7 Small Business Finance Trends in 2018

Small businesses play an important role in the economy, and one of the ways they drive economic growth is by creating opportunities for employment. In fact, according to a report by the US Small Business Administration, small businesses create more jobs, compared to bigger corporations.

Many recent developments have contributed to the success of small businesses, such as internet technology and social media. But there are also several reasons that cause enterprises to fail, such as uncertainties in the economy and a marked decrease in consumer spending.

If you are an entrepreneur or plan to be one, it is important to keep up-to-date with the latest developments and news in business. Here are some valuable trends in finance for 2018 that you should be aware of.

Millennials Become a Powerful Economic Force

Generation Y, more popularly known as the millennial generation, makes up a significant portion of the workforce, and it is expected to become even more influential in the year 2018. According to a study by Accenture, millennials spend an estimated $600 billion every year. This figure is forecasted to hit $1.4 trillion in 2020.

In addition, millennials are also paving the way for the so-called sharing economy, which can be seen in the meteoric rise of companies like Uber and Airbnb. Understanding the traits and behaviors of millennials is very critical for businesses that want to thrive in the coming years. Small-business owners will need to focus on being receptive to the needs of this market and adapt their approaches to the unique personalities of millennials.

The Digital Banking Industry Will Expand

As previously mentioned, millennials are going to play an important role in the economy. One of the traits that millennials are known for is their need to transact business in a fast and efficient way. This extends to their banking habits as well.

Simply put, millennials want to bank whenever they want to and wherever they want to. Furthermore, it is estimated that, by 2020, users of digital banking will reach 2 billion. Last but not the least, millennials are heavily reliant on artificial intelligence and technology to help them in managing their finances.

In fact, a study by CSpace found that only as little as 39 percent of millennials rely on financial advice from a traditional professional working in a traditional financial institution. This is a significant challenge for traditional banks, and one of their response is to adopt a more radical banking model and integrate digital technology in many of their approaches to conducting business.

Alternative Funding Platforms Will Gain Popularity

One of the big challenges that small businesses face is finding investors who will fund their company. Business loans are certainly a viable option, but many banks are not very eager to lend money to start-ups or small enterprises. In recent years, alternative funding platforms like crowdfunding have made it possible for small businesses to overcome this hurdle.

Crowdfunding works by letting individuals and organizations find financial support from people all over the world using crowdfunding websites. This type of funding is expected to rise in 2018 and will certainly open opportunities for small businesses to find a reliable and convenient access to capital.

More Partnerships Fintech Firms Will Be Formed

Fintech companies will find a very important role to play in the midst of all the technology-driven changes taking place in 2018. Fintech is a relatively new industry that distinctively applies technology to the back-end operations of established financial institutions and consumer markets.

As more and more people opt for efficient and convenient transactions, expect more business to embrace internet technology and tap into fintech firms to help them either overhaul their processes or improve their current system.

The Cannabis Industry Will Continue to Grow

The year 2018 was a historic year for marijuana enthusiasts as more states legalized the plant. California, in particular, moved to legalize the recreational use of cannabis on January 1, 2018.

Cannabis is already a multibillion-dollar industry in the United States. The Golden State is the fifth largest economy in the world and, in fact, is bigger than the United Kingdom, so its move will significantly alter the industry.

According to New Frontier Data, the marijuana market in the US is estimated to reach a record high of $25 billion in the year 2025. This burgeoning industry is certainly going to play an important role in the economy as well as legislation. Already, a number of companies have chosen to remove weed from the list of illegal substances in the workplace and no longer require employees to pass a marijuana drug test.

Data-Driven Approaches Will Dominate

More and more businesses have recognized the power of data and adopted data-driven approaches in their operations. This trend will continue to rise in 2018 as data analytics takes on unprecedented forms.

For example, identity resolution has made it possible for marketers to gain an in-depth understanding of their consumers. Identity resolution works by generating and combining information about a consumer from the different multiple social media channels and devices they use.

Identity resolution forms a unique 360-degree view of the consumer, thereby giving marketers invaluable insights on how to create even more personalized experiences. Data is not just for big corporations, and small businesses will benefit greatly from harnessing the power of data.

Cryptocurrencies Will Show More Developments

Bitcoin has been causing waves in the finance industry in recent years. In 2018, trends in cryptocurrency will be even more visible as more businesses recognize its potential and risks and find ways to address them.

Although Bitcoin and the blockchain show great promise, they still face many significant hurdles, including being inefficient in terms of energy consumption, processing time, and storage usage. This year, many Bitcoin supporters will seek to address these challenges.

Bitcoin and blockchain will continue to influence the way business is conducted. Cryptocurrency trends will continue to push forward-thinking organizations to improve their security and find ways to use cryptocurrencies as a competitive edge to their business.