The Future of Entrepreneurship in the 21st Century
By Dr Srikanth Gaddam, CEO, ERPA Group
September 06, 2020
“For years, becoming an entrepreneur has been the goal of many a would-be business owner. The lifestyle, flexibility of working hours and the ability to set yourself up financially, potentially for life, is a call that thousands each year find difficult to ignore, taking the leap and setting out on their own business ventures. What puts a large fraction of potential entrepreneurs off, however, is the inability to decide what kind of business they are best to venture into in the first place. What do consumers favor in 2020, and what will make you more likely to succeed? Is it innovative ideas, bringing something completely new to the market? Is it about keeping a keen eye on consumer trends and new markets? Or is it perhaps all about embracing the move towards sustainability and using business to ‘give back’ to the world around you?
Here, we will take a look at some of the trends and changes we have seen throughout the business world over the past few years, and what those changes could mean for potential entrepreneurs looking to start their own business ventures in 2020, as well as how those changes could affect the future of entrepreneurship going forward.
The Rise of the Social Enterprise
In recent years, there has been a sharp increase in the social awareness of consumers and the desire to contribute to businesses who use a percentage of their profits to help a range of deserving causes, and this change in habits has paved the way for a new kind of business venture. These businesses are known as social enterprises and are driven by purpose rather than profit, with a goal of improving the lives of others – and they’re most certainly becoming more and more common in today’s vast business landscape. In fact, there has been a 59% rise in the founding of social enterprise businesses in the United Kingdom over the last three years.
The mission behind social enterprises is to generate funds that can be used to contribute to helping groups of people who are less fortunate, which is increasingly important to certain demographics when choosing which businesses to spend their hard-earned money with.
Social enterprises, however, aren’t charities. While charities are dedicated to and give 100% of their profits to their chosen cause, social enterprises do keep a percentage of their profits for themselves – just slightly less. The owner of a purpose-driven business like this can still live a comfortable lifestyle using the money they turn over from their venture, but they also have the satisfaction of knowing that some of that money has been used to improve the lives of vulnerable groups and individuals. This contributes to a positive public opinion of the brand among potential consumers, which will, in turn, lead to a higher number of sales than could be experienced by your profit-driven competitors. This will be welcome news to anyone who is attracted to the idea of entrepreneurship due to the financial benefits, as operating a social enterprise allows the business owner to set themselves up financially while knowing that they are still contributing regularly to a good cause.
There’s no shortage of different industries in which you can set up a social enterprise, either – there are purpose-driven businesses in a range of different markets, including magazines and newspapers, food and drink and even banking. It’s clear that, in an age where we are all a little more conscious about how we affect the world around us, social enterprises are giving millions of consumers a more ethically satisfying way to spend their money.
Another benefit of the social enterprise movement is that it appears to have raised the level of diversity in business, too. It’s reported that 40% of all social enterprise executives are women, while 31% of directors are of Black Asian Minority Ethnic descent and 40% experience a disability. In today’s increasingly progressive society, this is certainly no downside.
Overall, social enterprises appear to be on a clear and consistent rise, so it’s well worth doing your research into this new face of business if you’re considering taking on an entrepreneurial venture any time soon.
The Importance of Digital Trends
One thing that any aspiring entrepreneur should certainly keep a keen eye on is the changing trends appearing within their potential consumer base. These trends can then be used to better market products or businesses towards the target demographic, leading to an all-important increase in sales and overall growth of the brand – or they could even be the thing that directs you towards your business idea in the first place.
By continuing to look closely at your target demographic’s use of social media, search engines or mobile applications, you can effectively place advertisements where they will be the most effective at securing sales for your business. It’s important that you are very specific when monitoring these trends for the benefit of your business – a single, childless woman in her early twenties will be using social media in a very different way to a married father in his late fifties – and that you take full advantage of your findings. It is almost impossible now to effectively scale a brand without proficient knowledge of the way your consumers use the internet, as this is such a prominent part of nearly everybody’s daily life these days.
For instance, if the target demographic of your business is consumers in their late twenties to late forties, then perhaps advertising through more long-established social media platforms such as Facebook would be the most effective route for your business. However, if you are looking to tap into the youth market, then consider the use of a newer social media such as TikTok, or take advantage of the growth in ‘influencer culture’ by partnering with a prominent figure among this demographic through YouTube or Instagram.
It is important to spot whether or not there is a gap in the digital market when launching your business venture – companies like Uber and Deliveroo were able to take a service that had been around for a long time and upgrade it for the 21st century, with both brands using the advent of smartphones to streamline a service that had once required a spoken over-the-phone conversation and the use of cash payment into a service that is quicker, simpler and entirely digital. It really is all about being able to spot what products and services your target demographic need or want the most and coming up with an interesting concept that has strong appeal in the world of today.
When it comes down to it, innovation is one thing, but you have to be able to predict whether or not your idea is likely to succeed, and you must keep an eye on digital trends in order to do this effectively.
The best way to do this is to monitor cultural changes closely. Is there a need for a particular service or product that you feel you could deliver? Maybe there is a new way of advertising through the internet or social media that will allow you to reach your target market more effectively. When it comes down to it, the two most important aspects of using digital trends are to keep in touch with the needs of your target market and use social media and the internet effectively in order to advertise your business to them. Be specific in what the audience and goals of your business are in order to streamline the way you use the internet to grow your brand.
One of the most effective ways to keep your business at the forefront of your target market’s minds is to use a combination of several different websites and social media in order to achieve a greater presence among your audience. It is, of course, beneficial to have a member of your target demographic come across a Facebook advertisement for the product or service offered by your business, but would be even more beneficial if the same member of your demographic then saw similar advertisements through Google or in the form of a banner or video advertisement on an app they use regularly.
The Growth of Platforms
Over the past few years, there has been a sharp increase in the establishing of businesses that operate using the platform model. A platform is a business model in which the company relies on building a large and prominent user base in order to grow, achieve prominence and maintain long-term success.
One of the earliest examples of a successful platform business is eBay, which started out in 1995 after Pierre Omidyar decided to sell his broken laser printer online, originally asking for just $1 and consequently making $14.83. In the 25 years since, however, Omidyar has grown his website into a globally recognized brand with a net worth of over $13 billion and 25 million active monthly users. While a platform business model may not necessarily be ideal for entrepreneurs hoping to grow as quickly as possible, it is most certainly the ideal business model in terms of achieving global recognition.
In the 21st century, many other businesses have risen to prominence with this model. Depop, similarly to eBay, provides a way for users to sell their pre-loved clothes to new owners, with Depop taking a percentage of the sale as commission. The app has once again grown incredibly quickly, having amassed a user base of over 18 million in the nine years since it launched in 2011.
Some businesses operating under this model go on to dominate their particular market entirely. Ten years ago, online dating was almost exclusively done through a desktop website and relied on filling out lengthy questionnaires and writing long messages to potential partners. However, in 2012, Tinder revolutionized the online dating scene by optimizing it for mobile users and moving unapologetically from matching singles based on compatibility to matching users based more prominently on physical appearance, making the app far more appealing to a younger demographic. Despite being free to use in its most basic form, 5 million of its 50 million users pay a monthly fee for a premium membership, and the app has grown into a cultural phenomenon.
The platform business model shows no signs of decreasing in popularity, either. These days, nearly everyone has a smartphone, so there is no shortage of opportunity for entrepreneurs to take advantage of the millions of potential users out there to help your grow your own platform business – all you need is to tap into the right idea.
What Does the Future of Entrepreneurship Look Like?
Every year, thousands more decide to take a leap of faith and launch their own business. This is a fact that comes with both positives and negatives to consider – one the one hand, it goes to show that becoming an entrepreneur is a more accessible career path than it ever has been in the past, but on the other hand, it becomes increasingly hard to achieve widespread recognition and success within highly saturated markets. Fortunately, it just comes down to having the right knowledge in order to get your business where you want it to be.
First of all, consider the changes in digital trends. Every year, we are seeing new social media apps and sites appearing, or new features being added by existing sites, which change the way that our target audience interacts with the internet and the advertisements that they are shown while online. It is highly important that you keep a close eye on the way your target audience behaves online and how they react to the world’s fast cultural changes, as both these things influence their consumer choices.
Remember also to take into account the growing desire of consumers to spend their money in ways which are morally and ethically beneficial, which directly contributes to the success of social enterprises. While owners of purpose-driven businesses may lose out on a percentage of their profits at first, the appeal of social enterprises to consumers will positively influence their brand success in the long run.
Finally, if there is a business model to keep a close eye on in the 21st century, it’s the platform model. We live in an age where everyone can be connected for a variety of different reasons, and platform businesses have used this to their advantage with great success, especially within the last ten years.
Overall, there has never been a better time to set up your own business, as long as you can keep up with the trends and stand out among the rest. You could be the entrepreneur behind the next global cultural phenomenon.
Dr Srikanth Gaddam is an author, angel investor and a seasoned entrepreneur who launched three successful technology companies in the last seventeen years. Dr. Gaddam’ s greatest accomplishment lies in raising ERP Analysts, Inc. from a two-person organization to eighty-five-million-dollar firm. ERP Analysts, Inc. has been recognized as one of the fastest-growing companies by Inc. 5000 for ten years, Deloitte Fast 500, & Business First Fast 50 for several years. ERP Analysts is recognized as a “Best Places to Work” in Ohio for several years (www.erpagroup.com). Dr. Gaddam graduated the Doctor of Management (DM) from Case Western Reserve University, MBA from the Ohio State University, and the Owner President Management program (OPM 43) from Harvard Business School. He is the author of the book “Destination Success: Discovering the Entrepreneurial Journey” and also co-author of “Roadmap to Success,” with Deepak Chopra, Ken Blanchard, and other entrepreneurial leaders.