Next year will be critical for every small business. Don’t believe me? Check out my predictions for 2013—that's a 92 percent accuracy rate. My only error was thinking the stock market would rise just 7 percent, whereas it's up over 20 percent year to date. Here's what to keep your eye on for next year.
1. The stock market will cool. After recovering from the Great Recession and reaching record highs, there's nowhere to go but down. I don’t predict a crash, but a 10 percent loss by the end of 2014 is in order.
What it means to small business: As the year progresses, customers will become more fearful about a new recession since the stock market is usually a leading indicator. This will be the time to slow investments in new areas and instead focus on growing existing customers.
2. Long-term interest rates will rise very slowly. This will be a function of continued nervousness about the stability of the economy and the midterm Congressional elections. However, short-term rates will remain low.
What it means to small business: For those who have the financial resources to borrow, expansion capital will still be cheap. This also means that angel and venture capital investors will continue to be attracted to the startup sector as a way to increase their returns.
3. Inflation makes a comeback. Inflation will top 3 percent next year after being at 2 percent or less in 2013. Also, look for increases in food prices as weather patterns stay unpredictable.
What it means to small business: Prices have been kept artificially low as a result of the fear of losing customers during the Great Recession. This is the year to finally raise those prices.
4. The health insurance requirement of the Affordable Care Act (Obamacare) will be delayed. While small-business owners already received a reprieve for the health insurance mandate, individuals will not be required to have insurance on January 1, 2014. Delays will be caused by bugs in the health exchanges being resolved so slowly.
What it means to small business: This delay will allow a testing of the exchanges by every company. Should a small business carry its own health insurance plan or will it be less expensive to send all its employees to the exchanges? This decision will vary by state. Small-business owners will also look to hire part-time and freelance workers to avoid the health-care requirement.
5. Unemployment will not dip. A rate of 7 percent becomes the new normal.
What it means to small business: Small businesses will continue to have a choice to hire great people at reasonable salaries. Owners will also be able to hire skilled part-time or freelance workers who haven't been able to find full-time jobs.
6. Same sex marriage brings new markets. As more states approve same sex marriage, it will attract more consumers to the wedding and entertainment markets.
What it means to small business: More people start companies in this market or invest resources to expand the businesses they already have.
7. Same day delivery becomes mandatory. With companies like Walmart and Amazon leading the way, consumers start to expect a same day delivery option.
8. Limited growth capital is the new normal. Capital from crowdfunding will dry up this year. Little progress will be made in legislative regulations to angel financing through the bogged down JumpStart Our Business StartUp.
What it means to small business: Crowdfunding will continue to be a source of capital only for those entrepreneurs that already have good networks and want to raise an average of $10,000. Owners will need to find cash inside their own businesses or use family and friends as resources.
9. The Internet will monitor everything. Sensors can already track home temperature and smoke alarms. Consumers are attaching sensors to their bodies (Fitbit and Nike Fuelband). Look for the obsession of monitoring everything and analyzing via smartphones to become even greater. There will be more machines talking directly to each other than to people. This includes cars, refrigerators and heart monitors.
What it means to small business: Economist Intelligence Unit (EIU) expects that 30 billion to 50 billion so-called "smart objects" will exist by 2020. This will open up new opportunities to provide and analyze data to offer up to hungry consumers.
10. Social accountability takes a front seat. Every business now becomes accountable to its community and its employees.
What it means for small business: Companies are finding the value of transparency. It not only creates trust internally among staff, but it becomes a key reason that customers will buy from you.
What are your predictions for 2014? How do you think my predictions will pan out? Share with the community in the comments.
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