What do you think the most important trend affecting small business will be? How best can owners position their companies to take advantage of it? We posed these questions to our team of entrepreneurial mentors and distilled their answers into six steps companies can take to position themselves for success in the coming years.

1. Tap into your customers' search for meaning and connection.

Lisa H. Buksbaum small image Lisa H. Buksbaum, president & founder, Boxtree Communications; CEO & founder, Soaringwords.
The most important trend affecting small business is surely people's search for meaning and connection in their lives.

Many of the motivating reasons entrepreneurs started businesses in the 1990s -- to have more control over their destiny, to make a difference in the world, to spend time with their families, to have multi-dimensional lives beyond their title and paycheck -- are now trends that are being expressed in corporate America. My Fortune 500 clients and 1099 employees are more comfortable enjoying their lives, interests, and families and not feeling ashamed that they have to hide this part of their existence. In fact, the tide has turned so that the workaholic titans who boast of not having a life outside of work are no longer considered role models, by anyone that I know. Companies should position themselves as "getting it" to be a vibrant and energizing place that employees will want to align with and should talk to their customers about the psychographic and emotional things that really matter to them most, instead of treating them like their demographic profiles, i.e., age, zip code, job titles, etc.

2. Adapt to continual change.

Paul & Sarah Edwards - Small Paul and Sarah Edwards, experts and authors on self-employment.
Trends are ever more rapidly coming into existence, and disappearing and sometimes colliding with one another. It took over 80 years for three-quarters of the population to have telephones; it's taking eight years for three-quarters of Americans to have access to the Internet.

Small businesspeople need to regard change as an ongoing process, not something that happens from time to time. Therefore, adapting to continual change must be mastered like a skill. How to do this:

  • First, develop the sixth sense to notice the early warning signs of change by keeping in contact with your customers, with people in your own and other industries, reading, attending meetings and conferences, participating in online message boards and seminars.
  • Second, anticipate change by not investing too much in organizational structure and instead organizing your work into projects.
  • Third, be prepared to team up with others outside your company in project-oriented strategic alliances, focusing your contribution on what you do best.
  • Fourth, be prepared to get bigger or smaller quickly.

Charlie Bodenstab - Small Charles J. Bodenstab, author and consultant.
As technology advances and new concepts of operations evolve, the threat is that other businesses, both larger and small, will simply usurp the very function of the small business owner (SBO). For example, the emergence of the mega-retail stores or "category busters" appeared to most business owners to virtually "come out of nowhere." These operations, inconceivable not too long ago, have revolutionized retailing in areas that were once the province of small specialized retailers. These small niche players have basically disappeared.

Technology is frequently making obsolete the function and value-add of the SBO. Many SBOs survive, and have prospered, by finding and filling a specific function that had value added to some aspect of business. Technology -- particularly in the new large systems areas such as supply chain management and total enterprise systems -- simply bypasses these functions or incorporates them painlessly into the overall system.

The SBO faced with this challenge must constantly ask himself or herself: What is the value-add of my business and how well is it protected? What are the barriers to entry? What is coming down the road that basically performs our function? And most of all, what can I do to pre-empt these threats? Even further, ask what has happened technologically that I can embrace and actually become the threat to others, rather than the victim?

Pat Cavanaugh -- Small Pat Cavanaugh, president & CEO, Cavanaugh.
The small business must take advantage of being more nimble and flexible when it comes to addressing changes in the marketplace dictated by new technology. Because of often limited capital resources, the small business must do a better job in foreseeing these changes and planning ahead in order to implement a plan to confront changes without precipitating a serious cash flow problem or a crucial drain on resources needed to fund future growth.

Leaders of small business must be proactive to seek new advancements not just to compete in the marketplace but to allow their employees the opportunity to feel as if they are a part of something dynamic. The key to any company, organization, or team is the ability to make people feel as if they are important, recognized for their efforts, and think what they are doing is unique enough to give 110% each day.

3. Be superior in recruiting and retaining employees.

Rudy Karsan - Small Rudy Karsan, CEO, Kenexa.
Certain studies indicate that without migration, the United States will be losing more employees through attrition, namely retirement, and other terminations from the labor force versus new entrants coming into the work force.

Small businesses are going to have to be extremely vigilant about ensuring that their employee pool consists of highly effective individuals who are top performers in their organization and meet the values of their business.

In order to take advantage of this trend, I would recommend that the small business owner do a few things:

  1. Have strong measurement around employee performance. These measurements should be individually related to the various functions that employees perform.
  2. Develop measurement techniques to ensure that the existing work force is engaged, motivated, and willing to outperform customers' expectations.
  3. Learning is a primary drive for employees. Make sure that there are adequate vehicles through which your employee base can learn.
  4. Small business owners should make it incumbent that they meet with, on a face-to-face basis, every employee in the company. Suggested guidelines are: Less than 50 employees, meet at least twice per year; significantly less than 50, meet once a quarter; more than 50, develop other communication vehicles including written notes and e-mails to ensure a relationship exists between the leader and the organization.

Robert Hoffman - Small Robert Hoffman, CEO & founder, HRAdvice.com.
According to Electronic Recruiting News, for the 15 years beginning in 2000, the number of 25- to 44-year-olds in the economy will decline from the 1999 peak. The decline will be steep, as there will be 15% fewer workers in this important age group than we have today.

Attracting and retaining the right skills, can be accomplished by practicing the following techniques:

  1. Determine the singular most compelling reason to join your company. Carve a recruiting niche similar to a product niche. Make sure everyone in your industry and geography knows the reason to join your firm. Determine what makes your business different from the rest and sell the concept to recruits, relentlessly.
  2. Use a skills assessment in the targeting and selection process. For example, if you need creative marketing plans, have candidates produce marketing collateral for you during the assessment process. Merely having the ability to describe marketing plans is not enough. Require specific examples.
  3. Develop networking relationships to identify the talent you seek.
  4. Treat your potential employees as customers. Return calls, get them excited about the position and company and use them to enhance the reputation of your business in the community.
  5. Create innovative attraction tools designed to promote retention, such as sabbaticals after five years of employment, subsidizing graduate degrees, or other non-financial incentives.

4. Gain access to capital by achieving customer traction, validation, and growing revenues.

Guy Kawawsaki - Small Guy Kawasaki, cofounder, chairman & CEO, Garage.com.
The most important issue will be access to capital. Many innovative and growing young companies can't raise the capital they need to survive and flourish in this tough environment. Smart startups will do whatever it takes to get customer traction, validation, and, most importantly, significant and growing revenues. Revenues and customer traction are critically important to illustrate to potential investors that the company has tremendous potential and deserves an investor's attention and capital.

5. Spend more on technology.

Brad Brown - SmallBradley D. Brown, chairman of the Board, cofounder, TUSC.
Accept and recognize that you (along with every business) are in the information technology (IT) business. Take advantage of this current time-standing-still moment and invest in IT and you will outpace the competition.

Lillian Vernon - Small Lillian Vernon, founder & CEO, Lillian Vernon Corp.
The right computer systems offer companies of all sizes the opportunity to expand their business efficiently to save time and money. The key is to invest in state-of-the-art technology and good information technology professionals. You might need to hire an information technology consultant who offers a full range of services but be sure to check references carefully.

Glenn Weadock - Small Glenn Weadock, president & cofounder, Independent Software, Inc.
Companies that can take a hard look at sophisticated computer and communications equipment and software and make decisions based on real world business needs will gain a leg up on companies that simply automate because they feel they must.

The sensible use of technology is illustrated by the following examples:

  • Telecommuting with links fast enough to work well. One of the reasons companies are backing off from telecommuting is that they often didn't invest in fast enough links to make the proposition viable. It would be a shame if the whole concept of giving employees some freedom to work from home gets a black eye because of some highly publicized and ill-planned implementations, but I see that danger.
  • Network security. You would not believe how many small companies still don't have viable, sound data backup strategies in place, or effective antivirus measures. Some attention to basic data management, boring though it may be, is a key component of a technology implementation strategy. One fire or flood or earthquake won't put a big company out of business, but it surely could put many small firms out of business if they lose all their operating data.

6. Increase and improve your online presence.

Jay Levinson - Small Jay Conrad Levinson, chairman, Guerrilla Marketing International.
The most important trend is still the opportunity to market online, and I believe that's going to be the case for the next decade. I'd position my company as ultra-customer-oriented, quick to respond, able to get personal, and then I'd market my site all over the place. I'd make sure that contacting me is as easy as pie -- with e-mail, cell phones, pagers, and a toll-free number.

Tom West small b&w Tom West, publisher, Business Brokerage Press.
The Internet is, and will continue to change, small business. The small business, if it hasn't already, should be developing a Web site. If it has one, it should be continuously improving it. If it hasn't yet improved your business, it will.

To think that a small business can now reach customers all over the world -- and at very little cost -- is mind-boggling. To think that small business can contact a customer almost instantaneously is awesome. The World Wide Web allows the small business to be part of the global economy, to give excellent personal customer or client service, and it provides the tools to compete in today's business climate, in which businesses seem to just be getting bigger and bigger.

Jakob Neilson - Small Jakob Nielsen, Web usability consultant.
The Internet provides great potential for niche businesses: if you specialize at being very good at something very specific, the Internet expands your reach so that you can connect with customers worldwide. Globalization is an important element of this trend, especially for small businesses that provide virtual products and services (i.e., those that can be delivered over the Net). For example, in my own case, I publish a series of reports on Web usability at www.nngroup.com/reports and the distribution of sales for the last three months is as follows:

USA 40%
Canada 4%
Latin America 2%
U.K. 16%
Rest of Europe 25%
Asia 8%
Australia/NZ 4%
Africa 1%

More than half my sales are outside North America. This proves two things:First, it really is true that a targeted business can have substantial sales overseas. Second, since my topic happens to be how you should design your Web site, the huge demand from overseas shows that they are getting into the act. With the Web, business is international. Deal with it.

Barbara Weltman Small Barbara Weltman, attorney, author and lecturer.
The most important trend I see affecting small business is the increased use of the Internet to simplify tax obligations. Small business can now pay taxes online, file quarterly employment taxes online and obtain vital tax information online. The IRS, the Department of Labor, the Small Business Administration and some states are working to develop one-stop filing for employment taxes (called the Simplified Tax and Wage Reporting System or STWRS) -- one quarterly return for both federal and state employment tax purposes.

For small business owners who handle their taxes, this trend means spending less time on taxes -- time available to run the core of the business -- as well as greater certainty that tax obligations are being satisfied -- avoiding costly penalties and interest. For small businesses that use accountants or other tax experts to handle tax matters, this simplification can translate into fee reductions.

Small business owners can learn about e-file opportunities at www.irs.gov/smallbiz/index.htm and STWRS information at www.employers.gov.

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