The landscape of small businesses is changing fast. From new technologies to evolving consumer behaviors, the dynamics are undergoing a radical transformation. If you own a small business or are planning to start one, it’s crucial to keep up with these trends.
This will not only keep you ahead of the competition, but also prepare you for future challenges and opportunities.
Rise of Large Platforms
The definition of a small business has broadened. Traditional brick-and-mortar stores are not the only players in the market anymore. Platforms, such as Amazon, Shopify, and Etsy, have empowered entrepreneurs to kickstart their ventures with minimal capital. Even niche businesses, like shieldcoart.com, offering custom signs are finding ways to reach wider audiences online.
According to Small Business Administration, there are over 33 million small businesses in the U.S., with more than 80% operating without employees. The Amazon ecosystem, for instance, has provided a launchpad for millions of solo entrepreneurs. Searches for “Amazon FBA” have surged by 478% over the last decade.
Examples:
- Amazon: More than half of all goods sold on Amazon are by third-party sellers. With over 2.5 million active third-party sellers, Amazon is a haven for small businesses.
- Shopify: Over 4.8 million businesses now use Shopify to run their online stores.
- Substack: An online publishing platform allowing individuals to start their newsletter businesses, with search interest growing by 4,600% in the last five years.
The E-commerce Boom
The pandemic was a catalyst for small businesses shifting to online commerce. In 2020, new business creation accelerated at the fastest pace in over a decade, and nearly three-quarters of small businesses began selling products or services online. Platforms like Shopify, Etsy, and Amazon saw record numbers of new merchants.
Facts and Stats:
- Etsy: The number of active sellers grew by 62% in 2020 compared to 2019, and continued growing to reach 7 million by Q4 2023.
- Amazon’s Third-Party Platform: Allows millions of small businesses to sell products online, with a significant portion of goods sold by third-party sellers.
- Sales Growth: During the 2020 holiday season, e-commerce retailers reported a 104% year-on-year increase in sales.
Tip: Traditional retailers should consider moving some operations online to thrive in this new environment. According to PYMNTs, 54% of sales in 2023 by SMBs were from online channels.
Innovative Financing Methods
Traditional loans are no longer the only way to finance a small business. Many fintech companies have revolutionized how businesses get funded. Creative financing options are popping up, filling the gap left by traditional banks.
Key Players:
- American Express’ Kabbage Funding: Offers automated loans using alternative data.
- Bluevine: Since its inception in 2013, it has offered over $14 billion in financing to more than 450,000 small businesses.
Importance: These new methods can be crucial for small businesses that struggle to get traditional loans. With nearly half of small businesses now applying for needed financing, fintech solutions offer a more accessible alternative.
Virtual Efficiency Through SaaS
Small businesses are increasingly relying on Software as a Service (SaaS) to streamline operations. From customer relationship management (HubSpot) to project management (Trello) and HR functions (BambooHR), these tools are becoming essential.
Notable Stats:
- Focus on Efficiency: Small and medium-sized enterprises (SMEs) allocated an average of $11,196 per employee as of the end of 2023.
- Adoption Rates: In 2023, 89% of SMBs used SaaS products.
Benefits: These tools allow small businesses to operate with minimal staff but maximum efficiency, making it possible to manage large-scale operations with a lean team. With the integration of AI into these tools, expect even greater benefits to come.
The Need for a Digital Presence
A robust digital presence is no longer optional. It’s imperative. From social media to SEO, small businesses need to focus on digital marketing to reach their customers. According to Top Design Firms, 71% of small businesses have a website, which means nearly one third didn’t; the ones that did expect faster growth.
Digital Marketing Insights:
- Digital Advertising: Expected to account for over 60% of total media ad spend.
- Social Media: 73% of small businesses identify social media as their most successful marketing channel.
- Local SEO: Searches for “Local SEO” have risen by 623% in the last decade, underscoring its importance.
Example: Even local-only businesses are seeing the need to invest in digital presence. Google reported that about half of all searches are location-dependent, with nearly all searchers Googling a local business.
Conclusion
Staying ahead of the curve is essential for the survival and growth of small businesses. By adapting to today’s trends, such as leveraging large platforms, moving to e-commerce, seeking innovative funding, adopting SaaS tools, and creating a strong digital presence, small businesses can prepare for a promising future. Understanding these trends are crucial for navigating the evolving small business landscape and making informed decisions to drive success.
Small businesses are the backbone of the economy, and by embracing these changes, they can ensure they not only survive but thrive in the coming years.
To find more information concerning small business trends, see another blog here.
