Trend: Small Business Market Goes Global

The world is shrinking, and small businesses have noticed.

Taking advantage of instant communication, product delivery measured in days, and falling trade barriers, small businesses will become more global. The Internet and the proliferation of cheap, easy communications technology (cell phones, lower long distance rates, email, instant messaging, VOIP) are a big part of the enabling of small business in the global marketplace. Worldwide delivery services have contributed by lowering shipping time and costs.

Cross-border markets that were once the domain of only the largest corporations will be open to any size enterprise. National boundaries and oceans will no longer hem in the ambitions of small businesses.

The U.S. Small Business Administration reports that 97% of U.S. exporters qualify as small businesses. But the influence of globalization will be felt on more than sales. Suppliers to U.S. small businesses will increasingly be located in other countries. Small businesses are already outsourcing software development, preparation of tax returns, and the manufacture of goods. Look for all of these to increase and for new areas to open up.

Impact:
Expect a huge increase in translation services, import/export specialists, and other services to help smaller enterprises find partners and do business across borders. English will continue to be the lingua franca of business around the globe. But the ability to communicate in the languages of the markets into which you sell will be as sought-after competitive edge.

International outsourcing has become common in larger companies. But in tomorrow's world, U.S. small businesses will become important users of offshore outsourcing.

Capital markets will open up. Technology developed in one country increasingly will be funded by investors in other countries. Look for this to increase the investment of the U.S. and other first-world countries in developing nations. Also, look for a rise in the number of facilitators of investment and other transnational business activities.


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Trend: Graying of Small Business

Not too long ago when we thought of entrepreneurs an image of 20-somethings came to mind. Entrepreneurs we thought came from the ranks of the young. But in the future that won't be the case for many of the small businesses that form the backbone of the U.S. economy.

Small business is graying. And that should come as no surprise. That great bulge of population known as the Baby Boomers has changed everything it has touched in its generational march, and Boomers are getting pretty gray.

Fortified with corporate buyouts, early retirement, stock options, and severance packages, people who once would have been thought of as being in the twilight of their working lives will be carving out second or even third careers as small businesses owners.

The Boomers in their fifties, sixties, and seventies will be a different species from their parents. They'll be more likely to take on new challenges than to look for a place in the sun. For many, owning their own business will be a long sought dream, a chance to cap a lifetime of work with a more personal and individual accomplishment.

Impact:
Vendors will have to be ready to respond to older, savvier business owners, many of whom will have worked for companies very much like those trying to sell to them. These new small business owners will be more sophisticated and knowledgeable than earlier, younger first-time entrepreneurs.

Expect them to have well-honed negotiating skills and acumen out of proportion to the size of their businesses. Don't be surprised if they are better versed in procurement procedures and marketing tactics than the people selling to them.

This will be a new breed of entrepreneur. They won't be the young, high flyers of the 1990s dreaming of IPOs and constantly recurring triple-digit growth. Many will be going into business with an expectation of establishing moderate but steady revenue streams.

They will have established strong reputations. Many will be acknowledged experts in their fields, and they are likely to have contacts at high levels within some of the world's largest corporations.

In short, the graying of entrepreneurs will change the way organizations large and small do business with smaller enterprises. Small business is trending older. The way in which individuals and companies respond to that trend will play a large role in determining their success or failure in the small business marketplace.
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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.
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