As we enter the new year, here are the top 11 trends that entrepreneurs need to watch, think about, and should be prepared for:
1. The Economy Will Still Struggle: This is the biggest question on everyone’s mind. If the public relations and marketing gurus coached me to write this blog to make it popular, they’d be asking me to speak positively about the economic trends of 2011. But I don’t see it on a macroeconomic level, and I refuse to sugarcoat it. thing after writing a popular blog post. I know some entrepreneurs who are thriving and some who are struggling or who have closed their doors. But mostly tread water. And it will be in the same news at the end of 2011. I said it, although you may want to hear something different.
In his post, Yet More Evidence Bows Down Among Small Businesses, Jeff Cornwall expressed concern that if entrepreneurs do not position their companies to thrive, a full economic recovery appears to be a long way off. But there are many strong niches and unique opportunities that will continue to thrive in the hands of skilled entrepreneurs.
2. Working Capital will be King: Yes, the saying goes that cash is king. But tough economic times have taught many entrepreneurs that their working capital is sacred, especially because it’s the key to immediate and short-term cash. Those who make it more efficient (see Working Capital – Less More Often) will outperform their competitors. Those who protect it from being spent on capital expenditures, excessive owner compensation, and other outflows that do not help generate immediate and short-term gross profits, will find the empowerment it generates regardless of almost any external or economic pressure.
3. Results Driven Marketing will be one of the Biggest Difference Makers of the Year: What happened to measuring marketing performance? Many entrepreneurs are so obsessed with marketing that they become soft on measuring the results it produces. Few have justified spending more on marketing as a strategy to weather the recession, and most of them are now out of business, having exhausted their working capital with no means of measuring whether it is actually paying off. Marketing metrics will come back into vogue, and cost per lead and cost per customer acquisition will be the lowest possible numbers driven by successful businesses. John Donal Leavy has more to say on this topic here: Results Driven Marketing in 2011.
4. Capex will increase: Most businesses are delaying capital expenditures required in 2010 for two reasons. First, they worry about not getting an extended Section 179 tax deduction on 100% of their purchases, and second, they worry about overspending in a tough economy. With increasing Section 179 cuts extending into 2011 and the economy still faltering, most employers are holding off pent-up demand until 2011. Don’t be fooled by it, as capital spending is likely to fall again in 2012. You can read more about this in the article published below. I write for the American Express OPEN Forum-Five Financial Trends Every Entrepreneur Needs to Know.
5. Going Green is no longer a trend-will be Hope: A bit ahead of this trend, in my opinion, the folks at Willoughby Design wrote: Going Green isn’t Temporary Madness—It’s Hope. If you haven’t accepted this fact, your competitors will gain more traction and sustainability than you. Period.
6. Fixed Fee and Fixed Rate will win more business: Whatever you sell, have a fixed price for it. If your customers feel, in any way, that their costs for your products or services vary, it will reduce your chances of getting business. Find out how to price your products and services and give your customers what they need. The argument that every customer’s needs are different is becoming obsolete, and so are those who base their entire business model on it. This is just one example of an attorney writing about how Customers Like Billing a Fixed Fee Based on Defined Work.
7. Mobile, Cloud and Social Technologies will continue to converge: As these three technologies mature, they will continue to coalesce and become the future of how we think about and use technology. You can read one of the many opinions on this here: Mobile, Cloud, and Social Convergence.
8. Entrepreneurship Loans will move away from Traditional Sources: It will be more difficult and less attractive to get a traditional loan from a bank. Increasing Entrepreneurs’ opportunities to adequately fund their business is a topic of heated debate, but few seem to really understand it. You can read more about these challenges at altconsulting.org, and you can also expect more innovation in getting the access to funding entrepreneurs need in 2011.
9. Compliance Enforcement Will Increase: The IRS had $300 million more to spend on enforcement programs in 2011, and many state and local tax and other compliance agencies are also spending more on enforcement. Plan for it, and then you’ll be ready when it comes. The more likely it is.
10. Social Security’s Temporary Tax Cuts are a harbinger of things to come: One provision of the Tax Relief Act of 2010 has me scratching my head. Everyone knows the social security system is underfunded and will be bankrupt in a few decades unless the program is overhauled. So why did Congress reduce the amount paid into the fund by two percentage points, or up to $2,136 per worker? That doesn’t make sense, unless the long-term plan is to remove the cap, which is currently set at $106,800, entirely, to conform in a similar way to current medical tax treatment.
11. Recruitment will focus on adding value, regardless of position or responsibility: Most studies and surveys say that hiring will stagnate among entrepreneurial firms in 2011. But those hiring will focus on the value each new hire and position will bring to the company. They will Improve Your Business Hiring Practices and only hire when an employee is the only way to progress towards their goals and objectives.
Hopefully these trends and tips will help us all turn 2011 into a year of prosperity and growth. To view my 2010 prediction report card, visit the Top 10 Trends 2010 Report Card for Entrepreneurs.