Gazing into the Crystal Ball: What’s Ahead for U.S. Businesses? 2014-2016Many business owners were hard-pressed during the recession to formulate any kind of strategic plan, since they often faced challenges they’d never encountered before. Now that the economy seems to be finally rebounding, can we all return to “business as usual” and run our companies like we did before the bottom fell out? Probably not, since so many changes have taken place in the meanwhile.
So, in formulating new strategic plans to adapt to current conditions, it’s best to find out all you can about current economic trends, as well as experts’ predictions for the next few years. To get you started, here are four factors that will affect U.S. businesses in 2014-2016.Good news: growth. Bad news: slow growth Given current economic realities, not even Pollyanna would predict a quick return to the growth U.S. businesses enjoyed before the recession started in December 2007. However, experts have noticed signs of a recovering economy that are expected to continue for at least the next few years. The Bureau of Labor Statistics projects that Gross Domestic Product (GDP) will increase by an average of 2.6 percent annually from 2012 to 20221, and unemployment is expected to hover around 6.5 to 7.0 percent for the next couple of years.
Business spending is also expected to increase as optimism about the economy returns. According to Kiplinger’s 2014 Economic Outlook, “Spending since the Great Recession ended has focused on new and updated equipment rather than on expanding plants, partly because the slump in business caused by the downturn left many businesses with idled plants and excess capacity. A significant share of that slack has now been taken up, and vacancies in both office and industrial space are on the decline, which will lead to an increase of around 5% in spending in 2014 and a modest acceleration in following years as demand increases.”2Affording the Affordable Care Act Early in 2014, the Obama administration announced that employers with 50 to 99 workers have until 2016 before they risk a federal penalty for not offering health insurance to full-time workers (defined as those working 30 hours or more). The deadline was originally set for January 2014, but difficulties with the rollout of the Affordable Care Act caused it to be pushed forward. Between now and 2016, businesses will be challenged, not only with keeping track of federal regulations and deadlines that seem to be constantly changing, but also with finding ways to cover additional expenses due to the ACA. Besides the cost of providing health insurance for employees who may not currently be covered, businesses will also have to budget for the cost of setting up systems to deal with the extra paperwork required for compliance with the ACA.
Globalization presents opportunities The U.S. GDP currently represents about 20 percent of the world’s economy, which means that the other 80 percent is located outside our borders. As the world becomes more interconnected through trade agreements, logistics and technology, American businesses will have more chances in the near future to both buy and sell overseas. China’s economy is expected to equal the United States’ by 2019 or 2020, and China presents plenty of opportunity for American companies willing to overcome the bureaucratic hurdles of breaking into this huge market.
A New York Times article by Adam Davidson gives an example of the possibilities available in the emerging global marketplace3: It will become increasingly harder to sell smart phones to Americans in the next couple of years because so many of them already have phones with the features they need, so it makes sense for companies selling smart phones and apps to turn to markets in developing countries where there is still plenty of demand. This same principle applies to many other industries.Adapting to “technology creep” Now that so many people in the U.S. are tied to their digital devices 24/7, businesses are looking for new ways to engage with them -- through social media, through customer relationship management (CRM) software, and through local-based mobile marketing, which targets potential clients whose digital devices are near their place of business. The rapid rise of new platforms like Pinterest and Instagram shows just how quickly social media is evolving, and businesses will be hard-pressed to keep up with trends in the ever-changing digital marketplace.
The only constant The ancient Greek philosopher Heraclitus was famously quoted as saying, “The only constant in life is change,” and this is even truer now than it was in 500 B.C. Since the world is continually evolving around us, crystal-gazing -- while sometimes useful -- is not a foolproof method of preparing for the future. Business people must pay close attention to changes in the economy and in their industry if they are to find ways to adapt and succeed.