The State of the Small Business Economy

The State of the Small Business Economy

If there was ever a time to be excited about small business, it’s right now. For those with the entrepreneurial spirit encoded in their DNA, surf around LinkedIn, YouTube, Instagram, or go to your local food truck park. Small businesses are popping up everywhere, and many times, they don’t even need an address.

Growth is Strong

It’s an exciting time to be a small business. According to Wells Fargo, 37% of small businesses expect their numbers to grow, thanks to the digital world at their fingertips. Buyer sentiment is strong, but also, there’s faith in the small business economy.

Graph courtesy of Wells Fargo

Small business drives the American economy, and with over 30 million entrepreneurs doing everything from mowing lawns to opening record stores or creating pomade, the freedom to create and find your own lane is happening at an astonishing rate.

Two out of three people work for a small business, and that number is only growing. Right now, thanks to a steady economy coupled with small business-friendly legislation getting passed, people are seeing the value in striking out on their own vs. clocking in at the corporate job they feel lost in.  

What’s Driving That Growth?

Small businesses have played a large role in the economic recovery. That ecosystem is critical for national economic growth across the board because while there are new hires for these businesses, there are also satellite industries created around them. For every print shop that opens, there’s also the place down the road they get lunch. And, if that place is known for its dedication to farm to table, there’s the farmer who’s supplying the produce.

There’s also the local banks who give loans to startup businesses, too. While national banks aren’t letting the little regional and community-based banks take all of the new accounts, they’re implementing new programs to help underserved communities like womenveterans, and minorities get their dreams off the ground and running.

Getting Credit Is Easier Than in the Past

Because optimism is high right now, The Federal Reserve Bank of New York took the pulse of the small business world’s ability to scale and grow, but also how they impacted markets with available lines of credit, as well. But, what was most interesting about the study was that while more credit was opened, a lot of businesses don’t need it. Across the board, the survey showed optimism for revenue and employment growth. Small businesses are trending upward, and buyer sentiment is high.

Getting Started Is Really, Really Easy

Growth is about reaching new customers, and technology has broken down a lot of walls to do so. The old economy was relying on print, radio, or television, hoping your target market would see your company. Now, thanks to social media, we’ve entered a new media economy: we have Facebook pages, Instagram, and Amazon Seller accounts.

Have you ever heard of The Sneaker Don? It’s a story that could only happen in this new economy. A kid buys a nice pair of shoes, someone at school offers him money for that pair. He sells the shoes, and buys two pairs with profit. That same kid, who was fifteen at the time, kept gobbling up all of the most exclusive sneakers in New York, and soon built his brand persona on Instagram. Because of that free platform, he was able to broadcast his message of shoes to his sneakerhead followers. And soon enough, he was supplying rappers and basketball players with shoes, netting him over a million dollars – all before he could legally buy a lottery ticket.

Think about Amazon: Who doesn’t have a Prime membership these days? Jeff Bezos is the richest man in the world because we rely on Amazon for everything. And, one of the mega-company’s most interesting market’s is it’s Amazon Seller marketplace. Big name brands like Calvin Klein and Microsoft have opened stores tailored to the Amazon crowd. Little shops are opening up every day. In fact, there are over 10,000 sellers in the Amazon Marketplace selling used books, vinyl, clothes, electronics, and everything else. There are some retailers making $10K in four months, and that’s just on Amazon’s traffic. Anyone can get in on the Amazon game – all you need is a product.

Another major player in this small business revolution is that getting a business off the ground is simple: all you need is a website. Thanks to companies like WordPress, Wix, and Squarespace, business owners can drag and drop a site into existence in a few hours.

There are cloud-based tools to sell goods, and cloud-based tools that connect to goods manufacturers directly, cutting out the middleman.  Even better, just about everything can be controlled from your iPhone. These tools and devices increase accessibility. Now, anyone can dream up an idea and see if it holds water.

Because of all of the tools and software available, companies can run leaner, and with far less overhead. Instead of bloated processes, most software today cuts down costs. Instead of hiring someone for low level tiered support or even just appointment making, there are AI-based tools which can do that work for you, and at a fraction of the cost.

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A Favorable Tax Code Helps

There is still a lot to parse out in regards to the implications of last year’s tax law on small businesses. But, there are favorable highlights for both sides of the aisle.

One of the bill’s perks is the ability to file as a pass-through entity. For business owners, this means you can pay business taxes as an individual and when individual rates are cut, you spend less.

The extra 20 percent deduction on taxable income that pass-throughs claim will affect filing, but also equate to savings because of the broad exemption. This will help small businesses weather any slow seasons. And because of the exemption write-offs, many can invest further into their companies. In the past, you could only claim up to $500K in new equipment, but now, businesses can write off up to $1M.

“Shop Local”

We’ve never been as informed as we are right now. People are making a lot of purchases based on their personal belief systems vs. just rolling into Walmart and grabbing whatever’s on the shopping list. Instead, we’re buying local because we want to support the community vs. the big box stores; we want to purchase greens from farmers markets, or coffee from the local roaster.

It’s been said over and over that Millennials are killing chains, but is that such a bad thing? For every seat that sits open at the local Chili’s, there’s a table at the local taco joint opened up by a set of grandparents who had a dream. Don’t believe it? Come to Austin, and visit our local food truck parks. The folks manning the grill aren’t the twenty-something hipsters in your mind, but a cultural kaleidoscope of people who want to serve good food on their terms.

We’re also making choices that are environmentally conscious. We want green buildings and we expect non-toxic consumer products, clean water and renewable energy. But, to make these a reality, we need entrepreneurs who see these problems and offer solutions.

We’re taking risks

Small businesses also lead innovation as they’re more apt to adopt new processes and find solutions to problems with new technology. In contrast, enterprise companies are bogged down by red tape and middle management. The wheel turns back on itself because that small business owner who’s looking for a way to automate her monthly bills, wants a solution that serves an immediate need. And many times, that comes from a startup.

Like buying local, we’ve arrived at an informed place that’s very pro “little guy”. There’s a dynamic shift in the marketplace that shows consumers are willing to give new businesses a shot because of the feeling of community. Today, once vacant storefronts in strip malls are seeing a new life.

Build Your Brand

No matter where you are, there’s no better time to act than right now. You’ve got to use social media to your advantage as it can be cheapest way to reach your audience. Facebook Ads are easy to implement, and can be setup in minutes. All you need is a link and a credit card. It’s that easy. If you’re going for a more professional audience, LinkedIn is just as straight-forward. If you’re not “tech-savvy” there are plenty of consultants and social media managers out there that can help.

We’re a culture that’s always looking at a phone. That means there are limitless opportunities to create content or share an idea. Brands are built every day through smart Instagram marketing or YouTube reviews. Small businesses are popping up on Etsy to sell handcrafted Disney gear or homemade vegan candles. The market is wide open. Embrace your niche. This is the new economy, and it’s only getting stronger. Investing in your online presence is the next frontier, and the good news is, it’s cost effective.

We’re experiencing a boom of industry across the board. Right now is a great time to invest in new businesses and check out people who are creating and innovating like never before. The future is wide open, and there’s never been a time as exciting as right now.

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