What kind of year will it be for small business? It may not matter if some experts on the Mayan Calendar are correct and the world ends on December 21, 2012. But as I look into the glow of my iPhone, here are my predictions and what it means for every small business owner.
1. There won't be a double dip recession. GDP in the U.S will continue to grow at a solid 2 percent or more as most sectors of the economy recover. The National Federation of Independent Business (NFIB) confidence index is up, but still well below average. What it means for small business: This “new normal” will become more comfortable for buyers and sellers, so expect more steady business growth than what has been seen in the past three years.
2. Health insurance rate increases will be less. As 2014 approaches and insurance companies need to become more competitive, prices will "only" rise about 5 percent. What it means for small business: More predictable health insurance costs and no need to pass a large increase on to employees. This could all change depending what the Supreme Court decides on the new health insurance laws.
3. Obama will win the election. The President will win another close election in November as the country chooses what they know vs. what they don’t know. What it means for small business: Income taxes will go up for many small business owners as the Bush tax cuts expire. The SBA will continue the policy of trickle down help to small business, but don’t expect any dramatic help this year.
4. Unemployment will improve slightly. The rate will hover around 8.5 percent, still way above past traditional post recession rates. What it means for small business: It will still be easy to find average people at good prices. The best employees will now demand a premium. As unemployment lingers, more people will have no choice but to be “self employed” where they either start a business or become “solopreneurs” with multiple jobs and freelance assignments.
5. Banks still won’t lend money. The FDIC will continue to manage the banking system for safety not for investing for growth. Banks will not be forced to increase their lending to small business beyond current rates. What it means for small business: Banks as a source of capital will play a minor role in 2012. Continue to look to customers and vendors for cash flow help. Credit card company mail offers are back and will provide a short term cash solution.
6. Sales will rise in most consumer sectors. After four years, frugality fatigue has hit consumers as demonstrated by the higher than expected holiday sales numbers. What it means for small business: The macro economy is no longer stopping any small business owner from growing their own business. It is time to give up that excuse.
7. Fuel prices will still rise. It remains an economic wild card based on world wide political changes in 2012 and how much profit big oil companies want to make. With threats from changes in Iran and North Korea, fuel prices are likely to go up, not down. What it means for small business: If prices rise substantially, gas prices again could eat growth for consumer demand in other products and services.
8. Stock market remains volatile. The future of sovereign debt in European countries such as Greece and Italy make this another wild card. What it means for small business: This issue will continue to rock the stock market and inject uncertainty worldwide. If the situation becomes worse, it could have a big psychological effect on the macro consumer market.
9. Housing market will remain flat. After four years, consumers can finally sell their house, but at a “market price.” What it means for small business: Financing businesses through home equity loans will not make a comeback this year. Home values remain low compared to outstanding loans and credit is only for the few that can qualify.
10. Social media sites grow but, Google+ becomes stagnant. Google+ stops growing as other sites adopt its most innovative features like circles and hangouts. More companies integrate their website with Facebook to grow interaction. What it means for small business: Social media becomes the way to get feedback on customer service and the channel to build loyalty with customers and prospects. There will be increased competition here from big brands who try to appear small and gain consumer trust.
11. The “Occupy” movement will expand online. Time magazine stated this was the year of the protestor. The Occupy movement will be the catch all for any type of consumer discontent. Recent movements have been able to rollback price increases from Bank of America and Verizon. What it means for small business: Your business will be called out if consumers become dissatisfied.
12. "Deal of the Day" website offers will slow. Fifty percent off has become the new full price. What it means for small business: Existing businesses will use these sparingly as they realize how much it affects their profit margin. Smart owners will use tools in conjunction with these sites to retain those "deal a day" customers and increase their lifetime value.
What do you predict for 2012 for small business?