The Top 5 Business Concerns for 2018
The “___” Journey – a thought leadership presented by RedFusion Media
The Top 5 Business Concerns for 2018
Ron Burgess, RedFusion
Different surveys have different approaches, so we looked at six surveys and compared them to determine what are more likely the real top concerns for business owners. All surveys we used have been done in 2017; several are fresh in the last couple of months. See more about our methodology below.
Clearly the number one concern is little different than the last eight years of the very poor recovery of the Great Recession.
In the last year economic growth rates have surged to over 3 percent, and while still tentative, the hope is that this will continue and even increase. Because business owners may have not really seen a dramatic increase in the last six months they may believe we have actually turned the economic corner.
Independent businesses will see growth, and plenty are surging. However, business increases as always will not be even for all businesses. Additional pressure on smaller businesses will continue causing slow growth or even no growth.
Of note to many businesses is the Distribution Channel Disruption which is in full bloom this season. Also called the Amazon effect by some, the real issue is a revolution in digital buying along with improvements in delivery systems. Pressure is intense on retail, wholesale, and distribution businesses. Yet it is also affecting technology development, home delivery, industrial distribution channels, and branding strategies of products.
Growth can’t just be about increasing the marketing budget. It includes efficient delivery of great customer experiences, lower operating costs, the digital transformation, and product innovation.
So naturally smart business owners are still very concerned about growth. If not, they should be.
2. Hiring Good People
How to find them. Full employment means the employee is in the catbird seat. They can demand higher wages and better working conditions. Just as we emerge from a tough economy, many businesses don’t have the extra cash to compete.
However, money and benefits are not the only problems. The transformation to a millennial workforce is a concern to many businesses. Older owners and managers don’t know how to relate to them, and some of them lack a traditional work ethic.
Answers to good hiring practices also must include smarter hiring. Use of good pre-hiring tools and changes to hiring practices need to be learned by smaller businesses who have been used to “try and fire” instead of “screen and filter.”
A bad hire can cost as much as half a year’s salary. These are major decisions, yet few small- and medium-sized businesses know anything about modern hiring practices. They are often simply delegated to a trusted employee who knows even less about the subject. It is surprising how much time an owner can spend on a $20,000 machine compared to a $40,000 hire! The old interview first and pick the best one simply does not work reliably. Turn to professionals to assist on hiring and learning how to properly assess.
3. Government Regulations
Regulations are out of control. Thankfully, the new administration is a friend of business and uses a commonsense approach to remove hundreds of regulations that drive small and medium businesses crazy. The bureaucracy of administering tens of thousands of regulations is inconsistent, technical, and costly to business, sometimes with little improvement to what is being regulated. We hear individual stories regularly from clients; none want to pollute or ignore safety but always roll their eyes in conjunction with the last regulatory inspection. Inspectors are not necessarily the problem; the vast regulations are.
Other than the government removing regulations, the only real solution is to grow big enough to better deal with the cost of compliance.
4. Tax Policy
At this writing a new tax code exists. So many small businesses will benefit and put some much-needed cash in the bank. Learning the new rules will take some time, but we suspect this issue will drop off the top five list now.
5. Cash Flow
Always the lifeblood of business, maintaining a positive cash flow is always a top daily concern. Ironically growth will increase pressure on cash. As accounts receivable increase and use more cash, more investment and new employees are needed to keep up with growth. Managing cash wisely requires good financial and management accounting systems and carefully making new investments in assets and people.
One of the primary business movements, adopting the digital transformation, will need some investment but also if done right, reduces costs and provides higher cash flow. One client has successfully moved all customers to digital payment (credit card and bank transfers) and shut down credit accounts, for tens of thousands of customers, freeing up substantial cash. The online purchasing system facilitated the change and lowered administrative costs.
The digital transformation (if done well) also increases growth, assists with hiring, helps manage regulations, and deals with sales taxes in an efficient way across different political boundaries.
Other top concerns listed in the data set below, include health-care benefits, asset protection, and innovation. Growth wins here again as extra profit can help pay for benefits and innovation. We are not sure what to say about asset protection; see your lawyer and accountant and fix it.
A strong, growing economy is the best news since 2008, but it won’t mean sitting on your laurels. Competition has never been more difficult to understand. Traditional business has never seen such rapid disruption. With disruption from companies like Amazon, Uber, Google, Facebook, Twitter, AirBNB, and new technology of self-driving cars and trucks, drones, robots and artificial intelligence, more change will come — and soon.
It’s an opportunity for many businesses, just as it will put many out of business. Stay tuned.
Data and Methodology
RedFusion likes to look at multiple small business surveys to get a sense of what small business owners really see as important. Different studies have different emphases, so we combine them to get a better understanding. This year we selected 6 different studies. We scored only the top 4 or 5 issues (some had ten or more issue types). Then the particular issue had to have at least three answers (out of six) to make the top tier. All were current during 2017. Here are the results:
|Average for ranked||2017 State of Small Bus||Linfield Partners||Statistica||NFIB||Sm Bus Trends||Fast Company|
|Hiring key people||1.7||2||1||2|
|Second tier – less than three responses|
Below are links that drove the table above. Each of us should consider how we are going to address the issues business owners see as important for our area of expertise.
Show Notes from Podcast