Small businesses are one of the most important engines of the American economy. Over 58 million Americans work for small businesses. That accounts for almost 48% of all employees in any business nationwide. Over 99% of businesses in the US are considered small businesses. The definition of a small business can vary over time, but in general, any business with less than 500 employees can be considered a small business.[1]
The Importance of Small Businesses
Although small businesses make up a huge part of the economy, individually, they can have a high failure rate. As many as 20% of small businesses fail during their first year.[2] One of the biggest challenges for any small business is access to capital. This can make it challenging to acquire equipment and expand. Equipment finance programs like ours can make a big difference in any industry.
In addition to running their day-to-day operations, it’s important for small business owners to stay on top of trends as they develop. The rapid growth of technology is still making big changes in many industries. Right now, however, the US economy is largely healthy. Unemployment is low and holding steady at about 3% for most workers.[3] This means that the outlook for small businesses in 2020 is largely healthy, too.
Right now, low unemployment means it can be hard to bring full-time employees on, even when a small business has the means to do so. Since over a third of American workers now participate in the gig economy, it’s a great place to look for short-term or recurring help. Freelancers can be a great source for services like marketing, website maintenance and number-crunching. Working with freelancers also allows small businesses to save money in the short-term. This is a particularly good option for startup phase companies.
Key Trends for 2020
One key trend in the small business space is improved service. Over the past few years, consumers have shown that they’re very interested in things that feel personal or have a throwback element. Consider trends like steampunk, the explosion of crafting and the health of sites like Etsy. As tech has grown, it’s automated a lot of things that used to be time-consuming. That has meant real savings for consumers in terms of time and money. However, many people are frustrated with not being able to reach a human, not a menu, on the phone. Personalized, human touches are a great way to add value to almost any small business.
The tech-y buzzwords of the past few years aren’t going anywhere, though. Artificial intelligence is still gaining in importance. AI uses machine intelligence to learn and perform operations. It can be a big help with marketing and customer service. AI can suggest items for customer shopping carts based on someone’s previous purchases. AI is also key in estimating ETAs for companies like Uber. Small business owners shouldn’t feel intimidated by AI. The AI used in customer relationship management platforms can help streamline and improve service.
Services like Google Analytics and IBM’s Watson Analytics are well-designed tools that help small businesses get the most from their data. They help small business owners get to know the people who visit their websites. Analytics can tell a business owner how long someone engages with their site, what they spend the most time on and provide other information. There are also a host of tools that can work with software like QuickBooks to analyze accounting figures and identify key trends.
Overall, one great trend in the small business space is the increase in partnerships between tech and non-tech entrepreneurs. People who lack coding skills often have great ideas and skills in areas like communication, trades or even a medical specialty. By partnering with co-founder with a complementary skill set, entrepreneurs can get a lot more done together. Another option for entrepreneurs is to look for contractors who can help fill in some of the skills they lack.
2020 is shaping up to be a great year for small businesses. Major economic indicators point to good things. Technology continues to provide tools that help entrepreneurs gain a competitive advantage. 2020 is expected to be a great year for entrepreneurs to make new connections and find new efficiencies across all industries.
Sources:
1 https://www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-US.pdf
2 https://www.fundera.com/blog/what-percentage-of-small-businesses-fail