NEW YORK — What stresses small business owners the most? Our conversations with them and the research we come across suggest it’s a lack of clarity. Well, there’s no small business crystal ball — at least one we are aware of — but if one existed, here’s a look at what it might reveal for 2014:
Help from Washington?
Look for a more conciliatory attitude in Congress. Lawmakers’ collaboration on a budget deal in December is a sign that they’ll cooperate on issues affecting small business, including tax reform, says Barbara Kasoff, president of Women Impacting Public Policy, a group that advocates for women and minorities in business. The deadlock over the budget and government shutdown in 2013 hurt small businesses including federal contractors.
The safest bet? An increase in a tax code provision that allows businesses to deduct up-front rather than depreciate the cost of equipment like vehicles, computers and machinery. Without action by Congress, the 2014 deduction is $25,000, down from $500,000 in 2013. With many companies still struggling and congressional elections in November, lawmakers may boost it.
A tepid economic recovery will continue to frustrate small-company owners, says Susan Woodward, an economist with Sand Hill Econometrics in Menlo Park, Calif. Small retailers are struggling even as consumers spend more. Growth in online shopping and a tendency for people to patronize stores owned by big companies (choosing Starbucks rather than the local coffee shop, for example) will continue to be a challenge.
Small businesses shouldn’t expect goldmines from government contracting. Agencies will spend carefully. Some small federal contractors reported even before the $85 billion in spending cuts in 2013 that agencies had been cutting back. Contractors will prospect for business with companies to make up for budget cuts in 2013 and to diversify their revenue streams.
A sustained surge in construction of single-family homes could be a game changer, Woodward says. Growth in housing spills over to manufacturers, retailers and other businesses.