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Great Expectations

Is it too early to call 1998 a good year for entrepreneurs? Our experts certainly don't think so. Here's why...
February 1, 1998
URL: http://www.entrepreneur.com/article/15092

Romancing the unknown--it's one of life's eternal passions. Humanity continually ponders age-old questions: What will tomorrow bring? What can I expect for my family? For my business? Will I be healthy, happy and successful? Through the centuries, the queries have remained much the same--though the methods used to find the answers have changed with time and vary among cultures. From the ancient Greeks and Romans who sought divine revelations from the oracles to the revered medicine man in North American Indian tribes, the common theme remains: a burning interest in unleashing the mystery of the future.

With that in mind, we strove to determine what the remainder of 1998 holds for small business. We consulted a potpourri of experts, including small-business advocates, an astrologer, a futurist and a numerologist, for their predictions. Notably, despite their differing backgrounds and experiences, a singular picture of the year ahead--and beyond--emerged. The year will be a positive one, they unanimously agreed. And for some sectors, the next several months could even surpass achievements made in 1997.

"I think it's going to be a good year for small business," says Jere W. Glover, chief counsel for advocacy for the SBA. "I think we're going to continue to see small businesses grow in record numbers, and I think we're going to see more small businesses surviving."

Vast potential is already one of 1998's hallmarks. Our experts expect banks and other financial institutions to greatly increase lending and credit availability to small businesses, opening doors to more newcomers and releasing established firms from the capital confinement that can hinder growth.

And there's another factor affecting the possibilities facing today's small businesses: their diligent political strides. Entrepreneurs today rely more and more on the robust national organizations lobbying in Washington with increasing savvy and political strength. Their collective voice receives legislative attention and action on a level unheard of just a decade ago.

"I believe we are at a [turning] point in history," says Watts Wacker, a futurist at SRI Consulting, a business trend consulting firm in Menlo Park, California. "The way we organize our lives--literally every assumption to how we run our commerce, our governments and our affairs--is about to change. The last time this happened was probably with the discovery of the New World and the Renaissance of 500 years ago. And it will provide wealth-creating capabilities that have not been seen very often, that portend for tremendous opportunities economically."

Economic Reality

Despite turbulent stock market activity in late 1997, experts believe the performance of our solid macroeconomic environment will only improve. "Overall, the economy is doing very well," says Larry Winters, vice president of small-business services for Dun & Bradstreet, an international research-based business information provider in Murray Hill, New Jersey. "Quarterly earnings have been favorable, profit margins are good and unemployment is low. Most economic indicators are extremely favorable."

However, even the most optimistic outlook can't obscure the foremost challenge facing today's entrepreneurs: the tight job market. "One of the biggest concerns in 1998 for small business will be finding qualified and skilled employees," confirms Glover. "The most common complaint we hear today is `We can't find good, skilled workers.' And I think that's going to continue."

Unfortunately, experts expect the labor situation to intensify in the decades to come. "Over the next 50 years, the labor market will get tighter every year," says David Birch, president of Cognetics Inc., an economic research firm in Cambridge, Massachusetts. "Both the population growth rate and the labor force growth rate are slowing dramatically."

Whereas finding skilled labor is just a hindrance today, tomorrow it may plague you and your competitors to a perilous extent. Birch predicts the potential impact: "There are no people left--period. There's no way you can grow; there's no way to hire. And that's an issue." In fact, it's already happening in some parts of the country--Birch has witnessed businesses in Madison, Wisconsin, struggle with an unemployment rate of 1.9 percent.

On the bright side, relief from distant shores may be on the way, and according to Wacker, this new scenario may work in your favor. "Fifty percent of the people in the world now expect to spend the majority of their life in a nation other than their birth nation," he says. "I think you'll see the mobility of the labor force become a global phenomenon. [People] are going to be attracted to this country because of what it represents."

Going Global

As technology freely crosses borders and international markets open their arms ever wider to new business, the '90s wave of globalization shows no signs of cresting. And while countless entrepreneurs crossed horizons in the past, even more will follow in the coming months and years.

"International trade is driving the overall economy," says Winters. "Small business still represents a fairly small percentage, but the number of businesses growing in international trade is increasing."

Despite the initial enthusiasm for breaking into international markets, however, the logistics sometimes provide a sobering reality check. "As far as extending credit, [building] relationships, finding distributors, making sure their products are used and understood--it's hard to do that long distance," Winters says. "But I think [entrepreneurs] can do it, and they should learn how to do it and strategically pick countries they think they can have a quick impact on."

Wacker is even more optimistic. "A 15- or 20-person company today has just as much potential and the necessary resources and skill levels to be a global company," he says. "That's one of the wonderful things about [going global]: It's not just for big companies."

As the nation's small-business owners peruse the global landscape for opportunities, the challenge becomes targeting those areas that hold the most potential for 1998 and beyond. Our experts point to Asia, Canada, Eastern and Western Europe, and Latin America. "China, India, the Middle East, Pakistan--to me, those are by far the biggest opportunities over the next 20 years," says Birch.

But predictably, those lacking experience in the global arena should start out with modest aspirations, says Winters. "I think Canada and Mexico are great places to start because of their proximity, and I think Latin America is still a great opportunity," he says. "Eastern Europe also has a ton of potential, but [entrepreneurs] should start a little closer to home first, to get grounded."

Tech Talk

Such global accessibility can arguably be traced back to one of the most significant developments to impact our modern world--the Internet. At long last, the information superhighway grants businesses of all dimensions an easy--and inexpensive--mode of promoting products and services to an audience that was, for practical purposes, previously unreachable.

"I think it's going to level the playing field considerably for smaller companies," says Winters. "Do I think it's going to happen [this year]? I think it will start. But [entrepreneurs] should get their feet wet now. I think they should get in it because it's got the potential to be a major driver of the economy in the future."

That's because of a remarkable capability still in the early stages of development and acceptance, known widely as e-commerce, or electronic commerce. And although consumers today understand the risks involved when disclosing credit card numbers over unsecured lines, that will all change tomorrow when a program is developed that guarantees security. A handful are in the works, including one under joint construction by Visa and MasterCard.

The Internet aside, technology in general has provided a strategic edge for entrepreneurial firms. "This country has always been blessed with being innovative, and smaller businesses are usually the most nimble of the innovative," says Wacker.

Although some companies still underutilize the capacity of technology, those on the cutting edge will use its potential this year more than ever to take their businesses to new heights. "I think technology has done nothing but help small business," Winters says. "And I think it will continue to play a significant part in their development in 1998."

Perhaps most important, technology will continue to gradually alter the existing landscape. Although the effects will not be immediately evident, over time the changes will elicit a whole new perspective. Says Wacker, "I think the pervasiveness of technology today is at least as profound as the Gutenberg Bible was in the 1460s. I think every new industry will have at least [some] technological prowess."

Movers And Shakers

By far the most compelling, and fastest-growing, sector of our economy encompasses what was once a greatly outnumbered domain. Today, statistics speak to the contrary in regard to women- and minority-owned small businesses: According to the National Foundation for Women Business Owners, at the end of 1996, one-third of all U.S. businesses were owned by women, and they generated nearly $2.3 trillion in sales--an increase of 236 percent over 1987 figures.

The numbers are even higher for 1997, and experts don't foresee them slowing anytime soon. "I think it's going to be dramatic," Winters says. "I think financially they will be funded, and I think the population they're selling to will be just as diverse as they are. I believe if you're a minority business owner, you'll be able to sell more effectively to some of those minority groups. The numbers of white males [in business] are decreasing significantly, just as the numbers of women and [minorities] are increasing."

The apparent success of both minority- and women-owned firms, however, all comes down to support, and these businesses are presently getting a lot of it. "The financial services industry is recognizing them as a viable group," says Winters, "so business loans are being directed to those types of businesses. Wells Fargo, NationsBank, Chase--they all have special programs, especially for women-owned businesses."

Journey's Beginning

As it goes, virtually anything can happen in the coming days to confirm or deny our experts' predictions. Yet the possibilities behind our educated conjecture remain genuine. So what exactly will 1998 hold for small business? Of course, no one can answer precisely; the story, as yet, remains untold.

But a look into the recent past supports a promising outlook for the weeks and months ahead. For those tracking the trends, experts predict health care will continue its dominance of the business landscape--thanks to an aging population with access to substantial disposable income. Homebased businesses should also continue their rapid growth. And outsourcing, the cost-effective alternative for large corporations and small businesses alike, will continue to nourish the country's independent contractors.

The good news is that the businesses reaping profits today can be found in all types of industries. "We don't see a particular industry focus," says Birch. "We find rapidly growing companies in all sectors of the economy, in proportion to the number [of them] in the economy. Entrepreneurs are having a field day."

Sixth Sense

I've had the ability all my life," says Carole Kennedy, a self-proclaimed intuitive consultant and founder of Carole Kennedy & Affiliates, a worldwide psychic consulting firm in Mount Juliet, Tennessee. From assisting police in locating the remains of missing persons to helping resolve professional matters for her small-business clientele, Kennedy has dedicated nearly 20 years of her life to relaying the information she receives through so-called extrasensory perception (ESP). The following are some of her predictions for 1998:

Numbers Game

We asked Karin Pischke, a Chicago student of numerology with 30 years of experience, to interpret the state of small business for 1998. She derived her reading from a simple formula, which breaks down larger figures into a singular number (except for 11 and 22). For example, if you add 1+9+9+8, you get the sum of 27. If you then add 2+7, the result is 9. Each of the numbers holds a different meaning; generally, the higher the number, the better the luck. Below are some of her conclusions:

Sign Of The Times

Astrologers believe the alignment of the sun, moon, stars and planets directly affects the events occurring here on earth. So we called upon Del Norwood, an astrologer in Chicago, and asked her to forecast the rest of the year based on 1998's planetary cycles.

"The year gets better as it goes on," she says, "like a child learning to walk. In the early part of the year, just take baby steps because the situation overall hasn't gelled yet. And then, as the year goes on, I think the key word will be `innovation.' The new ideas are taking over more and more."

Placing Their Bets

Compiled by Keasha Dumas and Jesse Hertstein

We've talked to the experts about where they predict small business is heading this year, but what about all you entrepreneurs out in the trenches? For some insight into what you see for the year ahead, we turned to the hottest small companies around. Taken from our most recent "Hot 100," a listing of the 100 fastest-growing new small businesses, the following small-business owners sound off about growth, employees and the economy--and point to a year full of opportunities for small enterprise.

Mid-Continent Mechanical Inc. (#37)
Full-service plumbing contractor
Kansas City, Missouri

"I think small business looks good all around. There are a lot of jobs here in Kansas City. We're looking to double our figures, and next year, we should be around $3 million." --Mark Gingell

Shonfelds (USA) Inc. (#6)
Discount gourmet gift products
South Hackensack, New Jersey

"In terms of the overall economy, we believe small businesses are in a position of advantage and will continue to be in that position [this year]. Our advantage in particular is being flexible and working closely with our customers to ensure customer service of the highest degree. So we're investing in our own infrastructure to stabilize and increase our ability to work this way, to balance the explosive growth we've experienced." --Mindy Oppenheimer

Quality Staffing Specialists (#15)
Temporary staffing, executive placement, computer center
Cary, North Carolina

"In our area, things look wonderful. We had tremendous growth in the last two years and expect the same for '98. We just added a new computer training center and expect a real boom for the upcoming year. The survival rate for small businesses has been uncommonly high, and I am very optimistic." --Phyllis Eller-Moffett

The Network Group (#74)
Computer technical support service, training, Web site design
Boise, Idaho

"In our industry, I think the outlook is good for increased business. Large companies are still outsourcing their help desk services, internal network support, and Web page design and hosting, but I think the field will narrow down to companies that can follow through on their promises.

"The challenge to us and other companies will be finding qualified employees. The unemployment rate is so low that there are a lot of companies competing for the same employee base." --Jerry Fulton

Cotnact Sources

Carole Kennedy & Affiliates, (888) 592-2765, fax: (615) 754-9003

Cognetics Inc., 100 Cambridge Park Dr., Cambridge, MA 02140, fax: (617) 661-0918

Del Norwood, (773) 725-8300, accesastrl@aol.com

Dun & Bradstreet, wintersl@mail.dnb.com

National Foundation for Women Business Owners, (301) 495-4975, http://www.nfwbo.org

SBA, 409 Third St., #7800, Washington, DC 20416, (800) 8-ASK-SBA

SRI Consulting, (203) 226-2805, http://www.firstmatter.com