What are the new small business opportunity hot spots?

The fastest growing parts of the Australian economy are the service industries:
Many fast growing service businesses are in IT and communications, but there has also been strong growth in:

• Personal and recreational services;
• Health services; and
• Retail

Economists are great at looking backwards, but what of the future? The National Institute for Economic and Industry Research publishes forecasts every year with the Australian Local Government Association. These State of the Regions forecasts are built on a huge database about Australians and our economy. Looking over the horizon, the National Institute forecasts strong growth in services to continue, especially personal and ‘lifestyle’ services, while retail growth continue s and business services ‘outsourcing’ will moderate.

This means that our economy will become increasingly driven by knowledge and people-based business and the industries they represent. Flexibility, adaptability and innovative application of technical skills are keys to future business success.

Successful entrepreneurs will be those who have a clear ambition to ‘build a business’ rather than buy themselves a job. They will be able to match technical skills and reputation with business building skills. On the other side of the labour market, the growth of skills-based part-time and ‘portfolio’ work patterns will continue, as the old ‘jobs for life’ myth is long gone.

In this social and economic environment, the Next Big Thing for small business will be tapping the big growth areas in the highly personal, highly skilled, one-to-one services. Individuals and households will do what businesses have done and ‘outsource’ what used to be core activities. These are things like:

• Household services
  Gardening, cleaning, cooking, design, pet care
• Child and aged care
• Household services
  Gardening, cleaning, cooking, design, pet care
• Health and recreation
  Personal fitness, massage, pro-health, counselling, learning, travel
• Knowledge brokers
  Finance & mortgage brokers, coaching, IT/web

There has already been massive growth in these fields - especially in terms of new business formation. This growth in business formation is built on increasing expenditure in these fields - money that is looking for a place to be spent. There has been rapid growth in household expenditure in these fields, and it is forecast to keep rising by $150 per household per year over the next five years.That may not sound much, but an extra $150 per household per year quickly adds up. Who wants to be a millionaire?

• On these forecasts, a couple of suburbs with 7,000 households (around 15,000 residents) will be looking to spend $1million more each year on these services over the next five years.

The Experience Economy is the other big small business opportunity hot spot.

Experiences are a little more intangible than services – experiences are in many ways memories, and ways of feeling better about ourselves.

“Experiences are a fourth economic offering, as distinct from services as services are from goods. ... When a person buys a service he purchases a set of intangible activities carried out on his behalf. But when he buys an experience, he pays to spend time enjoying a series of memorable events that a company stages – as in a theatrical play – to engage him in a personal way.”

Extract from The Experience Economy by Joseph Pine and James Gilmore

In the Experience Economy, your customers are people, buying not just goods or services but experiences, relationships and memories. Think of some of the recent Australian Experience Economy success stories:

• BridgeClimb in Sydney
• Beechworth Bakery in Beechworth
• The change from the old ‘beauty salon’ to the new, experiential, ‘day spa’
• The resurgence of healthy, wholesome retreats and mind-body-spirit centres

The Small Business Futures workshops allow businesses in particular communities to work on capitalising on these small business opportunity hot spots. In the workshops we have the time to explore how successful small businesses can be led by their customers – reading just what it is that people are looking to buy, and providing the value they are looking for. The workshops enable the participants to look at their own businesses to strategise how to tap these hot spots. This requires creativity and imagination to identify and perform in new service categories that are as much about relationships, being part of the customers family, and meeting the needs for experiences as they are about good old goods and services.

Implications for small business

How can you position your business to capture some of the growth in personal services spending?

How can you reposition your business to connect with who your customers are rather than just the goods and services they seem to want?

How can you forge loyalty by having your business make your customers feel better about themselves?

How can you provide your customers with memorable experiences alongside products and services?