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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...

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Opinions expressed by Entrepreneur contributors are their own.

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

With that in mind, we strove to determine what the remainder of1998 holds for small business. We consulted a potpourri of experts,including small-business advocates, an astrologer, a futurist and anumerologist, for their predictions. Notably, despite theirdiffering backgrounds and experiences, a singular picture of theyear ahead--and beyond--emerged. The year will be a positive one,they unanimously agreed. And for some sectors, the next severalmonths could even surpass achievements made in 1997.

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

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

And there's another factor affecting the possibilitiesfacing today's small businesses: their diligent politicalstrides. Entrepreneurs today rely more and more on the robustnational organizations lobbying in Washington with increasing savvyand political strength. Their collective voice receives legislativeattention 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 trendconsulting firm in Menlo Park, California. "The way weorganize our lives--literally every assumption to how we run ourcommerce, our governments and our affairs--is about to change. Thelast time this happened was probably with the discovery of the NewWorld and the Renaissance of 500 years ago. And it will providewealth-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, expertsbelieve the performance of our solid macroeconomic environment willonly improve. "Overall, the economy is doing very well,"says Larry Winters, vice president of small-business services forDun & Bradstreet, an international research-based businessinformation provider in Murray Hill, New Jersey. "Quarterlyearnings have been favorable, profit margins are good andunemployment is low. Most economic indicators are extremelyfavorable."

However, even the most optimistic outlook can't obscure theforemost challenge facing today's entrepreneurs: the tight jobmarket. "One of the biggest concerns in 1998 for smallbusiness 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 thinkthat's going to continue."

Unfortunately, experts expect the labor situation to intensifyin the decades to come. "Over the next 50 years, the labormarket will get tighter every year," says David Birch,president of Cognetics Inc., an economic research firm inCambridge, Massachusetts. "Both the population growth rate andthe 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 perilousextent. Birch predicts the potential impact: "There are nopeople left--period. There's no way you can grow; there'sno way to hire. And that's an issue." In fact, it'salready happening in some parts of the country--Birch has witnessedbusinesses in Madison, Wisconsin, struggle with an unemploymentrate of 1.9 percent.

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

Going Global

As technology freely crosses borders and international marketsopen their arms ever wider to new business, the '90s wave ofglobalization shows no signs of cresting. And while countlessentrepreneurs crossed horizons in the past, even more will followin the coming months and years.

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

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

Wacker is even more optimistic. "A 15- or 20-person companytoday has just as much potential and the necessary resources andskill 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 globallandscape for opportunities, the challenge becomes targeting thoseareas that hold the most potential for 1998 and beyond. Our expertspoint to Asia, Canada, Eastern and Western Europe, and LatinAmerica. "China, India, the Middle East, Pakistan--to me,those are by far the biggest opportunities over the next 20years," says Birch.

But predictably, those lacking experience in the global arenashould start out with modest aspirations, says Winters. "Ithink Canada and Mexico are great places to start because of theirproximity, and I think Latin America is still a greatopportunity," he says. "Eastern Europe also has a ton ofpotential, but [entrepreneurs] should start a little closer to homefirst, to get grounded."

Tech Talk

Such global accessibility can arguably be traced back to one ofthe most significant developments to impact our modern world--theInternet. At long last, the information superhighway grantsbusinesses of all dimensions an easy--and inexpensive--mode ofpromoting products and services to an audience that was, forpractical purposes, previously unreachable.

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

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

The Internet aside, technology in general has provided astrategic edge for entrepreneurial firms. "This country hasalways been blessed with being innovative, and smaller businessesare usually the most nimble of the innovative," saysWacker.

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

Perhaps most important, technology will continue to graduallyalter the existing landscape. Although the effects will not beimmediately evident, over time the changes will elicit a whole newperspective. Says Wacker, "I think the pervasiveness oftechnology today is at least as profound as the Gutenberg Bible wasin 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 oureconomy encompasses what was once a greatly outnumbered domain.Today, statistics speak to the contrary in regard to women- andminority-owned small businesses: According to the NationalFoundation for Women Business Owners, at the end of 1996, one-thirdof all U.S. businesses were owned by women, and they generatednearly $2.3 trillion in sales--an increase of 236 percent over 1987figures.

The numbers are even higher for 1997, and experts don'tforesee them slowing anytime soon. "I think it's going tobe dramatic," Winters says. "I think financially theywill be funded, and I think the population they're selling towill be just as diverse as they are. I believe if you're aminority business owner, you'll be able to sell moreeffectively to some of those minority groups. The numbers of whitemales [in business] are decreasing significantly, just as thenumbers 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 arepresently getting a lot of it. "The financial servicesindustry is recognizing them as a viable group," says Winters,"so business loans are being directed to those types ofbusinesses. Wells Fargo, NationsBank, Chase--they all have specialprograms, especially for women-owned businesses."

Journey's Beginning

As it goes, virtually anything can happen in the coming days toconfirm or deny our experts' predictions. Yet the possibilitiesbehind our educated conjecture remain genuine. So what exactly will1998 hold for small business? Of course, no one can answerprecisely; the story, as yet, remains untold.

But a look into the recent past supports a promising outlook forthe weeks and months ahead. For those tracking the trends, expertspredict health care will continue its dominance of the businesslandscape--thanks to an aging population with access to substantialdisposable income. Homebased businesses should also continue theirrapid growth. And outsourcing, the cost-effective alternative forlarge corporations and small businesses alike, will continue tonourish the country's independent contractors.

The good news is that the businesses reaping profits today canbe found in all types of industries. "We don't see aparticular industry focus," says Birch. "We find rapidlygrowing companies in all sectors of the economy, in proportion tothe number [of them] in the economy. Entrepreneurs are having afield day."

Sixth Sense

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

  • Women: "Women-owned businesses are going to takeoff at astronomical rates," she says. "Businesses startedby women in the next 10 years will [become] the biggest part of theAmerican economy."
  • International business: "In the global market,you're going to have some hot spots and some troubles."Hot spots include Australia, Canada and Western Europe, Kennedysays. And the trouble spots? She points to Asia, Cuba and SouthAmerica.
  • Technology: "[The government] is getting ready tocontrol the Internet--big-time control. It will start somewheretoward the [second half] of the year, maybe July or September. Butas far as a marketplace, it's going to be the place to be.Consumers will be spending more than in the past."
  • The environment: "There will be some newregulations, especially for air, water and land. And [thegovernment] will control hazardous waste differently."
  • Trends: "Health is going to be a huge trend.It's going to go back to more and more basics--more herbaltreatments." Educational CDs and tapes for home learning willalso rise in popularity, in addition to pastas, health foods,juices and vegetables, according to Kennedy.
  • Expectations: "Excitement. We are on the move andon our way. We're not going to have the whole market, butwe're going to have a larger piece of the pie, and a lot morerespect--and we like that."

Numbers Game

We asked Karin Pischke, a Chicago student of numerology with 30years of experience, to interpret the state of small business for1998. She derived her reading from a simple formula, which breaksdown 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 thenadd 2+7, the result is 9. Each of the numbers holds a differentmeaning; generally, the higher the number, the better the luck.Below are some of her conclusions:

  • The year overall: 9. "The number 9 indicates a goodtime for any company having philanthropic or humanitarian aspects,especially if they can combine teaching and travel," Pischkeexplains. "But they would also have to curb the urge forpersonal satisfaction and ego gratification; otherwise it maybackfire."
  • February 1998 and November 1998: 11. During thesemonths, entrepreneurs will gain "added perceptions, addedawareness and different capabilities of understanding," saysPischke. However, their idealism may leave them unhappy whenperfection is not attained or lead them to blur the lines betweenreality and fantasy.
  • March 1998 and December 1998: 3. "These are goodperiods for businesses dealing with public speaking, lectures orother types of public interaction." These may also be goodmonths for "creative and inspirational pursuits."
  • April 1998: 4. "A very stable time for allcompanies," she says.
  • June 1998: 6. This is the best month for businessesdealing in the apparel, restaurant, health, art and musicindustries, according to Pischke.
  • August 1998: 8. "Any business started this month,or already established, will find this a time of significant gainin money, achievement, power and authority, due to confidence andhard work," says Pischke.
  • October 1998: 1. "This month is a good time tostart a new business," she says. The number 1 denotesopportunities in leadership, inner strength and new directions.Entrepreneurs will find success, but they must rely on themselves,rather than others. October will also be a great time to launch ormanufacture a new product.

Sign Of The Times

Astrologers believe the alignment of the sun, moon, stars andplanets directly affects the events occurring here on earth. So wecalled upon Del Norwood, an astrologer in Chicago, and asked her toforecast the rest of the year based on 1998's planetarycycles.

"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'tgelled yet. And then, as the year goes on, I think the key wordwill be `innovation.' The new ideas are taking over more andmore."

  • In the beginning of 1998, Pluto is the most importantplanet--and that will last until the fall. The last planet in lineat this time is Saturn, which represents the principle of gainingwisdom from experience. "I think it would be prudent to beconservative, and it's a time to rethink and restructureplans," she says. "I think it would be an excellent timeto review your company's mission statement or make one if youdon't have one."
  • As winter ends, "I think it's going to be avolatile and unstable period," Norwood says. "It's atime to observe what's happening, and I think it's going tobe a period of a major shift in public opinion, followed by a greatperiod of optimism."
  • In midsummer, act conservatively, and lean on experienceduring business dealings.
  • In the fall, the planets lack a coherent pattern,according to Norwood. "I would characterize this time by thethree Cs: To consolidate ideas and then to profit fromcommunicating and cooperating," she says.
  • By year-end, entrepreneurs should have a much bettersense of where they're going with their business. Says Norwood,"These months should be really comfortable. [Entrepreneurs]will be much more firmly established than they were at thebeginning of the year."

Placing Their Bets

Compiled by Keasha Dumas and Jesse Hertstein

We've talked to the experts about where they predict smallbusiness is heading this year, but what about all you entrepreneursout in the trenches? For some insight into what you see forthe year ahead, we turned to the hottest small companies around.Taken from our most recent "Hot 100," a listing of the100 fastest-growing new small businesses, the followingsmall-business owners sound off about growth, employees and theeconomy--and point to a year full of opportunities for smallenterprise.

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

"I think small business looks good all around. There are alot of jobs here in Kansas City. We're looking to double ourfigures, 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 smallbusinesses are in a position of advantage and will continue to bein that position [this year]. Our advantage in particular is beingflexible and working closely with our customers to ensure customerservice of the highest degree. So we're investing in our owninfrastructure to stabilize and increase our ability to work thisway, 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 tremendousgrowth in the last two years and expect the same for '98. Wejust added a new computer training center and expect a real boomfor the upcoming year. The survival rate for small businesses hasbeen uncommonly high, and I am very optimistic." --PhyllisEller-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 increasedbusiness. Large companies are still outsourcing their help deskservices, internal network support, and Web page design andhosting, but I think the field will narrow down to companies thatcan follow through on their promises.

"The challenge to us and other companies will be findingqualified employees. The unemployment rate is so low that there area 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, MA02140, 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

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