Trend: Business Ecosystems Proliferate

Ecosystems are developing within industry after industry as small and large businesses recognize and leverage their interdependency.

Once, total vertical integration was the goal. Today, outsourcing crucial elements of a company's production process has become the norm. In the future that outsourcing will be going more and more to smaller businesses.

Increasingly, small business will be able to do the same work as old Big Corp, and it will deliver higher quality for less cost. Big Corp will have a growing stake in the health of the smaller companies supplying it. Those small businesses in return will be invested in Big Corp's success.

If that's not an ecosystem, we don't know what is.

Impact:

As industries become ecosystems rather than food chains, look for more technology sharing. Look for larger organizations to seek investment in the smaller businesses in their ecosystem. Because those small businesses will lack the heavy commitment to past ways of doing things, they'll be quicker to initiate new ideas and processes.

That means the hot action is likely to be with the small businesses supplying larger companies. They are likely to be the places where innovation finds a home first. But the ecosystem's larger companies will be the market makers.

To succeed you'll need to understand the dynamics of both large and small business and of something new -- the ecosystem they share.

For more, see:

• The New Entrepreneurial Economy
• Film Piracy Threatens Small Businesses
• Going to the Customer
• A Business Friendly Europe

Trend: More Small Businesses

The number of small businesses is growing. Today, anyone can be the CEO of his or her own company. The limited liability corporation (LLC) with its reduced record-keeping and easier tax-filing requirements is part of the reason. The Internet has made it easy to set up an LLC. Most states have filing-forms online. In many states, you can even determine availability of a proposed company name online.

Sometimes people start a business because of a lack of job opportunities. Increasingly however, startups are the result of people who simply want to have their own company. The Global Entrepreneurship Monitor describes the former as desperation-driven and the latter as choice-driven. The future of small business is more likely to be about choice than desperation.

Impact:

More small businesses that are themselves smaller will impact those who sell products and services in the small business marketplace. Millions more small business owners will dramatically increase the number of decision makers that need to be reached -- and those decision makers will have less time available to give to vendors.

In a small business there isn't likely to be a CTO making the buying decision on new software and telecommunications equipment. That decision will probably be made by a CEO who is also the CFO, CTO and COO. People wearing that many hats won't have time for a lot of sales process. They'll be looking for the practical. They'll be cutting to the bottom line quickly.

Small businesses don't have much money to throw around. Price points are going to be lower than for a large corporation, and a rapid ROI will be expected. But don't look to deliver that ROI by reducing headcount. Most small businesses don't have fat to cut.

Implementation will have to be practical and simple. When you don't have a lot of excess staff, you need solutions that are fast and relatively painless. Small businesses can't dedicate people fulltime to drawn out change processes. If something can't be done simply and quickly, it probably won't be done.

The trend for the foreseeable future is for a dramatic increase in the number of small businesses. The changes this will bring to those selling goods and services to business customers will be at least as dramatic. Only those willing and able to adapt to a marketplace of more and smaller businesses will succeed.