The general consensus appears to be that the majority of people are interested in becoming an entrepreneur: 62% of adults believe it’s a good career. However, these startups are not always successful – a large number fail in the first year (20% according to BLS). The number one cause of this is because there’s no market need for the product or service they supply (42% fail for this reason according to a Guidant Financial). Therefore, those trying to make their entrepreneurial dreams into reality must consider whether their business idea fits into the startup trends forecast over the next decade.
Digital Innovation in Africa
A huge amount of venture capital has been moving to Africa in the past year. Partech reports an apparent $2B since last year alone. Once regarded as too risky, startups are beginning to recognise the continent’s untapped potential cannot be ignored. For example, Twiga Foods is creating a food distribution network with infrastructure to go with it alongside a mobile app for inventory and trade tracking. The Goldman Sachs-backed startup connects over 17,000 farmers in the country to 35,000 vendors and is growing at a rapid pace.
The Really Useful Information Company (TRUiC) compounded a list of business ideas for startups based on their extensive research. Combining one of their most popular small business ideas with one of these overarching trends for US startups is a recipe for success.
Mainstream Sustainable Finance
Sustainable finance is the practice of investing with considerations of environmental and social returns rather than purely monetary gains. This mindset is becoming increasingly mainstream (Bloomberg reports the field is valued at $30B) – as investors start to broaden their definition of return on investment, startups will need to look at more than just their revenue trajectories in order to prove themselves. Moreover, startup pitch decks will start to include slides requiring the business to prove their net-positive social and ecological effects.
Proven Business Models in New Geographies
In a similar vein to the trend of massive amounts of capital flowing to Africa to take advantage of its potential, proven business models are also making the jump, though not just to Africa but any geography in which it’s novel. For example, startups such as Uber Eats, Grub Hub and DoorDash have proven the success of the food delivery app model, just as Uber and Lyft have done the same for ride-hailing apps. There is an ongoing venture capital funded race to capture the different geographies in these spaces.
Glovo is an example of this. The Spanish startup which raised $500M in funding from its food delivery app whilst operating exclusively in Europe recently branched out to South America and North Africa – to great success. In addition to this, it established the new industry standard of allowing customers to track their food in real time.
Amazon setting the standard for delivery efficiency and customer service has led to an astronomical increase in customer expectations from all businesses (including startups) across all industries. Convenience and speed are becoming increasingly important, and startups that can recognise and prioritise this customer experience trend will flourish.
Lensabl is a recent startup providing a fully digital prescription lens replacement service. It allows customers to take their online eye exam from home then send in any frames they wish to have their personalised lenses fitted in. The pure convenience of the service has rewarded the startup lucratively: in the last year alone they generated $3M in profit, according to Owler.
In a study conducted by Deloitte it was found that offering personalised products increased a company’s sales by 10% or greater, regardless of whether the personalised product’s price was higher than the business’s standard equivalent. Nike’s “Nike By You” line of customisable trainers has been an unequivocal success despite costing 30-50% more than their regular selection of identical shoes.
Whilst this has always been present to an extent (Dell supplied custom-made PCs as far back as the 80s and 90s), an explosion in the ‘direct-to-consumer’ (DTC) business model has made product personalisation a more household notion. In 2020 alone, US online DTC sales jumped 24.3% and they’re expected to jump a further 19.2% in 2021. This is due, in part, to the progress 3D printing has made in the last 15 years: it has become affordable to the point that, in combination with DTC, businesses can offer nearly endless customisation.
Becoming an entrepreneur is an extremely desired goal by many, although it is difficult to do because many people fail to understand what the market needs. However, this hurdle can easily be overcome with a simple understanding of the startup trends for the next decade and the best small business ideas according to TRUiC.