Our overall economic outlook for 2013 is for solid if moderate growth with U.S. GDP increasing 2.5% to 2.75%. We expect hiring and the job market to continue to improve with unemployment falling and finishing the year in the 6.5% to 6.7% range.
1. The Convergence of Mobile, Cloud, Data and Analytics: Individually each of these technology trends has been on our annual top 10 lists in some form for years. And while each is important and powerful on its own, the growing convergence of these technologies is amplifying their impact and fundamentally changing how business is done. They’re also leading to new forms of technology-based competition as more small firms use capabilities developed through the convergence of these technologies to out maneuver competitors.
2. The Small Business Digital Divide Widens: A growing body of research is showing a performance gap between small businesses that successfully use technology and those that don’t. This small business digital divide means small firms unable or unwilling to deploy and use technology – and especially cloud, analytics and mobile technologies – are increasingly disadvantaged relative to their more technically savvy competitors. 2014 will see this divide widen as tech savvy small businesses use their technology to cut costs, better connect to customers and gain market share.
3. It’s a Visual World: Just as cameras and pictures have become ubiquitous on mobile phones, so too have video cameras. And short-form video applications like Vines and Instagram are making consumers familiar with taking, posting and watching short-form videos. This is leading to an explosion of visual imagery and storytelling as firms use sites like Pinterest, YouTube and others to visually display goods and services and tell stories both in static (picture) and dynamic (video) forms.
Economic and Business
4. Networked Organizations: Today’s collaborative technologies are allowing businesses to easily connect with anyone, anywhere, anytime. This is resulting in firms increasing their use of partnering, outsourced services and independent workers (freelancers, contractors, consultants, etc.). This is also blurring the boundaries between firms, leading to organizations behaving increasingly as nodes in broader networks rather than fully independent entities. This shift to network organizations has been discussed and forecasted for many years, but is finally arriving thanks to the maturing of the Internet, the cloud and related collaborative technologies.
5. Outsourcing Opportunities: As firms become more networked, they focus their internal efforts on core and/or strategic business functions. Areas not considered core or strategic are increasingly outsourced or turned over to business partners. This shift creates vast new opportunities for firms able to provide these services. For example, accounting firms are benefiting from small businesses outsourcing their bookkeeping and financial functions. And thanks to technology and rising offshoring costs, local firms are often at a competitive advantage relative to overseas outsourcing options.
6. Portfolio Careers: It’s increasingly clear the traditional career path is no longer available to most workers. In its place people are creating new career paths by creating two types of portfolio careers: (1) moving back and forth between traditional employment and self-employment; and, (2) creating multiple sources of income from different activities (part-time jobs, freelancing, renting rooms on Airbnb, etc.) instead of having a single job. We believe the shift to portfolio careers is structural and will continue to expand even as the economy improves and traditional jobs become more plentiful.
Social and Demographic
7. Income Inequality: Income inequality is a big issue that will become bigger in 2014. Local and national debates over minimum wage and living wage laws, coupled with a focus on benefits due to Obamacare, will make compensation an even hotter topic than normal for small businesses.
8. Boomer/Millennial Business Partnerships: Growing numbers of baby boomers and millennials are teaming up to start and run small businesses. Often family members, each brings complementary skills and abilities. Baby boomers provide capital, business experience and networks. Millennials bring tech skills, a feel for online businesses and business models as well as energy and enthusiasm. In many cases, these partnerships are born of necessity due to a lack of traditional job opportunities for one or both. But the opportunity and desire to run their own show is also a major driver for members of both age groups.
9. Green is the New Black Again: The recession clearly dampened the enthusiasm towards sustainable goods, services and business practices. But consumer and employee interest in these practices is making a strong comeback with multiple studies finding more people today considering sustainable business practices important than prior to the recession. The meaning of green has also expanded to include ethical business practices as well as support for local businesses.
10. Obamacare: We have bad news for those tired of the Affordable Care Act (Obamacare) – the controversial legislation will continue to be in the spotlight throughout 2014. Small business owners will need to move beyond the hype (and their own political views) and focus on securing the most cost effective health care plans for themselves and their employees.