5 Small Business Predictions for 2011

Okay, every year I've offered some insight into the year ahead for small businesses. In fact, I think it's quite common for any consultant and would-be psychic to demonstrate their astute prowess and outline clear bets. And this year is no different!

So - in a very envelope-to-forehead moment - here I go: my five predictions for the small business in 2011.

1. Lean. Call me a nattering naybob but I'm still not convinced that postponing tax breaks is going to eliminate uncertainty, nor is sustaining the current level of taxation going to put more money in people's pockets. I mean, it hasn't already so...? Economists are forecasting flat employment growth throughout 2011. So I think the small business is going to stay lean. They might even get leaner, employing some of the trends and tech below to reach even higher economies of scale and automation. Small businesses are learning - must learn - to do more with less, consistently, to survive. Look for some small businesses to fold whereas others take more drastic steps to achieve profitability: fire bad customers, lay-off entire regions or divisions, or, eliminate the need for a building.

2. Cloud. Why own when you can rent? That's really the idea being tossed around in the housing market but it's also applicable to small business computing! Why own a server, or, an application, when you can rent it for a period of time? And when you don't need it any more, ditch it? Efforts by all of the major vendors is making the cloud easier to reach and use by everyone. More small businesses will adopt cloud-based technologies and abandon the use of local servers. Look for more small businesses raising their hand and asking about the maturity of some of this technology, and for developing a migration strategy.

3. Social. If mass media is too expensive and budgets are tight, it doesn't take a rocket scientist to believe small businesses will start looking at social media as a viable alternative. Social networks allow businesses to get closer to consumers than ever before and to personify their brand. Yeah, we're going to see more of that. Look for small businesses to out-pace enterprise adoption, and to apply this technology more creatively, winning-over tight-wad consumers and convincing them to spend their scarce dollars locally! You just watch ... look for a substantial shift in marketing expenses away from television, radio, and print as traditional media continues to writhe and die a horrible, prolonged death.

4. Mobile. Next year will bring a gaggle of new gadget tech. The new iPhone 5 that'll feature 4G; a new iPad 2; a bunch of Android competitors; more eBook readers. Personally, I don't know where consumers are going to find the funds to invest in all of these disposable toys but, hey, the demand seems to be there. Look for small businesses to start leveraging Cloud and Social strategies across Mobile platforms to offer themselves greater flexibility in staffing and building expenses. Watch for people who passed on the iPhone 4 to scoop up the iPhone 5, and Apple - whose being fiercely eaten alive by Android in terms of market share, will announce some really cool features and enticements to retain their customer-base and pull-in defectors from the Android camp.

5. eBooks. Everybody's getting into them. Amazon, Google, Apple. This whole decade will be about transforming the distribution channel for books and video into an electronic medium, just like last decade was about music. Everybody, including you, are changing your consumer preferences! Self-publishing is here. Also, self-service is here because of plentiful low-cost bandwidth. Look for downward pressure on growth for large chain booksellers and video outlets; look for small/niche/specialty sellers in local communities cropping up to take their place. Look for our consumer habits to shift with more people consuming digital media over paper.

Predictions? Or perhaps I've just a command of the obvious? Meh, you decide.

By the way, I really liked this article from the Business Insider articulating 10 ways every small business should be preparing for 2011. Really good read!

R

10 Risks of Cloud Computing

@thescottydont asks on Facebook:

"True. However, seems like this video is missing some down sides. I ask you, Guru Mickler - are there down sides to Cloud Computing?"

Well, what a great question! And I think that it's only fair to honestly talk about the downsides to Cloud Computing as a small business strategy.

1. Application Maturity.

Today, many of the applications that you'd find hosted online as a cloud option use browser-based interfaces. Because of that, they're relatively simplistic as compared to applications installed on your local hard drive or server. In many cases, they're "no frills" or offer reduced capabilities or functions. This is changing very rapidly, though, as there's a rush to create dynamic and powerful applications that can be distributed within the browser. Just in looking at the maturity and growth of Google's Sites and Docs, or Zoho, in the last two years is pretty astounding. Cloud applications are quickly becoming more feature-rich, centralized (thereby reducing total costs of ownership), and available on any platform that runs a browser.

2. Application Ease of Use.

There are constraints on web programming that prevent a "fluidity" of movement within the user interface. It's nothing for many users to have multiple applications up and once, then copy and embed objects with ease, or use many different interfaces and toolbars to manage the software. The web model forces programmers to be a little more terse having to save records at certain periods, or, step a user back into three data entry screens for what used to take just one screen to perform. Users "feel" this when they're using web-based applications, that there are multiple steps that they're forced to walk through to get something done. This can be problematic and time consuming, and a detractor against adoption.

3. Internet Availability.

If the Internet is down, then your application and the data is unavailable. To some firms, this may be more than an annoyance but something that shuts down critical functions. Sometimes when I travel, I go to places and - gasp - no Internet: I'm effectively shut down! Their connectivity may be spotty or unreliable in the first place, which would make them reconsider the Cloud strategy. Indeed, the cloud strategy does depend on a "always on" Internet, and in many areas of the company, that reliability simply isn't available. The consideration here is probably thinking about how often the Internet goes down in comparison to a server which is much lower in terms of frequency. And, what the potential likelihood of no Internet access looks like.

4. Latency.

Broadband pricing is dropping dramatically but the risk is still there: yes, you could have a slow Internet connection. We're measuring cable bandwidth for consumers and businesses now between 50-100mbps, and large companies - of course - can afford fiber and optical carrier solutions that push bandwidth into the gigabit range. Others, though, may still rely on T1's or xDSL. These slower connectivity solutions diminish the reliability and usefulness of the cloud, especially when the "mature" cloud application expects to use a lot of bandwidth to provide more ease of use.

5. Data Location.

Many people get jittery if their data isn't right next to them. Like, in the other room, or, near their feet on a microcomputer's hard disk. The presence and location of data is important to some; it shouldn't be ignored or discounted. Companies that want to have exclusive control over their data and intellectual property would choose in-house servers and likely avoid the cloud.

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6. Data Integration.

Data is somewhat stuck in the cloud. Now, there are programming interfaces that developers can use to integrate one source of data to another, and those standards are well-defined these days and power a lot of Internet integration, but the lay-user just doesn't understand how to use these API's (Application Programming Interfaces) and they don't know the consequences of their use. If your Twitter feed is your property, how can you capture your "property" and push the feed into another "property" online? How can you integrate that? Well, this isn't easy to do right now. Facebook has an interesting model of applications that end-users can install to create integrated pockets of data... that could be a model we'll see adopted by the cloud.

7. Security Risk.

Some would suggest that your data is at risk if it's not in your general proximity. If you can't touch it, it's insecure. I would dispute that. Having data closer to us on microcomputers hasn't "increased" security or reduced the number of identity thefts, or, compromised PC's, or botnets. It is precisely because microcomputers aren't professionally managed that they're more at-risk than cloud-based systems which are professionally managed by an army of engineers. We live with data hosted by others all of the time (the IRS, banking institutions, corporations, universities...) and we come to trust their expertise in securing it. That trust will come hard for some; for others, they may flat-out reject the idea that somebody can manage security better that they can, and, at a lower cost.

8. Privacy Risk.

Yes, Google can see your data when it's on their cloud. Now, they "tokenize" and "stem" the data, meaning that they convert your data into abstract ideas and symbols, then aggregate it, so they're not really "reading" your files or email. They're just counting up the number of symbols that they see, or, abstracting relating one idea to another. Of course, a lot of people don't understand that, but services like Google aren't prying-in on your data; they are, though, abstracting it. Some folks may not even like that. Now, online privacy is a sensitive subject that consumers have become very aware of, and cloud-based services are working overtime to create useful models for securing privacy. This is still in development, and will likely be so for many years, especially as federal law catches up to defining universally "what is private".

9. Interoperability Risk.

Because data is stored away from your own PC and servers, integrating that data - either in the cloud, or with other clouds, or with microcomputer applications - becomes a big challenge. Mail merge, for example: easily done in Office. You point Word to a data source, run a wizard, and you have envelopes and labels. Not so fast nor easy in the cloud. Nor is just copying objects like graphs from one application to another. Again, the solutions are getting better, and Zoho - for example - provides a lot of interactivity between its modules, but you have to kind of be a programmer to understand how to use them! So, that can be a detractor.

10. Learning Curve.

Users - conceptually - understand their local computer, their desktop, and their hard disk. They understand a jump drive. They understand Word and how its tools work. However, if you throw a general-use person into a new, browser-based interface, that is comparably slower to a local application, where data is stored somewhere that they don't comprehend (not like on a C: drive) and they don't know how to find it again, well, they get buggy. This causes a steep learning curve. Again, cloud applications are getting more sophisticated all the time, but the learning curve shouldn't be ignored: none of this happens seamlessly out of the box.

Conclusion

When considering the cloud, small business needs to adequately weigh pros and cons. They need to see where they could gain cloud advantages but keep the cloud as transparent as possible to the end user (like Google Apps integration with Microsoft Outlook). They need to see where more advanced users on their staff could be the pioneers and train others how to use this stuff, and get people excited about using it. The small business should recognize the economies of scale in cloud computing and the rewards that come from immediate capability, lower expenses, and shifted management obligations, while at the same time they need to appropriately weigh security and privacy concerns. Really, it's all about strategy: some pieces of the cloud may work where others might not, and, the landscape is constantly evolving, so the small business should be ready for it, planning on change, and planning to take advantage of new features as they come available.

I hope that answered your question.

R