Small Business Matters

 Mike Dunn | Author | Helping Others with Insightful Information

Small businesses are North America’s, and the world’s, best chance to bring the economy back and reduce unemployment. Per my blog post in July, “Alarming Job Posting Data for July 2013“, companies are only trying to hire people that can have a direct and immediate impact on top line revenue. Specifically, Careerbuilder.com has 39 categories of jobs they post. In July of 2013, a whopping 58.8% of all the jobs posted were in just  5 categories: sales, customer service, retail, marketing and business development. The commonality is these are all revenue producing job titles. In other words, all the non-revenue producing jobs were posted were 41.2% of the job postings. This is scary for the job seekers that do not have job experience in those areas. There will be millions of people competing for 80,000+ jobs in the other 34 job categories. The good news is year over year retail seasonally adjusted sales (2013/2012)  increased in July by 0.2%. The bad news is that 2013 only increased by 0.2% as compared to a bad 2011/2012.

5 Reasons Small Businesses are Moving Cautiously

5. Inflation.

Unless a small business is positioned correctly, inflation can drive up their costs faster then their revenue.

4. Unemployment.

Who is going to buy their products and services? Where is the growth coming from? Foreclosures are slowing but they are still happening. People that have lost homes due to unemployment, and have most likely lost their savings and do not have access to credit. Hence, that accounts for more people that want but cannot pay for products or services. A buyer must be willing AND able to buy. When demand for consumer products go down, demands reductions in industrial products and services follows the same trend. As they cut back, employers react to the lessening demands. That further exacerbates the macro-economic problem.

3. Regulation and Tax costs.

Many Federal, State and local regulations cost a business just a little more. Regulators are adding just a little more in regulated costs to help the greater good per their directives. The problem is hundreds of regulators seem to be doing this. Many “just a little bits” can turn into a huge cost increase for a small business. In addition, many state and local governments have raised sales tax and property tax rates eating even more of the consumer’s disposable income.

2. Access to Capital.

Banks are sitting on funds and not lending. So small businesses need to be more reliant on their retained earnings to fund projects and raising their internal rate of return (IRR). So they are thinking twice

1. Healthcare Cost Uncertainty.

Millions of people are now just getting letters from their healthcare providers saying they will be shutting down operations on 12/31/13. I’ve talked with HeathCare brokers this week and they tell me the new ObamaCare plan starts on 1/1/14 and they still:

• The HealthCare Brokers still don’t have Pricing as of 8/14/13
• The HealthCare Brokers still don’t know if they will be selling ObamaCare or not
• The HealthCare Brokers still don’t know the Coverage Options
• The Small Businesses still don’t know how to make some workers part time and who to make full time
• The Small Businesses still don’t know the loaded cost of hiring a new position. They used to multiply the salary of an employee by 1.3 to get the loaded cost. In 2014 is that factor 1.5 or 2.0,  thus making hiring low wage and low producing workers cost prohibitive. This so sad and a true unintended consequence of our current situation
• Health Care Brokers are going to Health Care Broker Conferences and they don’t have any answers.
• The problem is no one knows. For a small business looking at their business checking accounts this is scary with these issues looming.

Since the Small Businesses don’t know how much their costs will be forced to choose to opt out of coverage for their employees and pay the penalty or buy the increased mandatory coverage. Which will be the better option or will the costs put them out of business?