The New Year always brings renewed optimism and intriguing opportunities for small business. After the last year or so of devastation to the economy, there are a few stark changes to be expected for small businesses and their owners. From a trend away from over-staffing to a more conscientious market, the entrepreneurs who are aware of and respond to these changes will survive and thrive in 2010.
The American workforce is in the midst of major change. Businesses are focused on improving efficiency such that the necessary functions are handled by the fewest employees possible. Professionals who are able are likely to opt for independent contractor status — working on contract rather than seeking long-term, internal jobs. Those who can’t switch to independent contractor status are likely to look for a more suitable position as the economy recovers, but then will be more likely to remain at that job than to job-hop as had become the norm over the last decade.
This is all good news for small business owners. One-off projects, like revamping a website or overhauling the accounting system, can be handled in a more cost-effective manner by utilizing independent contractors. Long-term positions, like in-house bookkeepers, sales staff, and other full-time jobs will be relatively easy to fill over the next year or so with well-qualified candidates. And, as long as the employer provides a reasonable salary and benefits, those workers are likely to stay around. Still, it will be critical for business owners to streamline their internal processes to avoid over-hiring and to be clear about the responsibilities and qualifications necessary to fill staff positions. Selecting the right job candidates the first time will be more important than ever, because once workers find a good place to land in the recovering economy they are going to be difficult to pry loose.
Another benefit of emerging from this tight job market is that wages will be corrected and the wildly out of control benefits packages are likely to be trimmed across the board. Still, savvy business owners will do their homework in setting salary ranges and offer competitive employment packages in order to take advantage of the job loyalty available from the shell-shocked workforce.
Consumer behavior has been drastically affected by the Great Recession as well. Shoppers are looking for value and bargains. Priorities have shifted internally to self and family over material accumulation. It is likely that good customer service will make a comeback, so those startups with a strong focus on taking care of their clients should do well. However, premium pricing for decent service will be difficult to sell. Consumers are looking to get back to basics, and that means good service should be standard, not a bonus.
Americans are also likely to be more wary of scams and rip-offs. While the scammers are still going strong right now, the federal government is expected to step up their pursuit of illegal “business opportunities” — these stories will get press, so more consumers will be aware of what to look for. Entrepreneurs need to be alert to the scams running within their own industry and be prepared to reassure clients that their business is legitimate.
2010 is gearing up to be a great year for small business. Times of economic recovery are historically beneficial to new business — if entrepreneurs take advantage of the efficiency and financial management lessons of the recession, they will establish themselves as the primary, if not only, source of job growth over the next decade.
About the Author
K. MacKillop, a serial entrepreneur with a J.D. from Duke University, is co-founder of LaunchX and authors a small business startup blog. The LaunchX System helps those starting a business capitalize on the new economy through extensive research and planning, attention to basics, and the tools needed to create a successful company. Visit LaunchX.com for a free Business Readiness Assessment.
