Our 2016 forecast includes the following "Top 10" categories we
see strongly influencing small business owners' decisions and
behaviors in the coming year.
#1 The political effect: The 2016 elections
will influence small businesses owners, regardless of their
affiliation, especially with regard to top issues - health care,
taxes, and minimum wages. This year's imminent presidential and
legislative elections cast uncertainty on the direction of these
issues, each of which is intricately linked to the outcomes.
Healthcare tops the list for many business owners. In fact, more
than one-third of small businesses consider healthcare one of their
most important business goals.
#2 Cybersecurity: Due to the ever-expanding
digitized environment, cybersecurity matters more than ever. As
more small businesses use cloud-based services and increase their
support of online and mobile access for their customers, there will
be a stronger emphasis on privacy protection and data security.
Small businesses will also focus more attention on developing
transparent customer communications which reflect their commitment
to security policies and privacy rights. In the coming year,
investments in security-related software are likely to rise as
small businesses become more embedded in the digitized world and
more mindful of the risks of not protecting sensitive data.
#3 Lending options: An increase in online
lending and crowdfunding are providing small businesses with more
options than ever to shop for rates and find new investors.
Traditional lenders are pressed to streamline their processes to
remain competitive with online lenders' heavier focus on automation
and quick approvals. With the passage of Title III of the Jobs Act
late in 2015, small businesses will now have the ability to raise
capital through crowdfunding from non-accredited, small-time
investors. The percentage of small businesses using
crowdfunding doubled between 2014 and 2015 (from 6% to
12%), and we expect to see a rise in the number of
entrepreneurs and start-ups using this type of funding.
- 67% increase in use of mobile for financial services over 2 years
#4 Payment technology: Mobile payments will
advance more broadly in 2016, facilitated by the stronger growth in
online shopping. Omni-commerce will be more common as the
purchasing trend of "anywhere, any way" becomes more entrenched.
Currently, 23% of small businesses use mobile for
payments - and even more among higher revenue companies.
Business credit cards remain the payment of choice for online and
mobile, and we expect this pattern to continue in 2016. As digital
wallets gain traction, more small business retailers will be
equipped this year to accept not only EMV-chipped cards, but also
Apple Pay, Samsung Pay, and Android Pay. Nonetheless, customers are
taking their time adopting these POS-mobile payments. While more
small businesses adopt mobile and online payments or applications,
we will see demand build for payment solutions which encompass
choices and flexibility.
#5 Mobile solutions: Mobile continues to be a
dominating force. Small business use of mobile devices is
widespread - 91% have a mobile device, and of this group, 77% have
a smartphone. The upward trend for small businesses' use
of mobile for financial services activities is compelling, with a
67% increase over a two-year period. Most notably, the evolution of
mobile has generated an increasingly tech-savvy segment of small
businesses who are integrating the technology into their day-to-day
operations. While we expect to see more companies use mobile this
year, we will also see more companies highlight mobile strategies
which focus on customers' overall digital experiences.
#6 Social media: A growing percentage of small
business owners are adding social media to their business plan.
Nearly 1 in 6 businesses use social media as a marketing
tool - mainly Facebook, LinkedIn or both. Most
importantly, more business owners are seeing noticeable
improvements in customer sales and engagement, which may account
for the77% of small businesses who say they plan to increase their
social media brand presence over the coming year.Social media is
adding greater functionality, including buy buttons, video
capabilities, paid advertising, and ways to share and search
content. Going forward, small businesses will need to be creative
in utilizing social media tools to build powerful, shareable
content, especially through DIY video content marketing. With
Facebook's growing video views, small businesses have validation to
include video content as part of their social media strategy.
#7 Cloud-based services: In 2015,
one-fourth of small businesses used cloud services,
primarily for data backup and file storage. Higher revenue
companies had the greatest use, with nearly 4 out of 10 utilizing
the services. Cloud services are opening the door for small
businesses to compete more effectively and to expand their customer
base, improve productivity, and reduce capital spending. Despite
the greater opportunities the cloud presents, small businesses must
be aware of their increased exposure to security breaches, which,
in turn, may boost the adoption of private cloud hosting. In the
coming year, look for use of cloud-based services to fast-track
among small businesses and for private and hybrid hosting to become
more widely accepted.
#8 The generational wave effect: In the next
year and beyond, the effect from retirement-ready baby boomers and
maturing Millennials will create waves in the business life cycle.
Baby boomers and older generations are entering a stage of
monumental decisions related to future business ownership, such as
whether to retain their current role, plan for succession, or sell
the business. Currently, 11% of business owners are
preparing for management succession and 9% plan to sell their
company over the next year. At the same time, Millennials
are in the early stages of the business life cycle and Gen Y
members are looking for ways to continue growing their established
businesses. As the generational wave effect becomes more pervasive,
Millennials will lead the generation of business owners whose
preferences lean toward everything digital, from mobile banking to
cloud-based solutions to electronic payments.
#9 Woman-owned businesses: The gender gap for
small business owners is slowly diminishing. The percentage of
woman-owned businesses continues to increase, effectively shrinking
the gap between the genders. In 2015, according to TNS' Small
Business Study, 4 out of 10 small businesses had a woman at the
helm - a 12% increase from two years earlier. Based on the average
growth rate for this segment over the past five years, we
expect woman-owned businesses to comprise half of all small
businesses in the next 5 years. In addition, look for
woman-owned businesses to also encompass a wider span of trades and
#10 Location-based marketing: While
location-based marketing has been around for awhile, we expect this
approach to pick up stronger interest among brick-and-mortar small
businesses this year as social media and mobile platforms roll out
better capabilities and new functions. For instance, with Facebook
Bluetooth Beacons, businesses are able to send promotions and
messages to potential customers who are within range of the
business, assuming they have opted in and have mobile services
which allow location access. Despite the greater interest, this
select segment of small businesses will need to ensure that their
digital marketing does not result in unintended clutter at the
expense of a personal relationship.