• Cell phones – 500 million people in the world will have their first experience this year with cell phones (or mobile phones as they are known outside the United States). The Internet may not have been the Big Thing. Cell phones may be it, because more people have access to cell phones than to computers. And cell phones are taking on more functions and becoming smarter and more powerful. All cell phone circuitry can now be placed on a silicon chip.

  The question for small businesses is: “How do you take advantage of the widespread use of cell phones?” Services to help consumers and businesses leverage the technology will be prime areas of opportunity. Business opportunities can come from services such as helping users program cell phones better, transferring phone data from old phones to new ones, downloadable programs to increase the functionality of cell phones, etc.

• “Small environmental footprint” – America has always been about “bigger is better,” but the small footprint is about making your business, your home and your lifestyle more energy efficient. Eco-business will become a larger proportion of the economy: hybrid cars, for instance, and similar efficiency tools will grow. Auto service franchises (similar to Midas Muffler shops) to keep cars efficient could be an opportunity.

• Digital life – All things relating to the “digital life” are big and will get bigger. This is a powerful consumer trend with a significant business impact. Kodak, for instance, is now making more money from digital than from chemical (film). The Geek Squad is an example of a business that started out small that helps ordinary individuals deal with the digital life. Watts see plenty of room for business opportunities, and suggests entrepreneurs use holiday get togethers as opportunities to pick the brains of nieces, nephews, sons, daughters, for all things digital. Watch to see the digital devices they use (iPods and satellite radio, for instance) and what excites them.

• Global culture - The global culture will ramp up. But the global culture is not the same as the American culture exported overseas. Recognize that America is only one player in the development of the global culture. The global culture is a megatrend. It will be at its apex in 2008 when China hosts the Olympics. Business needs to be prepared for this blended culture that crosses country boundaries.

• Avocation to vocation - People increasingly are looking to turn their avocations — their interests and hobbies — into vocations, i.e., revenue-producing businesses and income streams. Side businesses and are more prevalent. People are seeing that it is possible to earn a living doing what they love most.

Finally, Watts spent some time explaining how to make use of trends. Trends, he says, “begin on the fringes” and move toward the mainstream as the Next Big Thing. Trends percolate like a pot on a burner, until they start getting hotter and start boiling. You need to be aware of trends early on, but you may not want act on them until they get close to being the next big thing.

Getting the timing right on a trend is critical. He recommends evaluating where in the cycle a trend is. “If a trend is at the end of the queue, it may be close to becoming the next big thing and ripe for action. However, if a trend is at the beginning of the queue, it may be something important to be aware and keep track of, but not necessarily to jump on right away. For instance, the hottest thing in the hospitality industry, on the fringe, is the pillow menu, where you can choose 50 different pillows. Marriott pays attention to this kind of very early trend, but doesn’t necessarily want to jump on it right away.”

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Here is what Watts says we should expect to see heat up in 2005 and beyond. Enterprising small businesses — and those that sell to small businesses — may just find new opportunities from these trends.

Watts says we can expect to see four macro-level trends that affect society in general and businesses of all sizes:

1. Rise of the Gray Hairs: One of the greatest demographic shifts in the United States ever will happen in 2005. Every single Baby Boomer will be 40 or over. He is one himself and as he points out, Baby Boomers tend to think they are the arbiters of taste and style. While that’s not necessarily true, the aging Baby Boom generation is a significant force.

2. Premium is In: There is a continued move toward premium-ness. People are trading up from standard level. Think of Honda cars with heated seats. Or premium cookies.

3. Trend of “Anti-trending”: Companies will leverage their greatest strengths, even in contrarian ways. Hardee’s new 1400 calorie hamburger is an example. Just as Wendy’s, McDonald’s and other fast food restaurants are seeing that fat could be the next tobacco in litigation, at same time they are offering 1400 calorie hamburgers.

4. Lock it Up: We will see more emphasis on safety and security. Keeping things safe will be at the top of people’s minds. This applies to online security as well as security in the physical world, and it applies to everything from services to goods.

As to trends specific to the small business market, Watts predicts we will see:

• Accelerated Online Sales: We are going to see an increase in the increase of buying online. Online shopping and technology has moved beyond the early adopters and the mainstream. It is now so well established it is drawing in the laggards. Watts drew an analogy from hearing a cell phone ringing during a church service. He said don’t assume it is just a rude person. It is probably someone in his 70′s who just purchased a cell phone for the first time who doesn’t yet realize what the rest of us have known for some time about cell phone etiquette.

• Homeopathic Medicine: The recent decision by Merck withdrawing the drug Vioxx has people concerned over whether traditional medicine has been tested properly. People are taking more preventative medicines. Using natural remedies and alternative remedies will gain ground.

• Low-impact Makes an Impact: Aging Baby Boomers are looking for exercise that is easier on them. A perfect example is low-impact exercise such as Tai Chi and yoga. But not all low impact exercise is Eastern. Low impact includes swimming, spinning, and other exercise not as hard on aging bodies.

• Image Enhancement: No, not our personal images. Watts sees the cult trend of photoshopping (manipulating images using Photoshop software) going mainstream. He sees a rise in the use of technology to have images appear exactly the way we want them to create a new “reality.” For instance, a blended family might eliminate a divorced spouse from a photo — even add in the new spouse.

• Technology Convergence: He sees bundling between broadband, wireless and other communications technologies. Voice, wireless, Tivo, messaging — they all will converge. You’ll retrieve cell phone messages through your computer, and computer messages through your cell phone.

• Return of Loyalty: After years of saying “loyalty is dead” and “consumers are fickle,” there are signs that when people find something that works, they stay with it. Expect to see the real power not only of service (i.e., how you provide something) but experience (i.e., how I feel about the result). This bodes well for the small business market — and Watts suggests small businesses think about customer loyalty strategies. He points to the example of the high-end Dorothy Lane grocery stores, and how they stopped advertising. They took their ad money and developed a loyalty award program: the top 10 shoppers get an all-expenses-paid trip to Hawaii.

And so what are the most telling trends among these? Watts suggests that the trend of anti-trending is one of the most interesting trends for small retailers and other small businesses to explore.

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We picked up on four major trends in Watts’ talk, to share with you:

• What a Small World! Watts says we should all get used to the concept of a global culture — not a U.S. culture, not a European culture, but a global one. Frenchmen go to a DisneyWorld for vacation and eat Big Macs. The world’s culture knows no geographic borders anymore.

• Information is King. “The value of information about goods and services eclipses the value of the goods and services themselves,” he says. Watts gave as an example certain collectible Campbell’s Soup labels. The soup cans cost far less than the labels, which are being sold on eBay for more than 10 times the price of the soup.

• Paradox — Get Used to the Word. As Watts pointed out, we will be seeing more paradoxes, where society moves in multiple different directions at the same time. For example, low carb diets are hot, at the same time cooking is hot. This is a reflection of the complexity of our world.

• Capitalism Rules and China Ascends.The last two decades have seen the rise of capitalism, affecting China greatly as that country’s economic system transforms and morphs. China now has a US$1 Trillion economy and is poised to be a major economic power moving forward.

Interesting talk. Both Dave and I can see how these four trends play out in the small business market. We’ve already identified a number of them as major trends affecting the small business market, over at our sister site, TrendTracker.

Globalism is a dominant trend affecting small businesses. Information, and the rise of intellectual property as a key business asset and differentiator, is something that has increased the ability of small business to compete. Paradoxes are obvious, especially in the way big companies keep getting bigger, while small businesses proliferate. And finally, capitalism has opened up untold opportunities for small businesses to start up and expand worldwide, and has awakened the sleeping giant, China.

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