Prepare For 2020

December 2019 SMB’s yearend activity should focus on preparations for 2020.

The story of 2019 has been written.  For most, the year was a success. 

Information Strategies Inc. surveys show that 2019 was more successful for most SMBs than any other year in this decade.

While many economists see storm clouds approaching, most small business soundings are still upbeat.

According to the Q4 2019 CNBC/SurveyMonkey Small Business Survey Small Business Confidence moves higher on trade optimism with a surprise spike in tech optimism.

The number of small business owners who expect technological change will have positive effects on their business jumped to 48% in Q4, up from 41% in Q3.

With the year coming to a close, there are several avenues open to SMBs to lock in revenue growth and profits during the next 12 months.

Among them are:

• Banks are offering more generous terms for loans and lines of credit.  One reason is that more credit unions have started to process business credit programs.  Take advantage of available credit for expansion.

• While importing goods from China and other Asian nations may be more costly due to President Trump’s ongoing tariff negotiations, other countries have tried to offer alternative sourcing venues, at favorable rates.  Also, freight rates are still in declining mode and transportation costs have plummeted for even small SMBs.

• Energy costs in most states have declined and alternative providers are still offering lower cost power packages.  While subsides for solar projects are becoming scarcer, there are still available in many states.

• Labor costs are expected to take a major jump in 2020 and some economists say they should be factored into any planning effort.  Many states have enacted higher minimum wage floors to take effect in 2020.  Automation can be added, often with a 6 month payback.

• Along with labor costs, healthcare and retirement benefits will be in higher focus in 2020 as the election cycle plays out.  Average per employee healthcare insurance is expected to jump 7% in 2020.  Consider using gig workers and/or joining a benefits management firm to minimize labor labors.

• Many SMBs are reluctant to raise prices while inflation and interest rates remain low.  However, announcing rate increases for spring or summer can be an effective tool to encourage buyers to purchase early in the year, a normal slack time for many SMBs.

• The shift to more online selling, whether to consumers, businesses, governments, means greater investments will be needed in 2020 to increase sales.  One scary statistic, 25% of smaller businesses still do not have a website.  Consider getting outsource help to have a favorable online presence and the ability to transact.

• SMBs will need to devote more funding to onboarding, training, retaining staff in 2020 as the labor market continues to be very tight for qualified employees.  Ask employees, vendors and local education institutes for hiring recommendations.  Consider also asking retirees to work part time as well as stay-at-home mothers and gig workers.

• Finally, with the aging out of older leaders, many SMBs are facing the problem of what to do with their successful companies.  Many owners have found their children and grandchildren do not want to go into the family enterprise.  Experts expect this dilemma to become a major factor for many SMBs in 2020.  Consider finding experts in this area to begin planning for the orderly sale of the business.

December is a good month along with the holiday cheer to spend time thinking about next year and the opportunities those 366 days represent.