Top 7 Small Business Trends in 2012 for Frugal Entrepreneurs

It’s the season for a hearty helping of small business trends 2012 posts and predictions. After reading several of them complete with their recommendations for what small businesses should focus on in the coming year, I was left wondering who they are targeting. What about the frugal entrepreneur?

Whether by choice or by circumstance, many small business owners and entrepreneurs these days are taking a frugal approach to running their businesses and side ventures. While openings, growth, and hope certainly exist within specific industries and communities, personally I’m seeing that many small businesses are continuing to struggle with sluggish sales, tight profit margins, and stilted cash flow. Many are still worried about the economic climate, and many are overwhelmed by the rigorous demands of do-not-avoid-at-all-costs internet marketing strategies and customer relationship management (CRM).

Even among the tirelessly entrepreneurial 20 to 30 year olds, many are displaying an almost unprecedented financial caution. So what does the new year look like for the cash-strapped, the bootstrapped, and the entrepreneurial moonlighters who do not have so much time nor money to invest in their ventures? Here is a rundown of what to expect:

1. Virtual and temporary help. With more to do, less time to do it, and limited money, there has been an increasing demand for virtual assistants and other freelance workers as well as temporary employees over the past few years. The new year will be no different, especially for smaller companies seeking to balance their occupational needs with the rising costs of hiring a permanent employee. (Here is a simple side-by-side comparison of hiring a full-time worker versus a freelancer.)

Countries such as India and the Philippines have been quick to fill in the gap by offering quality virtual assistant services often at a significantly reduced cost. This increases the demand for services such as a t3 line.

2. Collaboration and co-working. While bigger companies are just starting to wake up to the fact that collaboration across departments and organizational levels is a highly profitable set-up, it’s old news for many small business owners and the self-employed. As social media platforms continue to develop and mature and collaboration solutions become more user-friendly and affordable, we’ll see many diverse businesses and entrepreneurs joining in. One cleaver example I recently saw was this writers’ hangouton Google+.

3. The rise… and struggle of the self-employed. Seemingly implicit to the two previous trends is an increase in the number of people seeking to run their own small businesses- whether on a full-time basis or as something on the side. With the job market still in the doldrums, this trend will continue to be a nation-wide phenomenon across all ages, backgrounds, and locations. This continued momentum has a downside, however. With saturated markets and increasing competition, it will become harder in 2012 for many of the self-employed to earn enough money for their efforts.

4. Getting back to the basics. Anyone who has been involved in marketing- whether in practice or as an observer- over the past couple of decades, has probably noticed a rush of almost fad-like trends- closely coinciding with the emergence and continued evolution of the Internet. Some of the latest trends have included viral marketing techniques, groupons, and a whole slew of slick social media “moves.” Lately, an overriding pattern has begun to emerge. Businesses are realizing that underneath all the fancy terms and tools, the “old school” rules of marketing, networking, business communications still apply. Trust agents, referral machines, and tribes are just modern ways of saying truth in advertising, word-of-mouth marketing, and business networking. The mediums may have changed, but not the rules. Bottom line: more and more small businesses will need to become savvy enough to sift through all the “fluff” out there and put their limited resources into the areas that will offer a real payback.

Which leads me to the next trend, and that is more businesses will be waking up to the fact that…

5. Social media marketing costs money?! It’s amazing to me that social media marketing is still erroneously being pushed as a “free” or “low-cost” way of promoting a business, and this message is coming from some very talented, well-respected small business thought-leaders and services. As someone who has worked with numerous small businesses and as a small business owner myself, these claims are nothing but hogwash.

Conducting a successful social media marketing campaign will not happen over night, and it may end up costing you much more than you realize when you start factoring in things like paid man-power and the opportunity costs that come from putting in the time you could have used to directly run or develop your business.

I am seeing that many small businesses owners are starting to realize this. Not only will they have to create a special social media marketing budget, but they will also almost be forced to evaluate what they need, versus what they don’t in order to be successful.

6. Personalized, real-time response. These days “service with a smile” is often no longer enough when it comes to customer service. Consumers want an instant, helpful, and personalized experience. This may take the form of a live web chat session with a customer service representative or a prompt response to an emailed inquiry or tweeted comment. In 2012, we’ll likely see the continued usage and development of economical CRM solutions and other low-cost customer service platforms, such as ZenDesk among small businesses.

7. On the Internet, everyone is local. This last trend comes from Becky McCray over at Small Biz Survival. I’m including it here not only because it is spot on, but because it also nicely illustrates some of the unique opportunities and struggles facing small business owners in 2012. I’ll quote her, rather that paraphrasing what she wrote:

Online reviews make everyone a local. Business pages have been created for almost every single business (even in small towns) by Google, Facebook and Yelp!, among others. Reviews and comments by customers give every visitor an inside view into local businesses. Result: We’re all in one big small town. This will help some terrific local businesses be found more often, and hurt some that really haven’t kept up their quality.

On one hand, the new year promises a lot of opportunity for those small business owners and entrepreneurs who have the resources and know-how to take advantage of the way consumers and other businesses use the Internet and mobile technologies. On the other hand, it presents a unique challenge for those who are not so tech or social media savvy or who just do not have the time, nor money to devote to Internet-based mediums, mobile technology, or CRM solutions.

And don’t forget that this is coming precisely at a time when, as I mentioned above, a large number of small businesses (especially the brick and mortar ones) are struggling with more “mundane” issues, such as increasing operational costs.

So the bottom line is: it’s the best of times and the worst of times. As a whole, those who approach their businesses with a blend of research, planning, and frugality will likely stand to benefit the most in 2012.

This is what I’m seeing. Do you agree? Are you running a small business? What have you been experiencing?



  1. Susie Brown says

    I am one of the “self-employed” (I’m a freelance writer) and also the co-owner of a small repair business that I run with my husband. I definitely feel like it’s getting harder and harder to attract clients and find work- especially with my freelancing. It seems there are so many people who are willing to work for much less then I can, and I can’t spend so much time on social networking.

  2. Adam Gottlieb says

    Hi Susie,

    You didn’t mention if your repair business is listed with local search engines or if you have any business pages up. If you do, then are they generating referrals?

  3. says

    These are all great observations. Closing in on two years of primarily web-based solo practice, I am realizing more and more the value of truly meaningful interactions in social media. The combination of more competition due to the increasing number of self-employed professionals with the volume of noise in social media makes it increasingly important to develop strong relationships in social media as opposed to simply broadcasting. I would be interested in learning what other service professionals have found successful in terms of the blend of research/planning/frugality referenced at the end of the article.

  4. Adam Gottlieb says

    I think people tend to forget that social media is really just an extension of our face-to-face relationships. We expect more from it because the potential reach and opportunities for expression are enhanced (like someone’s vision is enhanced looking through binoculars or a microscope). But behind the profiles, followers, friends, tweets, likes, etc there are people after all, and the basic rules of communication, relationship building, and doing business with these people still apply. IMO, it’s the best “social media” strategy there is.

    If you have built up a strong network of real followers and social media peers, then often they can be a valuable and frugal source of information for research and planning whether via collaboration, asking questions to targeted individuals, or conducting surveys.

  5. says

    I think the best thing that has come out of this social trend, for customers and businesses alike, is the way that review-based decision-making has the power to reward the good businesses and punish the bad ones. As an obsessive reader of Amazon user reviews, I maintain a healthy respect in my business for word of mouth and how it can make or break a business.

    And on the consumer end of things, I’m planning a wedding that’s taking place 6 hours from where I live, and I would be absolutely lost without user reviews to guide me. Nothing I find in even the most convincing marketing copy can replace the confidence I have in other users and their experience.

  6. Adam Gottlieb says

    Word of mouth advertising… on steroids. What I find amazing is that so many businesses, big and small, still don’t fully realize that this is how many consumers are making purchasing decisions.

    On the other hand, the downside to all of these reviews and feedback is that it is getting hard to sift through the sheer number of peer-based responses.

    Thanks for the comment.

  7. Susie Brown says

    Yes, we are listed with local search directories. But, our customers are all from our town or those directly neighboring it, so actual traffic from these listings are limited.

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