LinkedIn

What Will Small Business Look Like in 20 Years?

Herbert Prokscha
December 21, 2015
We all have heard about the movie “Back to the Future” and what that film missed in terms of predictions. If you remember the “Jetsons”, there are more examples of technology that did not come about even after 50 years. Predicting 20 years out is a high-risk proposition in any field especially for small business, which is a large and very diverse economic sector. Currently, there are some 28 million small businesses in the United States, but less than 6 million have more than one employee. Small businesses create the largest amount of jobs, but also have a tendency to be short-lived. (Forbes September 9, 2013) After 25+ years as CEO/Founder of manufacturing companies, I will give you a highly personal view of what I think companies falling into this category might look like in 20 years. In 20 years, there will be an infinite number of outside services available to an Entrepreneur or company that will handle all but the core processes of a business. If “Form follows Function” [1] then the shape of the companies will be determined by how they use these outside services and in what combination from the world that surrounds them.

Function

What will be the function of small business 20 years from today? I believe it will be a vehicle to provide income and value for people that do not fit into the mold of ever-growing large companies. This is where jobs will continue to be lost to automation. Consequently, the income and value created by small business will have to be rooted in “Original Content”. Whether that is a unique piece of code, a pair of hand-made leather shoes or organic aged cheese – originality is what will create a market. Quality will be the key to making the market viable. For a small business, the future reality will be one of “mice dancing between the legs of elephants”. New businesses must find niches that are not filled by the Mega-Companies and must provide goods or services that are tailored to each individual customer. These goods or services must be high in quality and the firm must be prepared to constantly re-evaluate its products. It cannot afford to become a target for the Mega-companies.

Form

If we define “Form” as the way small business will look in terms of structure, employees, physical plant, or market size, then this is where the biggest changes will occur. I believe that organizational structure, as flexible as it may be currently, will become more and more situational. The owner or CEO will be dealing with a chart that resembles a spider-web instead of the traditional diagram with tiered boxes. Artisan type manufacturers will have either a 1-person, 1-product approach (making shoes) or a collaborative/self-managed team making a batch (making cheese). Creative companies will work in teams, not necessarily in the same physical space; teams will work in the cloud using collaborative platforms. Ownership of projects will be by an individual or a small circle of founders and the teams formed are project specific. Traditional structure will remain in companies such as restaurants and small builders. However, even there, employees will be either on a 1099 basis or employed by a staffing company, rather than be on the company’s payroll. Data recording and communications will be bottom-up and decentralized and internal social and project networks will take on most or all functions of the traditional hierarchal structure. Recruiting and hiring talent will be even more critical and supervised by the CEO/Founder. The physical plant, if one is needed, will be focused on the process and eliminate cubicles and segregated departments. Engineers, programmers along with sales and marketing will work next to the product being assembled. Logistics, Payroll, Maintenance etc. will be contracted out to the Mega-Companies and be available on-demand. The market for your goods or services will be even more global in 20 years. So will be your competition. Selecting a niche and keeping your products original will be critical for survival. For an owner, that means that resources need to be sourced globally while your customer presence needs to be in person and local. Face to face contact will be an easy way to differentiate you from the Mega–Companies. However, your commitments must be kept and quality must be high, because dissatisfied customers have social media as a feedback platform.

Last Thoughts

The Binary Distribution for markets for small business is flattening out! The Fat End is getting smaller and the Long-Tail is getting bigger. This is great for small business. The future of Business - HourlyNerd I am looking forward to the changes that are already happening and will play out far into the future. Small businesses and Entrepreneurs will be able to outsource many of today’s time-consuming tasks without a loss in quality and will be able to focus on their customer and their vision. My only caveat is – there will be many more competitors. [1] https://en.wikipedia.org/wiki/Form_follows_function

About the Author

Herbert Prokscha

Herbert Prokscha's initial career involved working for International Trading Companies handling unusual projects and special assignments in emerging and industrial markets.  He then led turn-around and start-up manufacturing companies in the food industry. One of his companies reached Inc500 status twice. He is presently the Senior Strategic Partner for Z Niche, a consulting and marketing company specializing in unique and sensitive projects.

Join our newsletter

Enter your email address to recieve our best content