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Small Business Digest


  
    February 2017
 
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Small Business Outlook For 2015

Unlike the previous five year turns, 2015 promises significant pluses for small businesses.

Perhaps the most important is reduced energy costs. With oil trading at half the cost just six months ago two trends are already apparent.

While the energy component varies by industrial sector, economists expect a significant energy cost savings for most enterprises. Information Strategies, Inc. (ISI) estimates an average 7% cost reduction for most small businesses in all sectors.

The second trend comes from lower fuel costs for consumers. Economists predict the average American family will save $430 in the first six months of 2015. These savings will most likely be spent on non-basic items in the form of consumer goods and personal services which are purchased although smaller enterprises.

Adding to the plus side of year, interest rates are expected to remain low while the ability to borrow is expanding for small businesses. Increasingly, alternative lending sources for small businesses are coming online and ISI predicts this year will see a 15% gain in market share for these lenders. Large banks are expected to increase their lending to small businesses but not reach pre-recession levels in 2015.

Contributing to the brightening picture are signs of returning consumer confidence in the future which usually results in increased spending. However. this is not expected to have a significant impact until later in the year. Next year’s holiday shopping may be the most robust in six years.

As cloud services and smarter use of the Internet drive down costs and expands their sales opportunities, small businesses are expected to further benefit from the online revolution. This trend could fundamentally change how even the smallest enterprise conducts day-to-day operations.

At the least, it means average organizational management costs will decline in 2015 adding to profits.

After seven years of federal gridlock and despite media fears, Washington may at last be focusing on some of the key issues facing smaller enterprises. Legislation to ease some of the more egregious regulatory and tax impediments for small businesses may be addressed in the new Congress.

The average cost of regulatory compliance has gone up each of last five years. The coming year may see a decline in these costs.

In particular, some of the tax uncertainty for small business owners may be eased, if Republicans fulfill their post-election promises.

Finally, new business start-ups are expected to increase over 2014, which bodes well for the B2B marketplace, a prime driver for many smaller businesses.

There are clouds on the horizon but trends seem to be in place for a good year for small businesses.


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