It’s been a tough year for many small-business owners as they faced a soft economy, increased costs and confusion associated with the Affordable Care Act and the uncertainty of the federal government shutdown.
Ted Zoller, a professor at University of North Carolina’s Kenan-Flagler Business School professor and the director of the Center for Entrepreneurial Studies said he is “fairly optimistic” about 2014 for small-business owners.
An “entrepreneurs’ generation,” has emerged in recent years, and Zoller thinks the country will continue to see a rise in the founding of new companies. Entrepreneurship has been “democratized,” he said, and there are more tools available for founders to leverage capital, technology and legal information.
“A lot of barriers to starting a business have been dropped, and as a consequence more people are getting into business,” he said.
More businesses, however, translates into increased competition for customers, capital and employees. And new rules and regulations that will impact those businesses are expected in the new year.
In 2014, here’s what local and national small-business advocates said entrepreneurs should pay attention to:
Government Rules, Changes
Small-business owners need to stay abreast of changes and how they will impact them, advocates said.
“On the federal level, there are over 4,000 regulations in the pipeline to be implemented,” said Gregg Thompson, state director of the National Federation of Independent Business. “Some 800 of those 4,000 have a direct impact on the small-business community.”
Paychex, a small-business payroll, human resource, and benefits services provider, identified top federal regulatory issues that owners need to pay attention to in 2014.
First is the Affordable Care Act. Starting Jan. 1, most people will be required to carry insurance on themselves or face a tax. Businesses with less than 50 employees aren’t required to offer insurance, but those that do will need to comply with regulations that take effect in 2014.
“Although the reporting and enforcement of the Employer Shared Responsibility provision was delayed until 2015, employers should determine their applicable large employer status and ensure that appropriate tracking of employee hours begins in 2014,” the report states.
Owners should also watch for the debate surrounding the next increase in the federal debt limit in February and understand the impacts.
“One specific area of potential activity is the possible change in the current S-Corp structure to reduce an owner’s ability to scale back their payroll tax obligations,” the report states.
The U.S. Department of Labor will also likely continue its aggressive enforcement of misclassification of employees as independent contractors and minimum wage and overtime provisions, the report states.
Access to Capital
As the economy continues to improve, Zoller said, interest rates will slowly rise, but there will still likely be “extraordinarily favorable rates” in 2014.
As more companies open, the competition for capital will increase, but some businesses could have new ways to obtain capital.
“I’m excited about some of the changes occurring in terms of access to capital in the rule-making process for crowdfunding,” he said.
In October, the U.S. Securities and Exchange Commission sent out for public comment proposed rules that would allow companies to offer and sell securities through crowdfunding.
Zoller expects the new rules to be finalized in 2014.
“So that will create a whole new vehicle to raise money for small-business owners and entrepreneurs” he said.
Forty-two percent of small-business owners said that finding new customers is their top concern, according to a survey conducted by Internet marketing firm Yodle.
Jeremy Sisk, president of Xperience4Higher, a Durham small-business marketing firm, said owners need to establish an online presence, either with a website or through social media.
“And then also planning some form of digital ad spend, especially if they need customers immediately,” Sisk said.
The Yodle survey also found that 23 percent of owners don’t have a marketing budget and more than half spend less than $500.
Sisk said owners should set aside from 5 to 20 percent of their budget for marketing. In general, business-to-business firms can spend less, but business-to-consumer operations should consider spending more.
Some digital marketing shifts in 2014 include the continuing trend of social media platforms giving more weight to paid content versus organic activity, Sisk said.
Web searches will also continue to give more weight to sites that advertise and give advice or instructions.
“Now it’s all about the content you deliver and how well you’re sharing that content socially,” Sisk said. “If you are going to get out and play in the digital space you need to provide value beyond advertising.”
What to Watch for in 2014
Paychex identified top federal regulatory issues that owners need to watch in 2014.
- Federal government: Owners should pay attention to the debate on the next increase in the federal debt limit in February and understand how it will impact their businesses.
- Immigration and E-Verify: Comprehensive immigration reform has slowed down, but it remains on the radar of many. Proposals include mandatory E-Verify requirements for all employers and the potential release in 2014 of a new version of Form I-9.