Business Projections for 2007
Posted Monday January 1, 2007 in Business
It’s a new year, which means it’s time to engage in the annual hobby of prognostication. What will be the big trends in business for 2007? As an entrepreneur, I’m most interested in trends that are immediately actionable, so, for instance, I’m not going to discuss changes that I think will be major but which won’t bear fruit for another two or three years.1 I’m also influenced by what I just saw people talking about in business school, so up-and-coming trends that make it into the ivory tower will be strongly represented below.
Trends in Business for 2007
Socially Aware Business
Entrepreneurs around the US will start businesses that provide social good. As we see with Inc.’s new Green 50, doing good is hot — and it’s the great new frontier. Big business hasn’t been good at confronting social needs, so niches are available to startups, barriers to entry are dropping or already low, consumer need is strong, and angels and VCs are starting to open the money tap for socially-aware business.
What you can do: It’s a great time to join Net Impact. Look to your community for needs that you can fill locally, and find a way to do good and profit.
Education as a Business
Charter schools, tutors, test prep, afterschool activities, enrichment — all of these are taking off. As the traditional education system increasingly fails to provide the outcomes that its customers expect, government at all levels is looking to private industry to fill the gap. Parents are also looking into their pocketbooks to offer more to their children. For better or worse, the cork is out of the bottle that holds in the education genie. This is my pick for the growth industry for the next 20 years, as healthcare was for the last 20.
What you can do: There are a lot of dedicated but frustrated educators out there. Talk to your friends and acquaintances who teach, and find ways to enable them to do what they already know they want to do. Teachers need product management, marketing, operations, financial management — all of the traditional business skills.
Onshore Outsourcing
Companies such as Apple and Dell have moved their support back onshore after unpleasant experiences overseas; they’re still saving money by outsourcing to specialist firms here in the US. Entrepreneurs have long known that outsourcing non-core functions to specialist companies can have a tremendous payoff:
- Specialists tend to have a lower cost structure, even where they pay as highly as generalists
- Specialists have already climbed the learning and experience curves, so costly mistakes are less likely
- Specialists have unique knowledge that they can feed back to their customers, helping their customers with operations
What you can do: If your company has a unique specialty, find a way to sell that specialty to others. If you’re in a big company, strike out on your own to create a specialist company that sells what that big company needs.
Green is Profitable
For many years, green technology has been marginal at solving consumers’ problems and volume has been too small to gain economies of scale. Not any more — performance has arrived and big companies like Wal-Mart are going green, which means that the scale is there too. Not only will green be smart in 2007, it’ll be a good place to make money.
What you can do: Look to incorporate green into your products — even if it’s just an adjunct. Green packaging is cost-competitive with conventional, and you can trumpet using pollution offsets in your PR materials. If you can provide offsets, look to make money there, too.
The Food Industry Leads (Not Follows) Crises
In 2006, the food industry was blindsided by e. coli in vegetables and by bans on trans fats and foie gras in some cities and countries. Don’t look for big food to have two years this bad — they’ll get out in front of the crises in 2007. Quick-service and fast-food restaurants will be ahead of the next bad kind of fat, and minimal self-regulation by agriculture will prevent any government regulation.
What you can do: If you can sell compliance services, do it. If you’re in foodservice, watch trends and lead them, don’t follow. If you sell raw products, find ways to expand or revise your line to offer healthier materials.
Trends in Consumer Preferences for 2007
Buying Green
With prices coming down and green products offering the quality of consumer experiences that non-green products do, the average consumer is now ready to go green. In fact, for higher-socioeconomic status consumers, green commands a sizeable price premium. 2007 will be the year in which consumers pick green over conventional.
What you can do: Find ways to incorporate green. Go organic, go low-emissions; if you can’t make your fundamental product green, then look to go green in packaging or transportation or some adjunct like that, and make sure to stamp a big “Green” on your packaging!2
Buying to Donate
2005’s most exciting water market entrant was Ethos Water, which donated a percentage on every premium-priced bottle to bringing clean water to the developing world. Ethos got bought for a good price by Starbuck’s, and now the Bono- and Oprah-approved (Product)Red is making AIDS treatment a part of a business model. Consumers like to donate, and donating as part of buying is much easier than researching and selecting a charity.
What you can do: Find a cause to support, and donate a percentage of your profits to it. Mark this clearly on your product and help your consumer select you based on the charity you support.
Healthy Unhealthy Food
Consumers still want to have French fries and burgers, but they want to minimize the unhealthiness of these products. Consumer groups will push for, and get, bans on items like trans fats in many big cities and even some states; consumers at large will select products that advertise that they are free of the bad fat or ingredient of the month.
What you can do: Offer what consumers will want next and let the health press bring them to you. This means that you need to do your homework and seek out healthy ingredient vendors early on — or, if you’re one of those ingredient vendors, make sure that you’ll be ready to offer the healthier version of your ingredient before consumers demand it. Look out, because consumers won’t pay a premium for healthy unhealthy food — they’ll just expect it.
Lessons
Consumer preferences, and industrial capability, are changing faster than ever. Falling behind can be fatal; it’s time to lead, not follow, for even the smallest company.
- Keep in touch with your consumers, to know what their emerging needs are
- Watch the big Attorneys General, to see what they’re ready to regulate and sue over
- Outsource things that aren’t in your core competency, and concentrate on the things you need to do
- Most of all, do what you love, because that’s the best way to achieve your dreams.
1 One great example of this is Alan Mullaly taking over at Ford; at Boeing, when he was there, they really did a great job figuring out what the important market segments were and targeting them. I think that part of the way that Mullaly will change Ford is to make their vehicles more targeted, which is one of the things that can threaten category-spanners such as the Toyota Camry. But this change won’t be visible for 3-5 years, so you only read about it in the footnotes.
2 In vegetable-based ink, of course.
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