December 20, 2018 | Last Updated on: January 17, 2024
DISCLAIMER: This article was written in 2018 and has not been updated. For more up to date information on economic impacts to small business funding, please read this recent article Emerging Trends in Business Financing
2018 was a great year for small businesses – the economy has done well despite all the talk of trade wars and tariffs, and President Trump gave businesses a big tax cut. The SBA reports that there are 30.2 million small businesses in the United States, which together employ 47.5 percent of the country’s private workforce. 1.9 million jobs were created at small businesses in 2018. With so much good news for business owners over the past year, everyone is wondering if 2019 will be just as good. Next year could be a difficult one for small business owners. But in large part, what happens next year will depend on the big trends that emerged throughout 2018. Let’s look back at the past year to see how the small business world has evolved and what trends to pay attention to in the year to come.
Online shopping is more popular now than ever before. 87% of consumers begin their shopping journey online before purchasing. Even though up to 90% of purchases are still made “offline” in one way or another, there’s no question that digital customer behavior was an important theme during 2018. For the next year, small businesses should make their websites a high priority as the numbers of online shoppers are expected to continue to rise. While the Facebook scandal about data privacy has seen consumers lose some trust in social media, another Facebook-owned platform has been transforming the way that businesses reach their customers. Instagram has paved the way for consumers to shop via social platforms and connect with their customers in a whole new way. Users were introduced to IGTV (that’s Instagram TV) as an additional way to connect with brands. Instagram Stories – which allow users and companies to create a whole narrative on the photo-sharing site – exploded with 1200% more shares than traditional posts. Ways to get interactive with a business’s customers have also been on the rise. Polls were one of the top ways for businesses to engage with customers on the platform in 2018. The big story with all of this is that small businesses have to be prepared for an online world. Just like opening the storefront and sweeping the back office, updating the website or posting on social media are absolute musts for most businesses today.
Long gone are the days of waiting hours on customer service. Now you can communicate with a company via text, Facebook Messenger or WhatsApp. Consumers want an immediate connection when they need help, even when they’re shopping with a small or local business. Many business owners have found that using chat bots is the solution. According to Statista, messaging platforms are expected to grow from $2.25 billion in 2018 to $2.72 billion in 2021. That’s a clear sign that the trend is going to continue. Next year, investigate different ways that your small business can use chat bots to improve your customers’ shopping experience. Plus, having a chat bot on your website will improve your Google ranking because they will stay on your website longer. There are plenty of companies out there which can help you get started with these new robotic assistants.
More than 83 million individuals were born in the U.S. between 1982 and 2000, making the millennial generation 25% of the total population. They look at the world in a different way and are active consumers of digital content. Plus, according to Accenture, they spend roughly $600 billion per year with the number expected to increase to $1.1 trillion by 2020. Millennials love to support small businesses because they know they’re supporting a local community instead of a large corporation or chain. There’s an emotional connection when shopping small and that creates a unique experience, which is something this generation absolutely loves. Here are a few tips for winning over millennials:
Small businesses should continue to use the power of digital technology in the next year in all ways possible: marketing, record keeping, payments, financing, etc. The benefits are big: digital systems make businesses as cost efficient as possible and are great at saving time. The digital revolution is moving fast and as the economy starts to cool off, small businesses need to focus on providing value to their customers. Big banks are spending as much as 40% of their budgets on going digital. Small businesses need to keep up. The trend toward digital platforms in the banking world in particular is expected to accelerate, with 46% of customers preferring to do their banking digitally. Online/mobile banking and online lending applications are forecasted to increase more than 22% every year through 2020 according to the Financial Brand. Small businesses are already big fans of these online banking options. In 2019 they’ll need to adopt some of those same tactics to keep ahead of the digital revolution.
With the Equifax hack in 2017 and Facebook breach this September, risk management is more important than ever before. The 2017 Hiscox Cyber Readiness Report shared that, two thirds of cyberattacks were on small and medium sized businesses and 60% of small businesses failed within six months of the attack. The cost of an informational hack is vast for small businesses, ranging anywhere from $84K to $148K. But the bigger costs come in the form of customers’ lost trust and negative publicity. If you don’t have one in place already, invest in creating a risk management plan for your small business. Include the following in your plan: financial risk, security, data storage, equipment, natural disasters, human resources and brand risks. The cost of an informational hack could cost your business up to $150,000. Can your business afford to take a hit like that? Take the time to put the right plan in place so one bad event doesn’t shut down your whole business.
Make it a New Year’s resolution to understand the trends and disruptive forces that are happening in your industry. Be smart and learn how to work with the trends and not against them. Small business owners need to be smart when planning for the next year. Costs of goods are going to increase so it’s important to pay attention to the bottom line and budget appropriately. You should also have enough in reserves and get access to credit if you need it before interest rates rise higher.
Overall, 2018 has been a year of incredible dynamism for small businesses all over the country. The next year will bring an even more dramatic set of circumstances which will have major implications for small businesses and banks alike. What are you predicting for the year to come? Share your thoughts in the comment section below or let me know on social media. Twitter: Personal / Biz2Credit LinkedIn: Personal / Biz2Credit Facebook: Biz2Credit
