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TRENDTRACKER uses input from the online community to track the major trends affecting the small business market.
Anita Campbell
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Follow the major trends we are tracking:
More Small Businesses
Small Businesses Go Virtual
Small Businesses Pick Niches
Freelance Economy
Business Ecosystems Proliferate
Technology Levels the Playing Field
Small Businesses Change Hands
Small Business Market Goes Global
Graying of Small Business
Entrepreneurship Journal
US Association of Small Business
Small Business Administration
IRS Small Business
Small Business Service - U.K.
Canada One
Small Business Australia
European Union Small Business
Small Business CEO
Selling to Small Businesses
Trend: Small Businesses Change Hands
Small businesses are being sold more frequently than in the past. Statistically, on any given day, 1.7 Million small businesses are for sale in the United States. Yet, business brokers report that in many industries there are more buyers than sellers.

In the past, the vast majority of small business owners either started their companies or inherited them. The way in which small business ownership comes about is changing.

The trend of purchasing existing small businesses will be driven in part by older workers who have left corporate America (see the Graying of Small Business trend). Fortified by stock options, retirement buyouts, and severance packages, many will prefer to keep working as their own boss.

A thriving market for the sale of small businesses will help grow their total number. There will always be those who start from scratch, just as there will always be businesses that make it into second- and third-generation hands.

But a healthy market for the sale of small businesses will give owners additional exit-strategy options. Businesses that might have withered or have been absorbed by competitors will be sold to people who will bring new energy and in many instances new capital.

Service providers who assist in putting together buyers and sellers, such as business brokers and M&A firms, will find good times ahead. More M&A activity will also mean more business for lawyers, bankers, consultants, and others who help make sales happen.

For vendors, service providers, and market partners, businesses changing hands will mean a shifting landscape. A carefully constructed relationship has no guarantee of surviving when a new owner takes over. Relationships well become a constant concern that require more time and resources.
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Trend: Small Businesses Go Virtual
The future is likely to be the age of virtual businesses. The newly opened two-person office will be able to look big, established, and successful. Build a really good website, toss in some color printers, fast computers, and cell phones, and you're halfway there. After that, it's a question of leveraging your creativity and ability to partner with other entrepreneurs.

The virtual business is the epitome of the less is more dictum -- less expense leaving more profit.

Not every business in the future will be able to go virtual -- at least we don't think so today. But as the line between what's virtual and what's real blurs, going virtual will become more attractive.

Let's make one thing clear, virtual doesn't mean the business isn't for real. It just means all that heavy, expensive stuff won't be sitting there eating money when not in use.

Who cares whether the home office of Acme Thingamajig has 300,000 square feet as long as Acme is able to deliver those thingamjigs. Performance is what counts, not the number of employees or the size of the company cafeteria.

    For vendors and service providers, reaching virtual businesses will be an even bigger challenge than selling to traditional small businesses. Often virtual businesses pick vendors by word of mouth. Because they rely on other businesses for much of their output, they'll tend to network and look to their partners for purchasing advice.

    It will be hard to find the physical location of some virtual businesses, so the old fashioned sales call won't always work. With virtual businesses on the rise, companies will be developing new ways to communicate with decision makers. Think permission-based email marketing for one. Finding them online is another alternative.

    Virtual businesses will run lean. They won't have much time to be sold to, so expect relationship management to take on added importance. Savvy companies will make the investment to recognize the special needs of the virtual business.

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Trend: Freelance Economy
Self-employment, contracting, and consulting have changed the nature of work. As the book Free Agent Nation suggests, the U.S. is truly becoming a nation of people freelancing their skills and talents.

Consultant used to be code for "just killing time between jobs." That's still true for some. But consulting has become a real business for millions of former corporate warriors who wouldn't take a "real" job if Beelzebub's home turf turned into tundra.

Large corporations want to be leaner and meaner. Rather than staff up, they'll outsource functions. As large firms respond to tighter times by restructuring, they'll continue to replace employees with contract workers.

Often those workers will be the same people who used to be on the payroll. When the person doing the work is not on payroll it's easier to change your workforce to meet changing needs.

    Companies love it when the freelance market is a buyers market. That love can turn to fear when there is a shortage of good people. Anybody who had to hire IT professionals during the height of the dotcom boom is well aware of the corporate downside to a freelance market.

    Every change creates new market niches. As larger companies rely on contract workers and outside consultants, look for small businesses to develop and change to fill those needs.

    The old-line "temp" industry has already begun to morph into something new. Just what that something will become remains to be seen. But one thing is sure, it will have service and product needs of its own. And that's what we call a new market.

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