Two massive business trends will accelerate in 2021. Are you ready for them? Will each trend be your friend – or the end?
COVID’s impact on business is often described as a temporary challenge to endure. That’s wrong. The impact on business is permanent. It’s also the start of a massive surge of business innovation. Many of these seeds of change were planted before COVID but bloomed in the heat of adversity during 2020.
Here are two business trends for 2021 and what they mean for you.
Business Trend #1: Massive numbers of business failures
2020 saw many business failures. It was hard to watch our favorite business struggle from low cash flow.
In 2021, they will be joined by a massive number of failures of businesses that started in 2020. It all starts with the record-shattering number of business applications in late 2020:
These new businesses come with fresh funding and new ideas. Most will not succeed.
According to the Bureau of Labor and Statistics, 20% of new companies fail within their first two years. Around half of them fail in five years. Record new company formations will lead to record failures.
Don’t let all these failures detract from the success.
Think of a sales funnel. A large number of potential customers start at the top of the funnel but only a small number become customers.
New businesses are part of an innovation funnel. Q3 saw a record number of business ideas that will be tested. Most will fail but a small percent will succeed. The record number of ideas at the top of the business formation will lead to a record amount of business innovation at the end of the funnel.
The record number of ideas at the top of the business formation will lead to a record amount of business innovation at the end of the funnel.
Smart companies will be watching for how this surge of innovation will change the business landscape. These new businesses will disrupt the status quo, forcing us all to adapt.
There will also be a huge increase in optimistic martyrs. Daniel Kahneman, in Thinking Fast and Slow, says, “Giovanni Dosi and Dan Lovallo call entrepreneurial firms that fail but signal new markets to more qualified competitors’ optimistic martyrs’ – good for the economy but bad for their investors.” Watch for opportunities left from these optimistic martyrs.
Business Trend #2: Employees aren’t coming back
I managed a department six years ago that was the telecommuting test pilot at a company with $2 billion in assets. Two-thirds of my staff elected to telecommute at least part-time.
Telecommuting wasn’t perfect, but my staff preferred the flexibility of working both from home and at the office. It gave them more flexibility with childcare. They could work at home when they or their family members will ill.
Many staff today have become used to working from home. Taking that flexibility away will be hard.
Companies have also learned how to work with remote staff and the benefits it provides. Processes have been redesigned to accommodate remote workers.
Remote work was a business trend that had slowly advanced over the years. Those who had resisted the trend were forced to try it in 2020. Many won’t go back. Almost half of U.S. professional workers expect they will be able to work remotely, at least partially, after the pandemic.
Like my staff, most companies and workers will likely shift to partial remote work. Employees may work two or three days a week in the office and the rest at home. This is what my department chose. Ashley Whillans, a professor at Harvard Business School, calls this a 3-2-2 workweek: 3 days in the office, 2 days remote, and 2 days off.
A related business trend is the acceleration of gig work and side hustles. A study by Fiverr found that 68% of workers surveyed said that they are more open to taking on freelance work and/or a side hustle since the outbreak of the pandemic. More than half (55%) of these respondents agreed that working from home has made them realize that freelancing could be a legitimate career option for them.
The massive shift to remote work has triggered another business trend. Your staff can now work remotely for employers outside your local area. Their job opportunities have greatly expanded. In the same way, you can replace them from a larger labor pool if you’re willing to hire remote workers.
The return of good economic times usually leads to increased employee mobility. The number of employees who quit their jobs rises and falls with the economy
As the economy improves, employees will be more confident to leave their current employer for another company. They will go to your traditional competitors, to companies they start, or to the new companies that were formed in 2020 that I discussed earlier.
This creates both threats and opportunities for companies. Employees who mistreat employees will see massive turnover. Good employers will not see a huge increase in turnover, and they will be able to pick great employees from all over the country – and the world.
We’re not going back to normal
Many people are looking forward to a return to normal.
We can look forward to better times. We can’t return to the past. Our companies, our customers, and our industries are always moving forward. Keeping up with these changes means business survival and success.
Smart businesses see where today is leading to tomorrow. Successful businesses can adapt to wherever tomorrow takes them.
Going back to your 2019 or 2020 business plan is not an option. Successful companies will incorporate these accelerated business trends in their business plan. Take the time to chart your new course.
I wish you a successful 2021. I wish you well.