Modern business technology has not only made life easier for the small business owner, it’s completely altered the economy altogether. Because these technological advancements can seemingly occur overnight, it’s imperative that you stay as current as possible with the latest money trends. Not only do they impact your business, it ensures that you maintain a competitive edge and remain relevant in your industry.
With that in mind, here are ten of the more important trends that will affect small business owners in the very near future.
1. Peer-to-Peer Lending and Crowdfunding Will Replace Small Business Banks
Don’t expect traditional banking institutions to vanish completely overnight. After all, even peer-to-peer lending companies like Lending Club are currently in a rough spot. However, small business owners now have multiple options to secure lending or financing for their business. Whether they’re starting a new venture or need a loan to grow business owners can now easily turn to P2P lending or crowdfunding, as opposed to banks that previously denied them a loan or have high interest rates.
Having these alternatives will make small business banks irrelevant.
2. Technology Costs Will Drop
Technology will not only continue to advance, prices will also fall. Russ Fujioka and Gene Marks write in Entrepreneur that “Previously, businesses had to pay a lot of money for data and analytics.” Because these type of automation tools were so expensive, only large enterprises could afford to use them. “However, as the cost of tech falls small businesses have gained access to data, analytics and automation platforms once only affordable for big business.”
Fujioka and Marks conclude, “Today, a small business can tell where their interest is coming from and answer queries which could only be executed using millions of dollars worth of infrastructure.”
3. Interest Rates Will Rise
“For the first time in 7 years, the Federal Reserve feels confident enough about the American economy that it’s willing to raise interest rates” writes Jared Hecht for Inc.com. “In order to encourage as much employment and healthy borrowing as possible, the Fed has recently kept interest rates low–near zero, in fact–but its recent hike upwards indicates that the central bank believes our economy is now in a stronger position.”
Hecht argues that since small businesses are prospering, the higher interest rates shouldn’t be too much of a burden. In fact, it may influence banks to slowly increase leading. However, peer-to-peer lenders “might also need to raise rates in order to stay competitive for their investors when compared to other possible investments.” This will either “entice investors to stick around, since they would get bigger returns on their investments… Or they could get scared off, if they believed that more business owners might default on their loans.”
4. Purchasing or Renting Real Estate May Become Challenging
This money trend has us worrying.Between rising interest rates, an increase in home prices thanks to higher demand, and limited supply, it may be more difficult for first time buyers to afford property. Fortunately, long-term mortgages should only rise gradually.
There’s also a shortage in rental properties. Despite prices near or at a 30 year low, rental prices are expected to rise faster than inflation.
5. There Will Be a Decrease in Trade Pacts
“With new free trade pacts, small business will do more marketing overseas” claims Susan Wilson Solovic in the Huffington Post. “There will be a boom in lower-cost ways to get product lines and services represented overseas using local reps, for example. The Internet makes it easier to find and work with these foreign-based companies.”
6. More Businesses Will Put on the Market
Kimberly Deas, business transfer specialist, Murphy Business & Financial Services, tells Business News Daily that “With the economic recovery well underway, more and more businesses are in the zone for being sold, and with an aging baby boomer population, more business owners will be looking to sell.”
Deas adds, “This could flood the market with businesses for sale and drastically devalue the businesses. If a business owner is thinking about selling, they should consider doing it sooner [rather] than later. The longer they wait, the more competition there will be.”
7. The Sharing Economy Will Continue to Grow
If you’re looking to diverse your investments, consider purchasing stocks with HomeAway, which is similar to Airbnb except that it focuses more on high-end rentals. For small business owners, though, companies like Uber, Lyft, or Airbnb could continue to cut into your sales if your business is involved with the transportation or hospitality industries.
If so, you may have to innovate your products or services if you want to remain relevant.
8. Fines For Not Having Medical Insurance Will Increase
The penalty for individuals who do not have health insurance will increase from 2% of household income to 2.5%. If you offer health insurance to your employees, you must do so within 90 days of their employment start date.
The Affordable Care Act does provide incentives though for employers who offer wellness programs. According to HealthCare.gov, “The maximum reward to employers using a wellness program that’s contingent on employee health has increased from 20% to 30% of the cost of health coverage. The maximum reward for programs designed to prevent or reduce tobacco use is 50%.”
9. Government Policies Will Affect Minimum Wage, Overtime, Sick-Leave, and Funding
“Policies will change. Small businesses will not be prepared to handle the compliance regulations associated with minimum wage, overtime calculations and paid sick-leave policy. The regulations behind these policies are coming fast and furiously, as most small businesses do not have dedicated HR staff to ensure compliance with certainty” says Howard Tarnoff, SVP of customer success, Ceridian.
The government dictates some significant money trends. Even if we don’t see these policy changes this year, small business owners needs to be aware of the U.S. Department of Labor’s (DOL) proposed changes to overtime regulations, changes regarding mandatory sick leave, and the the passing and enforcement of minimum-wage increases.
Another trend that small business owners should be aware of is the JOBS Act: Title III. This will allow businesses to raise investments through crowdfunding.
10. The Payments Industry Will Continue to Rapidly Evolve
It’s no secret that technology has been quickly changing the way that we send and receive payments. In particular, expect to see the payment industry to change thanks to;
- Mobile and frictionless payments becoming more accepted thanks to companies like Apple and Samsung.
- A boost in subscription-based business models.
- More retailers adapting to EMV.
- Growing interest in cryptocurrency run on the blockchain.
- Access to affordable tech will create more financial inclusion for global merchants.
Because of these changes, we can also expect to see the entire banking and financial infrastructure to be updated.
