Ask an Expert: Big trends in small business, part 2

— -- Last week, I began my annual look at the top ten trends shaping small business. We wrap it up this week with a look at the Top 5.

No. 5: The China syndrome: It has often been said that the 20th Century was the American Century and the 21st looks to be the Chinese Century. If the past eight years are any indication, that may indeed prove to be true. But whether it is or not, there is no doubt that what is going on half-way around the globe is having, and will continue to have, a profound effect on you and your small business.

Growing at a rate of about 10% per year over the past quarter-century, with a population well over 1 billion and about 20% of the world's population, China's capitalist revoltion touches everything:• High gasoline prices negatively affecting your business? Blame China. The country's thirst for oil to fuel its economic expansion means you should not expect to see gas much below $3 a gallon again.• Worried about global warming? China is no small reason. "China's pollution problem, like the speed and scale of its rise as an economic power, has shattered all precedents" — NY Times, Aug. 25, 2007.• Concerned that your best customers may outsource what you do to a cheaper source? Bingo! China. According to the Asia Times last year, "After becoming the world's workshop for mostly labor-intensive products, China has unveiled a plan to… [challenge India and] create 1,000 large-scale international service-outsourcing enterprises."

The China Factor is something we all have to learn to deal with.

No. 4: It's the economy, stupid, part deux: 2008 looks to be a year dominated by the ripple effects of the sub-prime mortgage crisis: A sluggish economy and probably a recession. For the small business, the effects are substantial:• Falling housing prices, rising interest rates, and increased mortgage defaults means it will be significantly more difficult for small businesses to tap home equity to fuel start-ups, growth, or bailouts.• This credit squeeze also means getting a regular business loan will be tougher.• And the overall belt-tightening means doing business all around will be more of a challenge.