Top Eleven 2011 Trends for Entrepreneurs
As we head into the new year, here are the top 11 trends entrepreneurs need to be aware of, consider, and for which we should all prepare:
1. The economy will continue to struggle: This is the biggest question on everyone’s mind. If PR and marketing experts were advising me to write this blog to be popular, they would tell me to speak positively about the economic trends for 2011. But I just don’t see it on a macro level and refuse to sugarcoat it. things for the sake of writing a popular blog post. I know of some entrepreneurs that are thriving and some that are struggling or have already closed their doors. But most are treading water. And this will be the same news at the end of 2011. I’m saying this, even though you probably wanted to hear something different.
In his publication Yet More Evidence of Hunkering Down Among Small Business, Jeff Cornwall expresses his concern that if entrepreneurs aren’t positioning their businesses to expand, a full economic recovery seems distant at best. But there are plenty of strong niches and unique opportunities that will continue to thrive with savvy entrepreneurs.
2. Working capital will be king: Yes, the saying goes that cash is king. But tough economic times have taught many entrepreneurs that their working capital is sacred, primarily because it’s the key to immediate, short-term cash. Those who make it more efficient (see Working Capital: Less is Often More) will outperform their competitors. Those who protect it from being used for capital expenditures, excessive owner compensation, and other outflows that are not helpful in generating immediate and short-term gross profits will find it empowering to succeed regardless of almost any outside pressure or economic.
3. Results-oriented marketing will be one of the biggest differentiators of the year: Whatever Happened to Marketing Performance Measurement? Many entrepreneurs are so obsessed with marketing that they have become soft on measuring the results it generates. Some have justified spending more on marketing as a strategy to get through the recession, and most of them are out of business now, having depleted their working capital without a tool to measure whether it was really paying off. Marketing metrics will be back in fashion, and cost per lead and cost per customer acquisition will be numbers that successful businesses will keep to the minimum possible. John Donald Leavy has much more to say on this topic here: Performance Based Marketing in 2011.
4. Capital Expenditures will increase: Most companies have deferred necessary capital expenditures in 2010 for two reasons. First, they were concerned about not getting the expanded Section 179 tax deduction for 100% of their purchases, and second, they were concerned about overspending in a tough economy. With the increased Section 179 deduction extended through 2011 and an economy still shaky, most entrepreneurs are deferring that pent-up demand until 2011. Don’t be fooled because capital expenditures are likely to fall back into the 2012. You can read more about this in an article I wrote for the American Express OPEN Forum-Five Finance Trends Every Entrepreneur Needs to Know.
5. Going Green will no longer be a trend, it will be an expectation: A little ahead of this trend, in my opinion, the folks at Willoughby Design wrote: Going Green isn’t a temporary craze, it’s an expectation. If you haven’t accepted this fact, your competitors will gain more traction and sustainability than you. Period.
6. Fixed fee and flat fee will win more business: Whatever you sell, have a fixed price for it. If your customers somehow feel that the cost of your product or service is variable, it will decrease your chances of getting the business. Find out how to price your products and services and deliver what your customers need. The argument that each client’s needs are different is becoming obsolete, as are those who base their entire business model on it. This is just one example from a lawyer who wrote about how clients love flat-rate billing based on defined deliveries.
7. Mobile, cloud and social technology will continue to converge: As these three technologies mature, they will continue to converge and become the future of how we think about and use technology. You can read just one of many opinions on this here: Convergence of Mobile, Cloud and Social.
8. Corporate borrowing will move further away from traditional sources: It will become more difficult and less attractive to obtain traditional loans from banks. Increasing an entrepreneur’s opportunities to properly finance their business is a hotly debated topic, but few seem to really understand it. You can read more about these challenges at altconsulting.org, and you can also look forward to more innovation in getting entrepreneurs access to the funding they need in 2011.
9. Compliance enforcement will increase: The IRS has $300 million more to spend on compliance programs in 2011, and many state and local tax and other enforcement agencies are also spending more on compliance. Plan it and you’ll be ready when it arrives. It is becoming more and more likely that this will be the case.
10. The temporary Social Security tax cut is a sign of things to come: A provision of the 2010 Tax Relief Act left me baffled. Everyone knows that the social security system is underfunded and will be bankrupt in a few decades unless the program is overhauled. So why did Congress reduce the amount paid into the fund by two percentage points, or as much as $2,136 per worker? It just doesn’t make sense, unless the long-term plan is to remove the cap, currently set at $106,800, in total, to match the same way the health insurance tax is currently treated.
11. Recruitment will focus on added value, regardless of position or responsibility: Most studies and surveys say that hiring will plateau among entrepreneurial companies in 2011. But those who hire will focus on the value that each new employee and position will bring to the company. They will improve their hiring business practices and will only hire when an employee is the only way forward towards their goals and objectives.
We hope these trends and tips will help us all make 2011 a year of prosperity and growth. To see the report card of my predictions for 2010, visit the 2010 Top 10 Trends for Entrepreneurs Report Card.