According to a recent Gallup Survey, optimism among small business owners is the highest it's been in eight years. In fact, "the percentage of small-business owners expecting company revenues to increase over the next 12 months rose from 48% to 58%."
What's causing this optimism? It probably has something to do with the following nine trends that are explaining why small businesses are thriving now more than ever.
1. Small business owners are motivated for the right reasons.
After surveying more than 1,000 of its small business customers from all 50 states, Guidant Financial found that "dissatisfaction with Corporate America" ranked as the main reason why respondents pursued business ownership in 2016. However, that motivation doesn't exactly explain why small businesses are becoming successful.
While being dissatisfied with Corporate America may be the nudge that small business owners need to take the risk of starting their own business, they're following their passions and not just the dollars.
"Successful entrepreneurs are rarely motivated solely by money (ERON's top executives, and Bernie Maddoff are good examples of men motivated by making money at all costs.)," writes Lahle Wolfe, founder and CEO of LA Wolfe Marketing. "Successful entrepreneurs achieve wealth because they believe in what they are doing and inject personal core values into how they build a business: Wealth is their reward; not their god."
When you're proud of your business, "it will convey in everything you do. Your passion and confidence will get other people - customers and investors - excited about the business and you will have an easier time establishing your business' credibility," adds Wolfe.
Starting a business for the right reasons will also guide you in making better business decisions and avoid burnout.
2. Businesses are being started at the right age.
While the age 50-59 demographic remains the most popular age among Guidant Financial clients, there was an 84 percent increase in entrepreneurs age 30-39. That's actually a big deal because the ideal time to start a business is your 20s and 30s. Why?
- Because a starting a business as early as possible allows you to reap the rewards of success for longer.
- When you're younger you're better suited to handle the potential risk of failure.
- You have the motivation and energy it take to start and run a business. As you get older, both with decline.
- The younger you are, the more adaptable you are.
- Starting a business in your 20s or 30s allows you to build several businesses. Even if your fst venture failed, you can use that experience to launch a better business the next time around.
3. Small businesses are opening in the right states.
As I've discussed before, when considering the location of your business, you need to take into account factors like;
- Proximity to your friends and family.
- Cost of living will be.
- Access to VC funding.
- Health of the startup/small business scene.
- Depth of the local talent pool.
- Legal requirements for incorporating your business.
For example, I relocated from Utah to Silicon Valley because that was a better area for me to start my business. No disrespect to my home state, but I after doing some research and weighing the pros and cons, I doubt that I would have found the same amount of success that I've reached today.
Other small business owners are doing the same. They're doing their research and finding out which states are the best match for their small business idea.
And, if you're curious, California and Texas are the top two states for starting either a startup or small business. But, also check out Washington, Montana, Colorado, Louisiana, Florida, Georgia, North Carolina, Virginia, and New Hampshire.
4. The right type of businesses are being launched.
Guidant also discovered that "buying a new startup or franchise was the top choice at 57 percent, followed by buying an existing startup or franchise at 39 percent."
While there are plenty of entrepreneurs and small business owners willing to take the leap in starting their own business from the ground-up, there's also more options than ever to purchase an existing business or franchise. The main reason? Baby boomers are getting older, which means that they're going to have to transfer the business to someone else. In fact, it's expected that more than 70 percent of these businesses are going to change hands.
While taking over an existing business does come with some cons, there are also some promising advantages, such as having an established brand, business model, customer-base, and immediate cash flow. Since this groundwork has been laid for you, you can focus on growth instead.
5. They're experts.
In case you haven't noticed, more and more retailers are closing stores. These include one-time heavyweights like Sears and Macy's. Even Walmart isn't immune. The reason? They simply let customers find the items that they're looking for on their own. And, when customers can conveniently find these items at a better price online, why bother driving to these retailers?
The businesses that are thriving, however, are these that educate their customers by sharing their expertise. For instance, Home Depot offers in-store workshops and DIY online content. They're teaching their customers how to use the products that they're selling.
Small businesses, either through content marketing or educating their customers one-on-one, are better suited to provide value to their customers through information and expertise, as opposed to just selling products or services.
Furthermore, David Paul Carter, business consultant and coach, states that customers prefer to work with subject matter experts over traditional salespeople.
Instead of relying on traditional funding options, like loans, lines of credit, or investors, crowdfunding has made it possible to validate your business idea in advance.
As Clay Hebert, a crowdfunding and marketing expert, says, "Smart companies are using crowdfunding to not only raise capital, but to validate products before making substantial investments in product development."
7. Adopting segmentation.
"One of the biggest fears I hear entrepreneurs express in segmenting their market is that their different market segments are too small to be worth addressing individually," writes Ryan Levesque in his book Ask. "So they rely on 'one-size-fits-all' products and messaging. But the reality is when you try to be all things to all people, you end up being nothing to nobody. Companies, both big and small, that are adopting a segmented strategy are thriving more than ever in today's marketplace."
Segmentation, in it's simplest definition, is reaching the right customers through the right message at the right time by using data like demographics, interests, behavior, preferred communication channels, and where they're at in the sales funnel.
8. Embracing the "Lean Startup" method.
Ever since Eric Ries released his book The Lean Startup, more and more small businesses have taken his advice in testing business ideas before investing in them and using easy-to-execute strategies in order to make more informed, less costly decisions.
Guidant actually found that 18 percent of small businesses are spending between $50,000 to $100,000 when starting a new business. Additionally, 41 percent only have 2 to 5 employees.
Between crowdfunding ideas, using technology to automate daily, repetitive tasks, and the increase in remote workers, small business owners can remain lean when launching and building their business since they don't have to invest heavily in large office spaces, manufacturing, and a full-time workforce.
Make no mistake about. Millennials have finally come into their own. As the largest age demographic, Millennial small businesses now outnumber Boomer small businesses. And, the reason that these small businesses are finding success is because Millennials are perfect for building companies because;
- They chase their passions.
- They want to make a difference.
- They're able to adapt quickly.
- They know how to leverage online networking.
- They look for alternative sources of funding, like the above mentioned crowdfunding.