What concerns small business operators above all? Our consultations with them indicate it’s a relative measure of insecurity about what the near future holds. Well, lacking a small business fortune teller, if one existed, here’s a peek at what 2014 might look like, reading our own tea leaves:
How About Help from Lawmakers?
We expect to see a more appeasing attitude in Congress. Many say that lawmakers’ cooperation on the national budget deal in December is a strong indication that they’ll collaborate on matters impacting on small business, including more taxation reform.
Expect an increase in a tax code provision (Section 179) that permits businesses to deduct up-front rather than depreciate over time the cost of equipment like vehicles, computers, software and machinery. Barring action by Congress, the 2014 deduction is $25,000, down from $500,000 in 2013. With many companies still struggling and congressional elections in November, Congress will likely extend it.
Skilled labor market challenges
Expect small companies to strain to place skilled employee for positions like high-tech manufacturing. It’s not a new challenge. Surveys throughout 2013, from the National Federation of Independent Business, showed that businesses had vacant positions they couldn’t fill.
Finding more capital
Businesses eager to borrow from a bank or raise capital on the Internet may get their desire.
New liberal rules governing how cash-strapped businesses solicit money from individual investors via the Web may soon be completed after a long wait. The SEC published them in October, nearly a year later than anticipated. Websites are reading for the day when the relaxed rules go into effect.
Financial institutions will continue to increase their lending to small businesses. In 2013 small business lending was up two percent.
The percentage of small businesses that use cloud computing is likely to keep increasing, but owners may experience some pain as cloud providers begin increasing their fees. Last year, over 40 percent of small businesses utilized the cloud, storing data and software applications offsite and retrieving them via the Web. That’s up from five percent in just 36 months, according to two recent NSBA surveys.
There’s still plenty of room for small businesses to increase their social media reach in 2014. More than a 25% don’t use it at all, according to the NSBA.
Continued lackluster recovery
A lukewarm economic recovery will likely continue to challenge small-business owners. Small retailers are challenged even as consumers spend more. Continued growth in Internet e-commerce shopping and a proclivity for consumers to patronize big brands (choosing Starbucks rather than the local coffee shop, for example) will continue to be a challenge.
Small businesses should not expect gold rush business from government contracting. Agencies will spend more carefully than ever.
A hoped for extended surge of single-family home building could be a game shifter. Growth in housing flows over to manufacturing, retailing and other industries.
2014 will provide small business owners more opportunity to understand the complexities of the new health care laws. Insurance agents and benefits advisors have stated that it would take a good 12 months of the law being in effect for owners to realize the impact on their revenues. Many small businesses avoided the law’s requirements by renewing their 2013 policies before the year ended. They’ll need to get up to speed before renewing in 2014.