Economy: Many SMB leaders do not believe the economy is as strong as national leaders argue. The last two months of economic data supports this view. The all-important holiday sales season is upon us and the signals are mixed as to whether it will positive for the New Year.
Interest Rates: If the Federal Reserve in early December follows through with its threatened rate hike, it will be the first in a long period. SMBs, like many smaller enterprises, are turning to more non-traditional lenders to finance growth. This move will force them further into new lending territory.
Energy Costs: The bright spot for many companies, energy costs have fallen dramatically this year. But it has also brought pain to many producers. They in turn have cut back with suppliers and labor with the result that many SMBs are suffering.
Inflation: Another bright spot has been inflation. Low inflation has held down prices but surveys indicate this may not be possible in 2016.
Wage Pressures: Recent contract settlements in the auto industry indicates the nation’s wage earners want more from the profit pie. Add in the movement for higher minimum wages, and there is real fear by SMBs of wage increases that will force price hikes.
Technology Growth: Clearly in the last five years technology has enabled new companies to appear and older companies to reduce costs. This trend will continue in 2016 but it is doubtful it will reduce pressure for price hikes.
Disruptive Changes: The taxi and hotel industries are but two of the industrial sectors affected by major changes in the way they are accessed and payed. The payment industry is also changing and with it the ability of individuals to settle transactions. This is just the beginning a massive tsunami that will engulf the SMB world.
Ownership Demographic Shifts: One major change is in who owns SMBs. Many are guided by individuals in their 60s and 70s who have not been able to get new generations involved or who have not found someone willing to pay a reasonable price. This will be a major issue in 2016 as tax laws also change. Another large group of SMBs are owned by crowd-funders.
JoAnn Laing is Chairperson and CMO of Information Strategies, Inc.