Small Business and Startups: The Trends for 2014 (Pt II)

I started a couple of weeks ago with the first part of a post on small business trends for 2014; today I have 5 more trends that I’d like to share. Two things to note: first, crystal balls like this one populate the Internet and mine is no better or worse than the many others out there. Secondly, trends are trends and nothing more. Some of them have legs and will be with us for a long time, others are like vapor – these may be in vogue at this moment in time, but a trend today is a mere memory to business owners a year from now. Having said that, these may inform how you approach your business in the next 12 months; here ya go:

1. Outsourcing social media. Many small business owners are devoting a significant chunk of their capacity to social media marketing, albeit sometimes with limited results. Studies have shown over 60% of small business marketers devote as much as 10 hours per week to SM campaigns and tactics. 25% of a marketer’s capacity is a huge investment by any measure and outsourcing the effort starts to look attractive to many managers and many have hired outside consultants to help. In fact, 15% of them are outsourcing design and development of their SM campaigns, 11% using outside capacity to create content and 10% are outsourcing their social media analytics. By outsourcing managers can free up their time, leverage expert help, and create brand value. Beware, however, a loss of control over messaging, increased costs, and poor integration with your other marketing efforts.

2. Crowdfunding for startup companies Great news, everyone! Recently the Securities and Exchange Commission proposed new rules to govern the upcoming changes in equity crowdfunding for startups and small businesses. The new rulers would permit startups to raise as much as $1 million from don rows online. It’s about time! In the several years since the launch of sites like Kickstarter and Indiegogo, filmmakers, artists and charities have used the Internet to gather support for their undertakings with huge success. But small businesses have been unable to take advantage of this innovative approach. The proposed rules are quite similar to those originally approved in the JOBS Act legislation passed last year:

  • Startups cannot raise more than $1 million in any 12-month period.
  • Investors with annual incomes or a net worth below $100,000 can only invest $2,000 or 5% of their annual income or net worth, whichever is higher
  • Investors with annual incomes or a net worth above $100,000 can only invest up to 10% of that annual income or net worth.
  • Transactions must be conducted through an intermediary. Intermediaries include registered brokers, or as a new type of entity called a “funding portal.”

For small investors the payoff could be huge (imagine investing a modest amount for a piece of a company that could go on to become the next Facebook or Twitter), but the risks are even greater. Studies have shown that startups fail at a rate between 75% and 90%, so the risk to this new breed of small-time equity investors is real and it is critical that they be well-informed. The proposed rules seek to mitigate that risk through the income and overall investment limitations.

3. Consumerization of products. Remember Kozmo was the late 90’s startup that began life as a video rental/delivery service and rapidly grew it’s ambitions to include delivery to your door of everything from books to razor blades within an hour! Well as cool as it was, Kozmo was about 15 years ahead of it’s time and was doomed to be a very well-funded failure. Today we are seeing the beginnings of a fiercely competitive effort to resurrect the idea of same day delivery of consumer products: Amazon, Netflix, Zappos, Staples, Ebay, and even Walmart are getting in the game to get you your groceries, shoes, office supplies, electronics, toys, and makeup on the same day that you place your online order! For instance, Amazon has switched its strategy from their efforts of the last decade to avoid state sales taxes on purchases, to one of building regional, urban warehouses and distribution centers with the goal of getting consumers their stuff within hours of an order being placed. The calculation is that many consumers would happily pay the tax in exchange for the convenience. And Ebay is building a network of couriers who, for a fee as little as $5, will acquire merchandise locally and deliver it directly to user’s doors, often within the hour. Sensing the threat, and not to be outdone, Wal-Mart has been testing a same-day service in several cities, delivering merchandise directly from its local stores.

4. Image based content. Historically, searches for online images have been accomplished by searching for the meta-data associated with the image – the tags and words used to describe the picture. New technology is allowing for computer vision techniques to the image retrieval problem, that is, the problem of searching for digital images in large databases. Not surprisingly, Google Images is the largest of these systems, allowing users to either type in a term or expression or to upload an image and let the network search for a visual match. But Google is not the only one making use of the technology; for instance you can download an app today that allows you to snap a picture of your prescription drug and ID My Pill the app will search for the visual match and identify it immediately., a image-based matching system for fashion, was acquired by Google in 2010 looks for visual matches based on user’s choices or from images they upload, and uses a unique algorithm to make suggestions on other clothing and jewelry the user might like. Other companies are moving in this direction, and recommendation engines are becoming more and more common.

5. Search is personalized. Personalized search is one that is customized based on a user’s own web history, physical location, and personal profile. Today, when you perform a search on Google, the results you see are based on what sites you have visited, what products you have purchased, what IP address you are browsing from, and what your social network looks like. In fact, as I write this post using Wordpersss, I am seeing ads for vacuum cleaners when I search. Why? Because it happens that I was searching online for a new one the other day and Google is well aware of that fact. The vacuum retailers have simply recognized that I am a hot lead, and worth the money they are paying to get those ads in front of me! For small businesses, this illustrates a great opportunity to tailor their SEO/SEM strategy to the folks who are most likely to be their customers, whether because they are already searching for or buying similar products, or because they are located just down the street. What this means for search marketing is that your company or product might not appear on page 1 of Google’s results on every single search, but rather only on the searches that really matter. In other words, why pay for premium placement of your ads if the user who is viewing them is less likely to buy your service or product?

Illustration, Wikipedia: 2014 – Year of the Horse