is still good business, particularly in industries that serve the Generation X and the Millennials.
Use social networking sites and other non-traditional marketing. As marketing budgets shrink, businesses will need to look for cheaper alternatives to traditional advertising. Twitter, LinkedIn, YouTube, Facebook and online advertising will be used more than ever to connect with customers, investors and employees.
Everyone’s an entrepreneur. Unemployment is at an all-time high; college recruitment is at an all-time low; and retirement accounts are shrinking hourly; more people than ever before will strike out on their own. Personal and small businesses are easier to set up now, making “self-employment” a popular alternative to unemployment. This trend will result in an increase in businesses that support start-up companies.
Globalization slowdown. This may be temporary, but right now the focus is on American-made products and local service providers. Businesses will highlight how they are participating in and supporting the U.S. economy. A tumultuous currency market will also contribute to the trend of investing domestically.
Bankruptcies and workouts will define the market. A cash and credit crunch is forcing many individuals and companies to file for bankruptcy protection in an effort to keep their homes and businesses while working out payment plans with their other creditors. As many as 1 in 9 individuals may file for bankruptcy this year. This trend will affect solvent businesses when accounts receivables end up in bankruptcy court.
Growth by mergers and acquisition: Warren Buffet says, “When there is greed be fearful; when there is fear be greedy.” Many companies have either been shocked by the current situation or paralyzed by fear as analysts bombard them through the media. Such fear creates a perfect environment for growth by acquisition or merger. In an environment of panic, vigilant entrepreneurs will find many diamonds in the rough.
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