Around this time of the year, an assortment of small business experts take out their crystal balls and make predictions about what the next twelve months or so will bring. While many of the these potential future trends are important to be aware of, sometimes events come together to create a literal transformation in the way we do things.
The following three business trends promise to totally revolutionize the way that small businesses operate. They don’t just represent popular movements or tendencies, but rather a paradigm shift in the way business is conducted.
1. The merging of online identity and the off-line world. After the launch of Apple Pay last October, many people were quick to suggest that mobile payments will see a surge in prevalence and popularity. While that may be true, the move by Apple is actually ushering in a more important trend. Apple has over 800 million accounts tied to credit cards, a loyal customer following, and data on users’ browsing behaviors as well as app usage. Every time an Apple customer uses Apple Pay to make a purchase, he or she is providing valuable data to Apple that can then be used to provide a personalized online user experience. We’re not just talking about mobile payments, but a merging of consumers’ online identity and habits with their off-line behavior and purchases.
2. The rise of dynamic pricing. With dynamic pricing, your prices on products or services change based on several factors including: demand, customer location, competition, and seasonality. Dynamic pricing as a practice is not a new concept. Airlines, event venues and hotels have been using dynamic pricing models for decades, and many big online retailers, such as Amazon.com, Target, and Walmart, rely on sophisticated applications and algorithms to instantly make personalized price changes.
What has changed is the number of vendors offering dynamic pricing solutions to small businesses- especially those that conduct business online. As mobile payments become more prevalent and online identities merge with offline purchases, even brick and mortar businesses could benefit from an app-based dynamic pricing solution to experiment with the market, spur demand during slow periods and maximize profits. There is also plenty of room for creativity. Consider what this San Diego bar did to engage customers while learning about their buying habits and maximizing profits.
3. Alternative business financing will make great leaps towards becoming the “new traditional.” Like dynamic pricing above, alternative, non-bank lending is far from a new concept. In fact, the practice of factoring in particular has actually been around for centuries.
Ever since the Great Recession hit a few years ago, and banks and most traditional commercial lenders basically closed the door on small business lending, a wave of alternative lenders have come on the scene to fill in the funding gap. But, the industry as a whole has got a bad rap, mostly due to a small pool of predatory lenders and fly by night operations, and it has yet to gain main stream appeal.
All of this is set to change, however, given the number of high-profile IPOs in the alternative lending space that have been taking shape over the last few months. This includes the likes of OnDeck Capital and peer-to-peer lending platform The Lending Club. Many have suggested that these IPOs are not really about raising money, but more about raising public awareness. Given that banks are still being reluctant to lend to the nation’s smallest businesses, even with real signs of an economic recovery, alternative lending, such as business cash advances, invoice factoring, and micro loans, will only grow forcing small business owners to think more in terms of short-term financing rather than long term funding.
So, what do you think? Do you see how each of these business trends is poised to make a big splash in the coming year for smaller companies? Let us know in the comments below.
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