The past year has been a time of volatility in the stock market and the broader tech economy, with concerns about inflation and a possible recession on the horizon. But even though some big names in Silicon Valley and on Wall Street have seen reductions in their stock price, there are significant signs of optimism for the digital economy – especially if you look at the growth in digital entrepreneurship and digital small business ownership.
People are still investing in the future of digital business – and we are seeing powerful signs of enduring growth in the ecosystem of digital small businesses.
Let’s look at a few reasons why 2023 will be another year of growth for small online businesses.
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Online Entrepreneurship Will Continue to Thrive
The years of lockdowns and social distancing up-ended everyday life – but they also brought a new wave of opportunity. Millions of entrepreneurs used this uncertain time to re-evaluate their work lives – and many of them decided to start new businesses. Whether it was a side hustle to earn e***********, or a totally new full-time venture, new business formation skyrocketed.
According to the National Bureau of Economic Research, between 2019 and 2020, there was a 20% increase in new business applications, with an increase of 500,000 in “likely employers” from March 2020 – May 2021. 33% of this growth in new business formations was in Non-Store Retail, such as eCommerce and online businesses. Although new business formations have declined a bit in 2022 compared to these record-setting numbers, they are still above 2019 levels. It appears that the pandemic has caused a lasting reset in interest and appetite for entrepreneurship.
Mobile Apps are the New Town Square
The early days of the pandemic saw skyrocketing growth in online shopping – and while it’s true that some of this growth has subsided as shoppers have wanted to return to stores, or combine brick-and-mortar retail experiences with online ordering, there are strong signs of ongoing momentum and growth for mobile commerce and online retail experiences.
People are still using smartphones and mobile apps as the center of their everyday lives, as the new “town square” where they get news, talk with friends, make plans, get information, and make purchases. Last year, people made a total of 32 billion app downloads, and spent an average of 100 hours per month on apps. Statista research projects that 10% of all U.S. retail sales will come from mobile commerce (m-commerce) by 2025.
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Here’s what this means for small online businesses: many mobile commerce use cases and markets are still in their early stages of growth and development. Entrepreneurs are still developing new ways to reach people, sell products and offer services, and build relationships with customers via mobile apps and other digital channels. The future of the digital economy probably won’t look like the Big Tech players of the past 10 years; instead, it will be something unexpected and new. We are still early in the e-commerce and SaaS lifecycle, and there is still massive potential for online businesses to grow and thrive in 2023.
Small Digital Businesses Will Earn Big Profits
Some of the Big Tech companies that have taken the biggest hit to their share price in 2022 were unprofitable companies that were selling a vision of the future: “we’re going to lose money in the short run, but we are scaling up to become Winner Take All.” Small digital businesses don’t have to play this risky game. There are thousands of small online businesses that have positive cash flow and strong future growth prospects. You don’t have to become the next Silicon Valley media darling to have a successful journey as a digital entrepreneur.
You don’t have to build the biggest, fastest-growing business on Earth to be successful. Many digital entrepreneurs are achieving a different model of success: out of the spotlight, on a smaller scale, but with a strong foundation of positive cash flow and successful growth prospects.
What does the future hold for online businesses in 2023? Regardless of what happens with Wall Street or Silicon Valley, even if there is a recession, we are seeing strong signs of enduring growth in online entrepreneurship and the digital economy. The world of technology always evolves, and a recession is often a moment of opportunity for new ideas to come forward and new leaders to emerge. The future is bright for digital entrepreneurship.
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