While a majority of small- and midsize-business owners “expect to thrive in 2006,” according to a national Web-based survey reported by the Boston Business Journal, the Associated Press (via the Washington Post) safely albeit quite aptly said, “It’s a mistake to try to pin a label like ‘optimistic” or ‘pessimistic’ on small-business owners as a whole.”

A survey of small-business owners, taken in November by the National Federation of Independent Business, found that while they were generally optimistic, they weren’t as upbeat as they had been in October, and some were paring back their 2006 job creation plans. Worries regarding higher prices contributed to owners’ uncertainty. The Institute for Supply Management’s report at the beginning of January showed slowing in manufacturing growth, which is also likely to hinder some company owners’ outlooks.

However, some owners are optimistic simply because business continues to improve from the downturn that came with the high-tech bubble burst and the 2001 recession. Those small businesses that are feeling upbeat about business in 2006 are likely to be in industries on the rise or in a market niche that ensures their companies will have solid growth. According to AP, “some are optimistic because they see signs of improvement in their clients’ and customers’ businesses.”

We know that RFID, nanotechnology, robots and biometrics continue to receive media play as intriguing and most-promising technologies; but aside from being of interest to a relatively small group of tech startups, none of those technologies is particularly relevant to the mainstream of small businesses, nor will they be throughout this new year. However, in addition to these aforementioned promising technologies, Entrepreneur magazine highlighted a number of other trends that seem to be particularly relevant to a broad range of small businesses and entrepreneurs. A selection of these, noted also by Small Business Trends, follows:

• Niche food businesses. Tea, especially healthful green and white teas, are big, and “the $6.8 billion tea industry is one of the strongest beverage markets, on track to reach $10 billion by 2010. Online specialty foods retail is growing -- our taste buds are becoming more specialized, and increasingly we turn to the Internet to find specialty food items. Chocolate, of course, continues to grow in popularity, and food or restaurant ideas that focus on chocolate are expected to be big. Moreover, one-food restaurants — such as restaurants for soups only — are expected to grow in popularity."
• Security businesses. There is keen emphasis on keeping our businesses safe on- or offline in 2006, with key areas being shredding services, identity-theft prevention and recovery services, hosted computer security, data backup, and surveillance cameras.
• Digital device add-on services and accessories. It took the United States a few years to catch up with the rest of the world, but now we are "gaga over wireless devices such as cell phones." There are 180 million wireless customers in the U.S.; but people don’t have to settle for a plain old white iPod when there are enterprising entrepreneurs who will skin it any color you want.
• B2B services. Technology consulting services, staffing services to handle the shortage of qualified candidates, and technology recycling services are key.
• New opportunities for small businesses. Experiential travel, services for eBay sellers, patient advocacy businesses, and niche fitness businesses are all on the hot list of businesses.

The following list of top ten trends for 2006 comes courtesy of Happy About Corporation (again via Small Business Trends). This list of top trends comes from input via executives within various industries. Here is a selection from the list of Happy About’s top trends for 2006:

• The Internet’s democratization effect expands to traditional media. This trend is all about using blogs, podcasts and even videoblogs, with the claim made that “if you are not personally or professionally using this technology, you’re behind the times.”
• Marketing expenditures and activities continue to shift to the Internet. Search engine marketing will be where it is at, suggesting that businesses need to buy Google and Yahoo Overture keyword advertising.
• China’s continued growth significantly affects world commerce. As Small Business Trends noted: “’Do you speak Mandarin’ is the comment for this trend. Enough said.”
• Outsourcing continues to expand to other sectors of the economy. Happy About suggests that offshore outsourcing is not cooling off — as some other predictions have suggested — but continues to grow. Yes, the breadth of interest in outsourcing, in terms of the number of deals and clients, continues to increase, according to Stifel Nicolaus & Company analysts. This is further confirmed by BusinessWeek and IndustryWeek.
• Services continue to play a bigger role in Western economies. This trend will inevitably affect the small-business market in a big way. Happy About suggests that software as a service is a key trend and to incorporate recurring revenue streams into your business model. Those are messages Small Business Trends too has been preaching for some time.
• Usage and proliferation of mobile commerce expands. In addition to damn near everything they already can do, portable devices such as cell phones will soon be able to conduct commerce.
• VoIP adoption continues. Communications systems aim for unification. I.e., telephone service, voice mail, e-mail and other Web communications all will work together — seamlessly.
• Employer/employee relationships strengthen for the first time in years. The disconnect between the two will shrink? Employee retention again becomes important? It’s tough to say this is definite, but perhaps the whole “It’s hit the fan and we’re all in this together” is the way by which said “strong employer/employee relationships” will finally stick, and thus fix the gap.
• Security and privacy issues raise their heads again. Cybercrime will only get worse, and security firms will be in even greater demand. This unless businesses of ALL sizes up their security.

E-Commerce
Avalara, online sales tax consultants to small and midsize businesses (SMBs), recently completed a survey of 12,000 SMB owners and operators active in e-commerce. In all, 90 percent of the SMB owners and operators who responded to the survey, and who are engaged in e-commerce themselves, think that “the U.S. Internet-based e-commerce economy was strong in 2005.” That same number (90 percent) anticipates the U.S. e-commerce economy this year to perform “better than it did in 2005.” Only three percent felt that 2005 was not as strong as 2004, and a mere four percent expect 2006 to under-perform 2005.

Further, Avalara asked small- and midsized-business owners and operators to rate their own businesses, and found that those engaged in e-commerce were also upbeat about their own e-commerce performance. Of those who participated in the survey, 83 percent say that their business' e-commerce operations did better in 2005 than it did in 2004. The Hosting News noted, “This response was virtually identical to their answers about their business' overall performance. To that question, 84 percent said their overall business — both on- and offline — had done better in 2005 than in 2004.”

Even more, 81 percent saw their e-commerce business again improving in 2006 over 2005, while 84 percent of respondents said that their overall business would improve in 2006. Only four percent of those engaged in e-commerce did not expect their e-commerce sales in 2005 to outperform those of 2004, and only five percent expected to do less well in e-commerce in 2006 than in the year just completed.

Lessons Katrina Taught Small Business
Having a disaster plan in place is only one of the lessons the worst natural disaster in U.S. history taught small business. Stories from Louisiana, Mississippi and Alabama describe unimaginable circumstances in the days and weeks following the storm. Homes, lives and, yes, businesses — all changed for what one can only assume will be forever. While most U.S. small businesses — fingers crossed — will never face a Katrina-like storm, other disasters such as fires, floods or tornadoes can decimate your business just as quickly. Are you ready? NFIB recently provided an article describing each of its five lessons, highlighted here:

1. Form a Disaster Plan
2. Take Care of Employees.
3. Anticipate Customer Needs.
4. Collaborate With other Businesses
5. Focus on Your Recovery, Not Your Losses.

Self-Employment
The number of self-employed workers in June 2005 fell 3.1 percent, or 303,000, from the month before, recent Labor Department data show. Self-employment tends to fall as the economy grows. That's especially true among laid-off workers who start tiny companies after failing to find work in slow times.

(Source: USA Today, July 18, 2005)

Hiring
The NFIB Research Foundation, in this month’s NFIB Small Business Economic Trends, found that “at least two million jobs were created […] although the December survey does indicate that job creation did decline in the final month. But October and November reported large job increases.

Inc.com, however, noted that the nation's small businesses “appear to be shifting from recovery leaders to laggards, ending 2005 with flat growth and fewer new jobs, according to a new payroll data report.” Hiring at small businesses grew by .3 percent in 2005, reported payroll research firm SurePayroll in its small-business scorecard for December, which surveyed some 15,000 small businesses across the U.S. This .3 percent growth is compared with 4.4 percent in 2004. Whereas the size of small businesses — gauged by the number of employees — had declined by the end of December in every region but one, hiring in the Northeast was up 10.4 percent on 17 straight months of increases.

Health Care
In a recent Inc.com article, titled The Sickly State of Small Business Health Care, it was noted that “conditions just keep getting worse for employer-sponsored health care.” Rightly so. While many large companies are managing to cover the bill, small businesses are struggling to afford what in many employees’ minds is a must-have benefit.

Inc.com stated the following:

A September 2005 survey from the Kaiser Family Foundation and the Health Research and Educational Trust notes the steady decline in businesses offering health benefits since 2000, as the rising cost has outpaced inflation year after year. More recently, in a January 9, 2006, article (membership required), the Society for Resource Management (SHRM) spoke to a number of experts who predicted the employer-sponsored health care system will eventually collapse. Furthermore, the article notes that small employers will be forced to push the cost onto employees, and employer programs at the low-end of the wage scale will dwindle away.

To cover workers, state-run programs and consumer-directed health plans, are trying to fill the need, though not always adequately. As well, individual insurance plans are popping up more relevant as options for employers who want to help, but who can only afford to sponsor a plan.

In addition, the single-payer government system is again on the table. Experts have mixed reviews on its ability to replace adequately an employer-sponsored system, as some say the public monies simply aren't there to support it.

Inc.com asks, “So what is the solution?” (The question was rhetorical. Its own answer immediately follows.) “Amidst all of them, it's hard to find one approach that can effectively replace what many workers have come to view as a natural part of their working lives. At the very least, these options illustrate a growing commitment to finding a solution, and more innovative thinking on tackling the issue.”

Your suggestions?

References

Small biz optimistic for 2006
by Lisa van der Pool
Boston Business Journal, Dec. 30, 2005

Small Biz Optimism May Depend on Industry
by Joyce M. Rosenberg
The Associated Press (via the Washington Post), Jan. 4, 2006

Hot Ideas for 2006
Entrepreneur magazine

Entrepreneur Magazine’s Top Trends for 2006
by Anita Campbell
Small Business Trends, Dec. 19, 2005

The “Happy About” 2006 Business Trends
by Anita Campbell
Small Business Trends, Dec. 13, 2005

Breadth of interest in outsourcing increases
Stifel Nicolaus, Jan. 12, 2006

Meet the Small-Biz-Friendy China
Special Report, with Rebecca Reisner and Frederick Balfour
BusinessWeek, Jan. 1, 2006

Hot! Hot! Hot! Global Siting's Hottest Locations
by John S. McClenahen
IndustryWeek, Jan. 1, 2006

Small and Medium-Sized eCommerce Businesses Confident in 2006
The Hosting News, Jan. 5, 2006

Five Things Katrina Taught Small Business
National Federation of Independent Business, Nov. 21, 2005

You may not know it, but small business is bullish
by Steve Strauss
USA Today, July 18, 2005

NFIB Small-Business Economic Trends -- January 2006
by William C. Dunkelberg and Holly Wade
National Federation of Independent Business, Jan. 10, 2006

Small-Business Hiring and Wages Slowed in 2005
by Angus Loten
Inc.com, Jan. 3, 2006

The Sickly State of Small Business Health Care
by Carole Matthews
Inc.com, Jan. 10, 2006