Running a small business requires a focus on the present daily operations. With time restraints looking ahead becomes difficult. However, in order to succeed you need to know what’s ahead to better plan and avert danger. The 21st century presents plenty of changes that will impact your small business in the future. Here are 8 small business trends for the 21st century:
The Small Business Revolution: The face of entrepreneurship is changing from the white middle-aged college educated male to a new class consisting of immigrants, women, baby boomers, and the younger digital generation. These groups are better prepared for success.
The boomers have a vast repertoire of skills and experiences while the youth possess a risk-taking attitude with very few financial commitments. According to the Kauffman Foundation, Americans aged 55 to 64 start a business at the highest rate of any age group—28% higher than the adult average. A growing number of employees will value the path to entrepreneurship continuing the small business revolution. Look for greater political clout and financing for small business.
An Empire of One: Forget the hiring headaches, managing problems, and added paperwork of running a business with employees. According to the Census Bureau, small business without payroll makes up more than 70 percent of America’s 27 million companies, with annual sales of $887 billion.
An empire of one can operate in a low-cost of location such as the home office and be more nimble than larger companies. One-person businesses can take advantage of outsourcing many functions while focusing on core strengths. The empire of one model will be appealing to more and more corporate employees leaving behind big companies with limited pensions and job security. Small businesses built around the empire of one model will be able to weather the perfect talent storm on the horizon.
The Perfect Talent Storm: A fast aging population, a rapid declining pool of younger workers combined with global competition creates the perfect storm for a serious labor shortage. Unlike past labor shortages, this is a global phenomenon impacting workers in many areas and businesses of all types. It will continue for much of the future regardless of economic cycles.
According to the U.S. Bureau of Labor Statistics, the U.S. is heading for a shortage of 3 to 6 million workers by 2012. Immigration provides little comfort with other countries facing similar talent crunches; retaining citizens will be a top priority. This storm means small businesses will have to compete aggressively for talent and learn how to fully engage the hearts and minds of employees.
The Innovation Age: The most important asset that will be fully realized in the future is the 3-pound creative universe in our heads. Our true competitive advantage is our ability to create and execute new business ideas. Although we have mastered the fundamentals of business such as sales or marketing, we have yet to grasp the concept of innovation. Smarter companies will leap ahead with the understanding that innovation is a process dependent system as opposed to a flash of genius.
Tips for getting Accounts Flowing
Do Your Homework Before Doing Business: This is cold comfort for those struggling to squeeze a dime out of currently delinquent customers but good practice for new ones. Forward-thinking accountants can check the credit rating of a business through our burt risk scoring system while also checking references.
Set More Favorable Credit Terms: Stacking the deck in your favor is smart practice. One strategy is to require credit card payments; that way, the payments are predictable (i.e. you’re in control) unless the customer severs the relationship.
Explain Credit Terms Upfront: let your customer know that you’ll charge late fees after X number of days and then send it to commercial collection agency after Y number of weeks will be more motivated to pay on time. And requiring payment within 15 days instead of 30, offering incentives for early payment, can ensure that you’re at the top of the list for who gets paid first.
Use the “Velvet Hammer” Approach: Some business experts insist that treating customers as partners can go a long way toward putting your company’s name at the top of the list when it comes time to write checks. Some even say that tacking on interest only hurts the relationship and may even backfire.