2009 Top 10 Small Business Trends May 29 th , 2009 Carolyn Ockels & Steve King Emergent Research

Emergent Research Our focus is identifying, analyzing and forecasting the trends and forces impacting small business. economic trends social and demographic shifts impact of technology changes in industrial structure Reports and resources: www.emergentresearch.com Blog: www.smallbizlabs.com Twitter: @smallbizlabs Intuit Future of Small Business reports and resources: www.intuit.com/futureofsmallbusiness

Our focus is identifying, analyzing and forecasting the trends and forces impacting small business.

economic trends

social and demographic shifts

impact of technology

changes in industrial structure

Reports and resources: www.emergentresearch.com

Blog: www.smallbizlabs.com

Twitter: @smallbizlabs

Intuit Future of Small Business reports and resources: www.intuit.com/futureofsmallbusiness

The Entrepreneurial Economy is Here Small businesses: Employ over half of America’s private workforce. Generate over half of America’s non-farm GDP Create 60-80% of America’s net new jobs Extremely diverse in size, style and goals

Small businesses:

Employ over half of America’s private workforce.

Generate over half of America’s non-farm GDP

Create 60-80% of America’s net new jobs

Extremely diverse in size, style and goals

The Long Term Drivers of Economic Decentralization and the Growth of Small Business The Growth of Market Capitalism Deregulation Technology Globalization Information and Market Efficiency Three Eras of Transformation Leads to Growth of Small Business

The Growth of Market Capitalism

Deregulation

Technology

Globalization

Information and Market Efficiency

27 Million U.S. Small Businesses Only 17,000 businesses with more than 500 employees Large Small Business Mid Market Micro & Personal About 2/3 of Personal Businesses are Significant Contributors to Family Income Main Street Sources: Intuit Main Street Quant Survey 2006, Intuit Segmentation Survey 2008, US Census data 2008 & 2009, US BLS data 2008 & 2009, Emergent Research estimates 2009 $65k $31M 5-19 100 - 499 Average Revenues $1.2M $6.1M # of Firms 1.8M 630K 90K 24.5 M # of Employees 20-99 0-4

The Next Decade The New Artisan Economy Over 40 million U.S. small business by 2017 Roughly 32 million personal businesses Over 13% of Americans self employed The new artisans will be knowledge workers, but many will make things They will be amplified by technology and highly networked Source: New Artisan Economy research report (www.intuit.com/futureofsmallbusiness)

Over 40 million U.S. small business by 2017

Roughly 32 million personal businesses

Over 13% of Americans self employed

The new artisans will be knowledge workers, but many will make things

They will be amplified by technology and highly networked

2009 Top 10 Small Business Trends Economic Trends The recession drives small business innovation Government plays an increasing role in the economy Global infrastructure and stimulus spending The number of small businesses will increase in 2009 Small business globalization will temporarily slow Demographic Trends Baby boomer retirement problems leads them to small business Gen Y turns to small business Technology Trends Mobile computing continues strong growth Cloud computing becomes mainstream for smallbiz Small business use of online marketing tools expands

Economic Trends

The recession drives small business innovation

Government plays an increasing role in the economy

Global infrastructure and stimulus spending

The number of small businesses will increase in 2009

Small business globalization will temporarily slow

Demographic Trends

Baby boomer retirement problems leads them to small business

Gen Y turns to small business

Technology Trends

Mobile computing continues strong growth

Cloud computing becomes mainstream for smallbiz

Small business use of online marketing tools expands

The Recession is Dominant Issue for Small Business in 2009 – And Drives Innovation Small businesses focus on cash flow, cost containment, customer retention and survival Re-evaluate, re-design and refine all aspects of their business to create opportunity Improvements through incremental and business model innovation common Economic Trends

Small businesses focus on cash flow, cost containment, customer retention and survival

Re-evaluate, re-design and refine all aspects of their business to create opportunity

Improvements through incremental and business model innovation common

Government Plays an Increasing Role in the Economy Economic turmoil, corporate malfeasance and regulatory failure lead to greater global government economic oversight Long term, global trend towards market capitalism still in place Small business awareness of federal, state and local government policies and programs required Economic Trends

Economic turmoil, corporate malfeasance and regulatory failure lead to greater global government economic oversight

Long term, global trend towards market capitalism still in place

Small business awareness of federal, state and local government policies and programs required

Global Infrastructure and Stimulus Spend Stimulus package will create or save 1.6 million small business jobs Global stimulus spending over $1.5 trillion Construction, clean tech, IT largest spending areas Economic Trends Source: The Stimulus Package: What it Means for Growing Businesses (www.myventurepad.com)

Stimulus package will create or save 1.6 million small business jobs

Global stimulus spending over $1.5 trillion

Construction, clean tech, IT largest spending areas

Small Business Numbers Will Increase in 2009 Job losses will lead to “necessity entrepreneurs” Easier and cheaper to start a small or personal business than in prior recessions Small business failure rates will increase, but net will be positive Economic Trends Source: Warrillow, SBA; employer businesses only.

Job losses will lead to “necessity entrepreneurs”

Easier and cheaper to start a small or personal business than in prior recessions

Small business failure rates will increase, but net will be positive

Small Business Globalization Will Temporarily Slow Recession and currency market turmoil reduce export opportunities Small businesses will focus on local markets Long term trend towards small business globalization will continue. Economic Trends

Recession and currency market turmoil reduce export opportunities

Small businesses will focus on local markets

Long term trend towards small business globalization will continue.

Baby Boomers Will Work Past Retirement Age Want to work Want change & work/life balance Skills, Ability, Flexibility Recession and stock market losses mean many will have to work. Small Business Formation by Age Avg 45-54 55-64 65+ 27% More likely to start a smallbiz Sources: Kauffman Foundation, US Census Demographic Trends

Want to work

Want change & work/life balance

Skills, Ability, Flexibility

Recession and stock market losses mean many will have to work.

Generation Y Will Turn to Small Business Digital natives with excellent end user tech skills Don’t trust corporations Values oriented Limited near term employment opportunities do to recession Percentage of Teens Who Want to Work For: % Someone Else Themselves Source: Gallup Poll Demographic Trends

Digital natives with excellent end user tech skills

Don’t trust corporations

Values oriented

Limited near term employment opportunities do to recession

Mobile Computing Continues Strong Growth Internet access devices Smartphones Ubiquitous WiFi Cellular nets Broadband Search Cloud resources Technology Trends

Internet access devices

Smartphones

Ubiquitous WiFi

Cellular nets

Broadband

Search

Cloud resources

Cloud Computing Becomes Mainstream for Small Business Lowers capital costs Turns fixed costs into variable costs Scalable solutions Many cloud issues seen as advantages by small businesses: Security Reliability Control of data Technology Trends

Lowers capital costs

Turns fixed costs into variable costs

Scalable solutions

Many cloud issues seen as advantages by small businesses:

Security

Reliability

Control of data

Small Business Expands Use of Online Marketing Small business online presence growing Growing understanding of online marketing Starting to understand social media and search engine optimization Clear metrics and ROI Lead generation in a recession Technology Trends

Small business online presence growing

Growing understanding of online marketing

Starting to understand social media and search engine optimization

Clear metrics and ROI

Lead generation in a recession

2009 Top 10 Small Business Trends May 29 th , 2009 Carolyn Ockels & Steve King Emergent Research