When it comes to business success, the old order is rapidly fading.
Historically, big businesses succeeded by selling goods and services on a massive scale. Small businesses struggled because they couldn’t match the resources or brands of the big guys.
Today, small businesses have access to the tools that were once the sole domain of mega companies. And nimble small businesses are actually much better suited to the realities of the 21st economy. They are better able to adapt, to take advantage of new opportunities and to pivot to serve customer expectations in a rapidly changing world.
A new study from Intuit–“QuickBooks Future of Small Business”–identifies five big trends that are empowering small businesses to compete against big businesses and win:
- Running operations on world-class business infrastructure
- Using data to make smarter decisions
- Tapping into the growing pool of on-demand talent
- Meeting consumer demand for niche products and services
- Getting the message out with cost-effective online advertising
The bottom line: Even the smallest of small businesses can appear big by utilizing global platforms like Amazon and Etsy that provide easier access to customers, leveraging on-demand employee marketplaces like Fiverr and Wonolo, and tapping into massive business infrastructures such as cloud computing and equally massive advertising platforms like Facebook and Google that cost pennies to get started on.
Let’s take a closer look:
INFRASTRUCTURE: Build it, Store it, Run it in the Cloud
Intuit data shows that 62 percent of small businesses are operating their business in the cloud, up from just 37 percent two years ago.
That’s a tremendous leap forward. Cloud computing turns fixed costs into variable costs, allowing small businesses to scale IT resources up and down and only pay for what they use. It delivers technology-enabled solutions in seconds and minutes, not days or weeks.
Accessibility anywhere a network connection is available means small businesses can collaborate with customers and partners, change direction and respond to market changes almost any time, anywhere. And it’s getting cheaper; the cost of accessing Google Cloud’s services, for example, has decreased over 50 percent in the last 18 months.
That’s the power of the cloud. We see it ourselves at Intuit. Seven out of 10 customers today pick QuickBooks Online vs. QuickBooks Desktop.
Manufacturing and warehousing and distributing at scale, meanwhile, are also more in reach than ever. Contract manufacturing through marketplaces such as Maker’s Row means small businesses and solopreneurs can tap thousands of factories on demand to easily outsource product development and manufacturing. Since 2012, the 10,000 factories on the Maker’s Row platform have helped small businesses make more than 2 million products.
For large-scale warehousing, distribution, and payment solutions look no further than Amazon, which also provides access to its enormous customer base of 240 million active users. According to a recent survey by Web Retailer, about half of all third-party sellers on Amazon sell less than $100,000 of merchandise through the site and 85 percent less than $1 million.
SMART DECISIONS: The Data Revolution
It’s amazing to appreciate the sheer scale of today’s data. A full 90 percent of all the data in the world has been generated over the last two years.
But what good is all of it, if we can’t do anything with it? Technology innovations in areas such as machine learning are paving the way to unleash data for business success.
One simple example is the online recommendations you receive from platforms such as Amazon and Netflix. Machine learning, the ability of machines and algorithms to generalize intelligence from data, has much more impactful applications too, including business applications for targeted marketing, customer segmentation, and retention.
Even as a small business owner, you have loads of data that you can use to make smarter decisions and grow your business.
Cash flow, for example, consistently ranks as a top pain point for small businesses. At Intuit, we have been able to help customers use their own data to gain access to financing that has often been out of reach.
The QuickBooks Financing platform allows small businesses to use their QuickBooks data to demonstrate credit worthiness. Customers are able to streamline the application process, shortening the loan processing time to as little as one business day. To date, small businesses have secured over $500 million in credit with a 70 percent acceptance rate, compared to the more typical 60 percent decline rate found in traditional lending channels.[Tweet “New @Intuit study reveals 5 trends your #smallbusiness needs to leverage for #success.”]
HIRING ON-DEMAND: Tapping the Talent You Need
Historically, big corporations dominated the war for talent by offering higher salaries and better benefits. But the rise of the on-demand economy is leveling the playing field. On-demand workers aren’t just people working for Uber. Highly skilled professionals with advanced degrees from top schools are available for hire – by you.
That means you can now hire the right people for the job in a flexible way.
Fiverr, for instance, bills itself as the world’s largest marketplace for digital services. You can get logo design, marketing services, whiteboards, and more. Upwork is a global platform where you can tap into the expertise of 12 million registered freelancers for everything from graphic design to web development and marketing.
The rise of on-demand talent is part of a broader long-term growth trend in the contingent workforce, which is expected to reach 43 percent of the U.S. job force by 2020 – up from just 17 percent 25 years ago. It’s a trend Intuit has watched very closely. We see the on-demand economy as both a way to propel small businesses forward by providing them with the talent they need and also an opportunity to nurture aspiring small business owners. It’s probably no surprise that our QuickBooks Self-Employed software is our fastest growing product.
FILLING A NICHE: And Watching It Grow
What truly sets up a small business for success is what has always made small businesses great: they are unique, community-centered, and offer a personal touch.
The good news is that there is rising consumer demand for the niche products and services that small businesses are uniquely positioned to offer: Research from Infosys found 78 percent of consumers are more likely to be a repeat customer if a retailer provides them with targeted, personalized offers.
The trend is playing out in many different markets.
Etsy, which bills itself as a platform where “creative entrepreneurs sell what they make or curate” to “shoppers looking for things they can’t find anywhere else,” has 1.7 million active sellers, 26.1 million active buyers, and recorded $2.39 billion in annual gross merchandise sales in 2015.
Craft breweries, meanwhile, expanded their share of the U.S. beer market from about 5 percent in 2008 to just over 20 percent in 2015.
One of the ways successful small businesses win is by taking advantage of online marketplaces to gain access to millions of customers at the click of a button. Amazon and eBay alone accounted for 29.1 percent of U.S. online retail sales in 2015. There are marketplaces for services too, such as Upwork, TaskRabbit, or Catalant.
ONLINE ADVERTISING: A Global Audience Within Reach
Small businesses will never be able to compete with big business when it comes to mass advertising. It costs $2.5 million for four weeks on Times Square’s biggest billboard. The average cost for 30 seconds of commercial time on prime time broadcast TV last year was $112,000.
A generation ago, the best option was to put a notice in a local paper or radio station and place a listing in the Yellow Pages. But in the age of the Internet, there’s every opportunity to deliver your message to prospective customers around the world.
It costs just $6.35 to reach an additional 1,000 people with a promoted post on Facebook. For $20, you can buy a thousand impressions for a sponsored photo on Instagram. Signing up for Google AdWords is free. You only pay when someone clicks your ad or calls you. And you can adjust your budget and stop or change your ads at any time.
Today more than ever, small business owners have every reason to feel empowered to fuel their passion. Grab hold of these five trends and leverage them to your advantage.
Alex Hood is the Vice President of Product Management, Small Business Group at Intuit.