Prospects for the U.S. economy may appear bleak, but entrepreneurs can stay at the front of the curve by paying attention to market and business trends. NuWire identified and ranked the Top 5 Business Trends. Collectively, these trends take into account three major factors—increased global awareness, advanced communications technology and demographic changes—that are influencing present and future market landscapes.
Entrepreneurs might wish to build a new business to capitalize on these trends, or figure out ways to incorporate one or more of them into an established business. In either case, knowledge of business trends can help successful business owners continue to do what they’ve always done: evaluate and adapt.
Most people are already familiar with the concept of business process outsourcing (BPO), such as the outsourcing of large company call centers overseas. As the outsourcing trend continues to grow, some companies are beginning to utilize the foreign workforce in higher-skilled trades though knowledge process outsourcing (KPO), according to an article in Time magazine published earlier this month. One subset, for instance, called legal process outsourcing (LPO), entrusts lower-level legal tasks and research to overseas attorneys at a fraction of the cost of legal fees charged in the U.S.
The benefits of outsourcing are not solely reserved for large, wealthy corporations; a market for personal outsourcing has also emerged, catering to small businesses and individuals. Indian companies such as Brickwork and Get Friday, for example, provide overseas “personal assistants” to perform even the most menial tasks and errands at a rate of $15 to 25 per hour, according to an article published in The New York Times last November. Both companies were recommended in Timothy Ferriss’s bestselling book, The 4-hour Workweek, which urges readers to outsource anything that can be done for a cost less than the value of their own time.
Recent trends suggest that personal outsourcing won’t be limited to overseas networks. Personal outsourcing may also begin to utilize untapped domestic resources, such as college students. Additionally, tech companies such as Rearden Commerce are jumping on board by developing “virtual personal assistant” software.
The dollar has weakened after a record trade deficit of $847 billion in 2007, according to the CIA World Factbook. However, U.S. exports appear to be on an upswing; in February, U.S. exports amounted to $151.4 billion, a 20.8 percent increase from February 2007, according to the U.S. International Trade in Goods and Services report released April 10. Imports also increased by 16.4 percent from the February 2007 level to $213.7 billion.
As foreign economies capitalize on the lowered costs of U.S. exports, demand for American goods will likely be compounded by the rise of middle- and upper-classes in emergent economies, such as China and Russia.
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Capital goods, such as transistors, aircraft, motor vehicle parts, computers and telecommunications equipment make up almost half of commodities exported, according to a 2003 estimate in the CIA World Factbook. Other commodities include industrial supplies, consumer goods and agricultural products, which make up 28.6, 15 and 9.2 percent of exports, respectively. Major export partners include Canada, Mexico, Japan, China and the United Kingdom.
A growing reliance on exports will present a wide variety of opportunities for small businesses. Smaller enterprises also make up the lion’s share of the market; conglomerate corporations make up only 4 percent of all exporters, according a U.S. Department of Commerce statistic cited on Entrepreneur.com
3. Senior living
The first wave of baby boomers will begin to hit retirement age in 2011, opening a new generational chapter with tremendous impact on U.S. and global economies. The baby boomer population is made up of some 78.2 million people, or approximately 26 percent of the entire U.S. population, according to 2005 estimates by the U.S. Census Bureau.
Baby boomers with “empty nests” are already making a significant dent in the housing market by moving into smaller residences, such as one-story homes or condominiums. A significant portion of baby boomers are also inclined to move into seasonal or vacation properties as their primary residence upon retirement, according to a study last year by the National Association of Realtors.
It is anticipated that the new retirees will pursue active lifestyles through vocations or hobbies that they enjoy, presenting opportunities in recreational businesses and tourism ventures that cater to their interests. Demand for assisted living is also likely take a sharp increase, as the health care system braces itself for an aging demographic that it isn’t “ready” for, according to an April 14 release from the Associated Press.
For more information about opportunities with senior living, read our previous article Top 10 Baby Boomer Investments.
4. Global tourism
As a result of increased global awareness, travel to foreign countries has become a mainstream phenomenon. And in spite of a recent slowdown, global travel and tourism is projected to grow steadily between 2009 and 2018 at an average rate of 4.4 percent per years, according to Tourism Satellite Accounting (TSA) research launched last month by the World Travel & Tourism Council and its strategic partner Accenture. It is estimated that growth will support 297 million jobs and 10.5 percent of global GDP by 2018.
Although the cost of living in the U.S. has risen significantly with high fuel prices and a weakened dollar, Americans are still taking vacations—on a budget. In 2007, 13.25 million Americans visited Europe, a 2.7 percent increase over 2006; some industry analysts expect that number will remain flat or increase slightly this year, according to an article published by The New York Times this month. However, some travel has shifted to less expensive countries, such as Portugal, where the dollar goes further.
Conversely, some 57 million foreigners traveled to the U.S. in 2007, spending $123 billion, according to Department of Commerce numbers cited in the Times article.
In addition to traditional tourism, an emerging market for medical tourism will likely have a positive impact on destination economies.
5. Internet-related business
With the entrance of the Internet and World Wide Web into the mainstream sphere more than a decade ago, entrepreneurs have gained access to a market far broader than that of traditional brick-and-mortar stores.
Internet users number more than 1.3 billion, or 20 percent of the world’s population, as of December 2007, according to InternetWorldState.com. In order to compete for potential consumers on the Internet, establishing a presence online has become a near necessity for business owners.
Purely web-based businesses have an unusual potential for profit by cutting back on traditional expenditures such as such as storefront leases, maintenance and round-the-clock staffing. Business owners who sell goods can avoid the costs of hosting their own website by posting items on platforms such as eBay and Amazon, which garner hundreds of millions visits each month.
For traditional business owners, selling products on the Internet can also provide a supplementary stream of income.
One drawback for Internet business involves the vast competition for consumers; the ease of comparison shopping can easily drive some products into a buyer’s market. Therefore, small Internet-related businesses require a high-degree of innovation and often cater to niche markets in order to be successful.