The small business market is likely to shift dramatically throughout 2016. Because this is an election year, there will probably be technological changes as well as macroeconomic conditions that largely influence the US small business market. In a year like this, it is absolutely necessary for small business owners to pay attention to the business trends that are occurring. It may seem hard to know what to focus on, but here are five trends to be on the lookout for.
Our labor force will shift due to an on-demand economy.
Self employment is on the rise, which means that America’s small businesses are contributing less to the nation’s GDP. In fact, small business’ contribution to the GDP decreased from 48.3 percent to 44.6 percent between 2002 and 2012.
One large reason for this is the rise of the freelancing workforce, which has been fueled by the number of platforms that connect people with work. If you want someone to give you a ride, clean your house, or even design a logo for you, there’s an app or service for that. This is how on-demand economy has begun to thrive, thus creating a large change in the labor force.
Due to these changes, competition for employees has increased. Additionally, there is now a national conversation regarding minimum wages, overtime rules, and paid time off, leading these topics to be brought up as key election issues.
Throughout 2016, we can expect to technology work to streamline the freelancing market. This could increase the productivity within freelancing.
In terms of policies, not much will change.
During an election year, there will probably be less to worry about when it comes to policy changes. For example, ObamaCare and tax reform are not likely to change, since election years are typically dead policy years. Most people are hoping to keep things steady so that the candidate they support will be elected. It is possible that in January of 2017 we will see policy changes, but this of course depends on who enters the office.
Funds are tightening.
During presidential election years, there aren’t many major moves made in U.S. financial markets. It doesn’t appear that small business are going to gain more access to capital. To make matters worse, the high cost of healthcare and employee wages is likely to weigh on the small business sector.
There is one big question that affects small businesses in terms of funds. Will the Fed raise rates more? If they do, capital with tighten and borrowing will become more costly. As a result, the economy would probably soften if this was the case.
If interest rates go up, this will present a number of investments that will be more attractive than the stock market. This affects business owners since a number of business owners have savings invested in the stock market. This also indicates that this is a good time to borrow, since interest rates will be low.
Since there will not be any significant legislation this year, the economy is expected to grow at a moderate pace of between 2 percent and 3 percent in 2016. Macro-economic forces will probably have a bigger impact on the US economy this year.
Life will be easier thanks to the falling cost of technology.
In the past, business were required to pay a lot for data and analytics. Only large businesses could afford automation platforms. But as the cost of tech falls, this is all changing. Data, analytics and automation platforms that were once only affordable to big enterprise are now more accessible to small businesses. Small businesses are now able to figure out where their interest is coming from thanks to this now affordable technology.
Businesses are realizing the power of the cloud.
The cloud has been talked about for a while, but in 2016, cloud technology is expected to fully flourish. More and more companies are moving to cloud technologies and there is likely to be more integration between software players. Numerous applications that are currently separate are expected to build strong ties with one another. This increasing trend will occur due to the younger generation and their constant drive for innovation.
The cloud is able to break barriers between nations and states, thus creating global opportunities that were previously unavailable to small businesses. It is not much easier to open and run a business.
At the moment, it has been estimated that around 70 percent of US small businesses that could be using an accounting platform, are not currently using one. As millennials enter the workforce, this is beginning to shift. As small businesses use technology to streamline their operations, they will become more productive.
If you own a small business, be sure that you are up on these trends in the economy. In a year during which an election is approaching, technology is growing, and young professionals are pushing for innovation, there is a lot to keep an eye on. Of course, nobody can be sure exactly what will happen throughout the rest of 2016, but it is exciting to see what changes are in store.