From capital to cloud computing, technological advances will be the strongest catalysts of change in 2016.
From tea leaves to tarot cards, the first half of the year is always a popular time for forecasting. But when it comes to peering into the future for small businesses, those kinds of predictions are driven less by assumptions and feelings, and more by data, trends and industry analysis from experts.
37 percent of U.S. small businesses are adapted to the cloud, and 65 percent already do back-office work like accounting and bookkeeping with cloud-based apps.
Of course, similar to the good fortune and romantic success predicted by tarot cards, no one can know with 100 percent certainty what entrepreneurs and small business owners should expect in the coming months. But it's a safe bet that embracing new technologies will be essential to success.
Here are six of the hottest trends small businesses should watch for this year, all driven by technology.
1. Promising business climate
The U.S. economy is expected to continue growing in 2016 at about 2.25 percent GDP, according to Jan Hatzius, chief economist at Goldman Sachs. He predicts "we'll likely complete the labor market recovery, get back to full employment and get the normalization process for monetary policy underway."
That's good news for small businesses, and dovetails with the latest Bank of America Small Business Owner Report, which is equally optimistic about growth. For example, 72 percent of surveyed business owners say they expect their revenue to increase in 2016, a 10 percent jump over last year's tally.
2. Easier access to capital
The purse strings at banks have loosened since the Great Recession, although cash flow and access to capital are always challenges for small business. According to the BofA study, 35 percent of small business owners plan to apply for loans in 2016, an 11 percent increase over 2015.
Historically risk-averse, traditional banks face a significant new challenge from online lenders in the small business space, many of whom exclusively fund small businesses and startups. Comprehensive online marketplaces include Prosper, Fundera and Biz2Credit, which link borrowers to alternative and traditional lenders.
Crowdfunding is another option, brought about through the Jumpstart Our Business Startups (JOBS) Act of 2012 Using crowdfunding sites like kickstarter.com, Indiegogo.com or angellist.com, entrepreneurs can launch their products or campaigns.
3. Changing workforce dynamics
The BofA study reports that 78 percent of small business owners plan to grow their business over the next five years, and 62 percent expect their local economy to improve over the next 12 months. To support those expectations, two out of three business owners plan to hire more employees.
Significantly, 47 percent of those business owners now offer telecommuting (a 12 percent increase from five years ago), and millennials are taking note. Results from a recent survey commissioned by Microsoft research shows that younger workers place a high value on collaboration, and expect employers to provide technology tools that allow them to collaborate no matter where they are working.
A recent PricewaterhouseCoopers study found that 78 percent of millennials believe that access to the "technology they like to use makes them more effective at work," and 41 percent say they prefer to communicate electronically rather than face-to-face or via a conference call.
Even hotter: Remote technologies are helping the so-called "gig" economy grow steadily, and become a clear alternative for small businesses that aren't ready to staff up. Some 53 million Americans are now freelancing, according to a study conducted by Edelman Berland and commissioned by Freelancers Union.
4. Mobile marketing essential
Mobile commerce, or m-commerce, is expected to continue expanding, as more and more consumers use their smartphones to research products and make online purchases. U.S. mobile payments will grow to $142 billion by 2019, predicts Forrester.
Improving a customer's mobile experience is essential, especially since Google implemented new Mobile Optimization Guidelines. Without a mobile-friendly web design, a business' SEO ranking can suffer, or even be omitted for anyone searching from a mobile device. For 2016, Google's new initiative will include faster page loading as part of a project called Accelerated Mobile Pages.
A positive mobile experience is just as important in the B2B world. A recent survey by Usablenet shows that mobile devices are used by 56 percent of B2B customers to read reviews, by 55 percent to read product information and by 50 percent to compare features. Among vendors, 57 percent say they are shifting transactions from offline to online, and adopting B2C best practices to optimize the purchasing experience.
5. Data security and cloud computing
Cloud computing is becoming the new normal for many small businesses because it eliminates the need for costly IT infrastructure, on-site network servers and heavy on-staff expertise.
According to Forbes, 37 percent of U.S. small businesses are adapted to the cloud, and 65 percent already do back-office work like accounting and bookkeeping with cloud-based apps.
A key driver will be improved data security. Small business owners may not think they are at risk for data breaches, but they are much more vulnerable than large corporations—and less likely to recover from a breach. In fact, the BofA study mentioned earlier found that more than 12 percent of small business owners already had been victims of a cybersecurity breach, and nearly two out of three (59 percent) are worried about protecting the proprietary data of their customers.
6. Improved business intelligence and analytics
Large companies have used business intelligence software to gather, store and analyze "big data" to improve decision-making. For example, who's buying which products, where do they live, and what are they most willing to pay? The answers to these questions allow a business to predict what to inventory, how much to buy, where to put it and how much to pay for it to preserve profit margins.
Small businesses now have access to advanced analytic tools that will monitor and track business data in real time, using an on-screen dashboard that integrates with your in-house or cloud-based databases. Among examples reported in Business News Daily are IBM's Watson Analytics, Google Analytics and InsightSquared, which harvests actionable data from business solutions you already use.
Small businesses could be better positioned to benefit from big data than large companies ever were. After all, even the most valuable insights aren't worth much if you aren't able to act on them in a timely way. And one advantage small businesses typically have is the ability to move quickly.