The New-Old Adage for Main Street 2025? The More Things Change, the More They Stay the Same.
The old adage “The more things change, the more they stay the same” isn’t relevant just in fashion and politics, it’s also true in business.
Consider the job of milkman, a staple in our parents' and grandparents' lives. Several decades ago, advances like one-stop grocery stores and household refrigerators all but eliminated this daily delivery service for bottles of milk.
But, today, changing demographics, along with developments like online ordering and payment services, are driving the service's resurgence. Thanks to those trends, microbreweries and doctors making house calls are also enjoying a comeback, and they aren’t the only sectors getting a competitive boost from technology. By 2025, I predict that a whole host of small businesses that once thrived on Main Street USA will be back with a vengeance -- thanks to technology.
Technology levels the playing field for small businesses.
A broad range of new (and some not so new) technologies and services is giving small businesses the tools they need to level the playing field with their bigger brethren. Think about the ubiquity and accessibility, the ease and speed of online marketing, fulfillment, financing, purchasing and transaction technologies.
Think about the companies bringing us these technologies -- like Amazon, eBay, PayPal, Intuit, Square, Kabbage, Alibaba etc. They're making it possible for small retailers and service providers to effectively compete with big box retailers and national brands.
The resurgence of small retail and service businesses driven by tech is gaining real momentum. According to a Pew Research study, nearly one in five Americans has earned money in the last year by selling something online, and nearly one in 10 has earned money in the last year using digital platforms to take on a job or task. Meanwhile, 1 percent have rented out their properties on a home-sharing site.
Adding up everyone who has performed at least one of these three activities, some 24 percent of American adults have earned money in the “online economy” over the last year.
And the uptick in small online retail businesses has undoubtedly left big businesses feeling the impact. In fact, some of the same platforms, like Amazon, that allow small businesses to thrive have sounded a death knell for long-established brick and mortar retailers like Sears, JC Penney’s, Kmart and Macys. A recent report from retail think tank Fung Global Retail & Technology estimated that the widespread closures among those four chains alone -- nearly 400 stores -- will leave approximately $2.5 billion in sales up for grabs.
In addition to sparking the revival of small retailers and service providers, technology has also given rise to the “gig economy,” a market estimated to represent 34 percent of the workforce. Mobile apps, POS systems and simple-to-use back office tools have made it easy for these individuals to take part in the new sharing and convenience markets.
Uber, Airbnb, TaskRabbit and other platforms, meanwhile, are giving workers unprecedented flexibility and control, and requiring little or no capital investment.
Millennials are prominent in the small-business revival.
There’s good reason to believe that the revival of small businesses will continue and will prominently feature millennials. The reason is that the members of this, our nation’s largest population segment, favor more personalized service. They also prefer buying from known communities.
A recent Coldwell Banker Commercial Affiliates survey found that nearly 40 percent of millennials surveyed said that supporting small businesses was important to them when they make buying decisions. Preferences like that one will have a potent impact on the market, considering that millennials already spend approximately $600 billion annually.
According to an Accenture report, by 2020, millennials will spend $1.4 trillion annually and represent 30 percent of total retail sales.
In fact, this cohort's outsized impact on the revival of the small-business economy can be traced not only to their purchasing preferences and power, but also to the part they’re playing in becoming small-business owners themselves.
According to an SBDC study, almost half of millennials surveyed (49 percent) said they wanted to start their own business in the next three years, and a full quarter (26 percent) had lived entirely off the income of a small business. Those factors, along with the increasing availability of technologies, easier access to working capital from services like my company, Kabbage and online tools for SMBs, create an ideal environment for individuals to found and grow their own small retail and service companies.
Will small businesses now be in control?
I predict we’ll see the rise of small-business oriented “super-service” technologies and tools. This includes those that provide under a single umbrella all the infrastructure needed to conduct business -- from insurance and accounting to marketing and sales fulfillment. These super services, in specific industries such as transportation, lodging, etc., will allow small businesses to compete effectively against their large rivals.
And, thanks to technology, every step of starting and running a business will be significantly easlier than ever before: setting up shop, gaining exposure, sourcing, shipping and delivery.
We have a motto at my company: "Let the chefs cook." The phrase refers to removing the friction that exists in small businesses today, distracting them from their core competencies and passions. Similarly, existing and new technologies will further reduce operational distractions, empowering them to achieve more.
This, coupled with millennials’ entrepreneurial spirit, and the growing number of tools to support small businesses, will makeMain Street USA bigger (or smaller) and better than ever. Then, perhaps, we may even tip the scales such that small businesses are the ones advantaged by our ongoing digital revolution.