The next five to 15 years will reveal subtle differences in the way entrepreneurs look, think and work.
That's the forecast outlined in "The Future of Small Business: Trends for a New Century," a national study conducted by American Express, IBM and National Small Business United (NSBU) and in cooperation with RISEbusiness. NSBU is the nation's oldest bipartisan political advocate for small businesses.
The report highlights new challenges and fresh opportunities for the savvy business owners. At COSE -- the Council of Smaller Enterprises -- we'll be helping entrepreneurs negotiate successful paths through what could be a pretty unfamiliar landscape.
The best news for many start-up and fast-growth ventures is that the globalization of financial markets is expected to create additional capital sources, and the Internet will be the tool you'll use for accessing many of these new markets.
The study, led by Dr. Richard W. Oliver, professor of Management at Vanderbilt University's Owen Graduate School of Management, examines emerging trends and developments in the areas of small business ownership, labor force requirements, new technologies, business commerce and financial markets.
It was conducted in consultation with panels of experts in each of the five areas and based on an examination of current data, interviews with topic experts and the review of scientific literature. Oliver's team predicts that some of the most significant changes will involve technology, demographic shifts and the ever-increasing influence of the Internet.
New technologies are expected to yield fertile business opportunities in such developing fields as microelectronics, microelectro-mechanical (MEM) systems, wide bandwidth communications and biotechnology. Additional technological developments will combine with changes in organizational structure and a move by entrepreneurs to more knowledge-based service businesses to increase productivity and profits. In other words, if you're a techie, you're in business.
The Internet will further stimulate the rapid growth of the business-to-business sector. There will be expanded online opportunities for market-niche, home-based and virtual businesses -- defined as short-term alliances among independent businesses to complete single projects. If you're not conducting business online yet, get there.
In business-to-consumer commerce, the study projects growth will be less rapid and the ease and convenience of e-commerce will let the buyer effectively set price, quality, service and delivery standards.
Among the projected challenges is the aging of the U.S. population, which could result in chronic labor shortages. Small technology firms could be further threatened by a shortfall of skilled math, science and computer professionals. As a smart entrepreneur, you'll anticipate these changes and create attractive work environments and competitive compensation packages that get and retain top employees without necessarily outspending the competition.
The study describes a work force of the near future that relies to a growing extent on women and minorities. The overall graying of America, and a population decline in the 25-44 age group -- the segment that traditionally creates most new businesses -- will translate into an accelerated rate of business closures and fewer new companies taking their place. Perhaps this trend will create markets that never existed for you before.
When it comes to evaluating the worth of a company, physical assets will take a backseat to intellectual property, including patents, brands, business models, competencies of personnel and innovations. It's not what you have, it's what you know that will matter most. What the survey points out more than anything else is the value of staying informed and flexible enough to accommodate new ways of finding and conducting business in the coming years.
Steve Millard is executive director of COSE, the nation's largest small business organization. COSE provides such small business advantages as health insurance, workers' compensation coverage, education, networking opportunities and government advocacy.
Survey saysThe face of smaller businesses will change in subtle but critical ways, according to "The Future of Small Business: Trends for a New Century."
Here are some of the highlights:
- New technologies and organizational structures will increase productivity and profitability, but smaller technology firms will acutely feel the shortage of computer, math and science professionals.
- The expansion of e-commerce will dramatically add to the $2.8 trillion in total business-to-business sales anticipated by 2003.
- The Internet will encourage the growth of market-niche, home-based and virtual businesses.
- Improved credit technologies and the Internet will offer smaller companies wider access to financing and the more flexible use of money.
- Major demographic shifts will results in chronic employee shortages and a work force that's older and more female, Hispanic and African-American.
- The dip in the supply of younger (25-44) workers will mean a temporary reduction in the rate of the creation of new businesses.