Challenges Ahead for Small Businesses

With the new year upon us, it time to get going and look forward to what is in store. Here are some of the biggest challenges small business owners will face in 2014. Read on to wise-up and make plans to overcome these potential stumbling blocks.

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1. Funding

While there are signs that the tight credit markets for small companies are loosening up, the loosening is happening slowly. In November 2013 big banks approved 17.4% of small-business loans which is up from 13.2% in 2012, small banks approved 49.7% 2013 versus 49.2% in 2012 according to Biz2Credit. While there is improvement in the percentage of loans approved, the improvement is minimal. Many business owners subsidize their businesses with personal savings or credit cards. In the past home equity has been tapped to help out as well but the housing market has not rebounded enough yet to make this a viable source for most business owners heading in to 2014.

On the bright side, the Securities and Exchange Commission is expected to lay down new rules, a provision of the Jumpstart Our Business Startups Act of 2012, that will allow small businesses to seek investors through what is known as crowd funding. Currently there are a variety of online crowd funding type websites; CrowdCube, Seedrs, SellaBand, Kickstarter to name a few.

2. Health Care

The good news is that small business owners were given a one year extension on the requirement that all businesses with 50+ full time employees to offer health insurance or pay a penalty. Unfortunately, other changes that are set to go into effect this year will likely increase costs for most employers, another of the upcoming challenges for small businesses.

Since insurers will no longer be able to set premiums for small-groups plans based on industry, health history or gender of their employees, rates will climb significantly to insure young, healthy employees. On the other hand, companies with older and less healthy employees will only face moderate increases in premiums.

Additionally, insurance companies will be charged a new annual fee this year. Insurance-experts expect that this fee will be passed on, in the form of higher premiums, to business owners and other consumers who buy their own policies.

3. Political Battles

Amid uncertainty over taxes, subsidies and other federal policies, it is dififcult for small business owners to know what to expect, even in the near future. Many small businesses are finding it difficult to grow when so much uncertainty lies ahead. Other issues like immigration reform and the move to increase federal minimum wage only lead to increased risks and challenges for small businesses nationwide.