Don’t let the Walmarts and Amazons take over the economy completely. There is still definitely a need for small business but in order to stay alive, sure to watch these trends as you can find yourself ahead of the curve if you do so properly. What do you think about these trends? Are these tips helpful for you?
Heading into an election year means many of the big influences on the US small business market will come from macro-economic conditions and technological changes being implemented in the sector.
Here are a few trends that bear watching over the next 12 months:
The on-demand economy is changing our labor force.
At a time when the level of self employment is rising, small businesses in America are contributing less to the nation’s GDP. Between 2002 and 2012, small businesses’ contribution to GDP fell from 48.3 percent to 44.6 percent. At the same time, the number of self-employed contractors grew to more than 14 percent of the labor market.
Driving this dynamic is the rise of the freelancing workforce fueled by a plethora of platforms connecting people with work, be it having someone design a logo for you, deliver ice cream, drive you down the street or clean your house. The on-demand economy is thriving.
The labor force has significantly changed. As an example, three years ago independent contracting site Upwork had 1.5 million freelancers registered, now they’re upwards of 10 million. With those demographic changes, there is now more competition for employees and it’s driving a conversation around minimum wages, paid time off and overtime rules which will all be key election issues. We’re going to hear a lot of discussion around these topics.
Over the next 12 months we’ll see technology help to streamline the freelancing marketplace, which should help boost productivity in this sector.
Not a lot is going to happen policy-wise.
Entering an election year means whatever fear you have about what policies may change in the government can likely be set aside. That means anything that’s going on with tax reform or ObamaCare, for example, isn’t likely to change in the near term as election years tend to be dead policy years. Everyone will be trying to steady the ship so their candidate is elected.
The Inauguration is Jan. 20, 2017, which is when you’ll see policy changes, if a Republican comes into office. The elections are up in the air right now. It’s way too early to predict what is going to happen. It’s fascinating to watch.
There aren’t a lot of major moves made in US financial markets during presidential election years. Access to capital doesn’t look like it’s going to get easier for small businesses, while the high cost of healthcare and employee wages will continue to weigh on the sector.
The big question is will the Fed raise rates more? If they do, access to capital will tighten, borrowing will become more expensive and the economy will probably soften.
If interest rates go up, there are going to be other investments which will be more attractive than the stock market. That’s important for business owners, as many have savings invested in the stock market. It also means now is a good time to borrow, while interest rates are low.
With no significant legislation expected to come out of Washington this year, there’s an expectation that the economy will continue to grow at a moderate pace in 2016 of between 2 percent to 3 percent. The biggest issue out of Washington is the government’s ability to repay its debt which has now been kicked back to March 2017.
This lack of movement locally drives home the idea that macro-economic forces will have a bigger impact on the US economy this year.
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