Top 5 Inner City Small Business Predictions for 2012

Top 5 Inner City Small Business Predictions for 2012

 

As ICIC’s research on inner cities has shown, inner cities don’t benefit from regional investment alone; instead, they require targeted strategies and investments to prosper.

In the spirit of this Entrepreneur.com article identifying the top 10 small business predictions for 2012, it seems only right to do the same for small businesses located in the inner city given that macro predictions might not trickle down to distressed urban areas. So, taking the most relevant insights from the broader national picture and ICIC’s own expertise, below are my top 5 Inner City Small Business Predictions for 2012.

 

1) Public and Private Uncertainty Ahead. While small to even moderate large-scale shifts don’t particularly impact inner cities, Euro troubles herald volatile future consequences for the American financial system and broader economy. Inner city firms wouldn’t be insulated from tightening underwriting standards, write-downs on their assets, or fearful customers.

With Congress seemingly paralyzed and state budgets contracting, the availability of public funds to jumpstart targeted investment is also seriously in question.

2) The Return of Retail. ICIC proprietary research shows that retail sites declined both nationally and in inner cities over the last decade—likely making this my boldest claim.

However, leaner practices from consolidation and the reinvention of competitive advantage through customer service and design brought on by Apple’s success are strong headwinds.

Couple that with the fact that simply, more young people and seniors are moving from the suburbs back to cities – and these demographics, people without kids at home or hefty mortgages, like to spend money. Many “Main Street” communities are having success at attracting retailers back downtown because there has been an increase in urban housing production. As city density increases, it makes sense for retailers to follow suit. 

Bob Wilson, director of the Mississippi Main Street Association explains: “Over the years as merchants moved to big boxes and malls, it left a void in downtown. When retailers and recruiters look at that, they see areas that are severely underserved.”

Look no further than past Inner City 100 winner Sneaker Villa from Philadelphia, Pennsylvania for proof that urban retailers may be poised for a comeback in 2012.

3) Shared Value.  More and more, we’re hearing about the importance of companies not just trying to make a profit, but doing “good” for their communities in the process. According to Mark Kramer and ICIC founder Michael Porter, “Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center.”

Past Inner City 100 winners like Sweetriot, City Feed and Supply and FutureNet Group can attest: shared value works. For example, Perry Mehtra, President of FutureNet based in Detroit, MI explains:

Our commitment to Detroit has never wavered. We purchased a warehouse in the inner city, which is the base of our operations, and hire locally as much as we possibly can. We strategically manage the relationship between the company’s economic success and that of the city by providing job opportunities for the people who live in this community. Our success is their success and vice versa.

In 2012, expect to see more companies utilizing the concept of shared value to bolster capitalism’s reputation while simultaneously generating profit and improving nearby communities.

4) The Rise of Social Media. According to a recent Constant Contact report on small business attitudes, small business owners are becoming increasingly more comfortable with social media. 67% of small business owners said they used social-media marketing because it was easy, up from 54% six months ago.

As social-media general manager at Constant Contact Mark Schmulen says about small businesses, “They’re realizing that it’s easy, affordable, and a great way to connect and engage with customers.”

5) Increased Mobile Footprints. Contrary to the caricature of inner cities as places lacking dynamism, inner city companies we’ve worked with over the years have unearthed and taken advantage of unique advantages endemic to their locales.

So don’t be surprised if 2012 sees a movement of inner city firms to the burgeoning mobile space. How fast is this medium growing? If trends persist, mobile internet use will exceed desktop use by 2014!

 

Of course, if I had a magic ball that gave me more than a “yes,” “no,” or “maybe” – then I’d probably be playing the lottery instead of studying urban business trends.  But given what we have seen over the past year, these are just a few educated predictions of what inner city small businesses can look forward to in 2012.

What do you think small businesses can expect to see in 2012? What did we miss?

Trolling the twitters on #Cleveland I stumbled across some inner city development predictions for small businesses in 2012 by ICIC.

Before I go through their list, I want to insert my #1 for small businesses in 2012: Analytics. Don’t just “feel” your business’s pulse. Measure it. Mine it. Focus on what key details actually matter instead of the infinite variety of things that could. Become a market scientist instead of amateur.

And now for my take on ICIC’s “TOP 5 INNER CITY SMALL BUSINESS PREDICTIONS FOR 2012”:

1) Public and Private [Funding] Uncertainty Ahead.
Even so, small businesses should expect this lack of aggregated monetary funding as certainty. Although this old model was efficient (think WW2 industrial scaling and post-WW2’s “Great Compression”), it is also more vulnerable to single-point failures than distributed, regional, models.

Though even as we move to the more distributed models of economic development, we can expect with certainty that the traditional concepts of funding will fail. Over the last four decades the finance sector has extracted from the coffers of their clients, industry, and then even cannibalized each other when that was not enough. The old-fashioned fiduciary duties of financial services to the client are dead. Do not expect them to mysteriously return, even under contract. Wall Street finance has transformed the role of money to an increasingly creditor-serving position. So as the capital barriers increase and the benefits diminish, we will find ourselves with a surplus of capacity to produce but without the cash to pay the salaries or buy the products that we make. Thankfully, there are alternatives for those without angel investors to get around this.

At the end of the cited OP Carol Tice of The Daily Dose voices her opinion in #10 (http://www.entrepreneur.com/blog/222419) that collaboration has a role to play in SB development. This is understatement at its finest. Small Business 2.0 will invoke crowd sourcing and other collaborative techniques to the Nth degree. We will live and die by Vanerchuk’s Thank You Economy. Partnerships and collaborations which trade services in exchange for credit of future services and build upon a reputation for competence is the new global currency. Who cares what you can buy? Anyone can buy something. What can you build? What can you deliver?

To be clear, if one has proper access to capital, leverage it for your success but do not consider it an end unto itself nor the only form of currency you have at your disposal. Keep your eyes open for opportunity to connect supply with demand through service swap arrangements, especially for the those in your ecosystem.

2) The Return of the [Urban] Retailer.
This is less about department stores or anything else we can get on the internet and not have to pay the urban retail overhead rates. This is also not directly about the latest trend in mega-sprawl open-air mall development.

The return of the urban retailer is about our regional identity and concentrating experiences which reinforce the desirable cultural values of that identity. For example, the restaurant Melt in Cleveland. If you have a tattoo of their logo you get 25% off for life (http://meltbarandgrilled.com/melt-tattoos/). They enjoy an insatiable demand, their popularity far exceeds the value of melted cheese on toast, and yet they are the shining beacon for what to get excited about in Cleveland. On a national scale, think Apple Store. How long before Apple starts hiring baristas so those pesky customer service agents can offer you something more than words to prime your next purchase and then building out a coffee shop culture more relevant than Starbucks?

3) Shared Value.
One man’s garbage is another’s treasure. Connect the needs with the supply. Facilitate recycling and waste exchanges. Welcome to corporate citizenship.

4) The Rise of Social Media.
For a good look at the value of SM for business, check out +Gary Vaynerchuk’s The Thankyou Economy or watch some of his talks on YouTube. The content is not as bad as the title may lead you to believe.

I would argue that Social Media has already risen. The deep questions that have yet to be solved are how to advertise through SM without alienating viewership or if it is even possible. It is likely that we will largely revert to the old-fashioned ways of doing business but instead of asking our friends we will be asking Google or Twitter whether or not this product is worth getting.

5) Increased Mobile Footprints.
Munich’s Oktoberfest has been using Mobile Apps since 2009 (http://www.pocket-lint.com/news/27277/oktoberfest-apple-iphone-beer-application). What are we all waiting for? Do we need a Gartner report to believe that virtual infrastructure and the resulting engagement is significant?

By Joe Gorse on 12/27/2011

I simply cannot understand why the obvious eludes so many. The only thing genuinely needed for businesses to flourish is to get governments out of the way.

Inner cities have been gutted because government regulation, not to mention taxation, have distorted all the natural forces that allow producers and consumers to interact in the marketplace. Zoning laws are one of the worst destructors of inner city business. Individuals, cooperating voluntarily with each other, don’t need third parties to determine zoning. Worst of all is the corruption that accompanies land use and zoning laws.

Social media and technology have continued to evolve throughout civilization. Technology or tactics change virtually nothing when the underlying structure is crippled by central planners. The more governments, at any level, interfere with the voluntary exchange of goods and services, the worse the economic climate becomes. And the more the economy moves underground.

By Chuck Dahmer on 12/27/2011





BY Sathya Vijayakumar on December 23rd, 2011

TAGS: retail | shared value | small business | business

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