2007 Outlook: Holding Steady
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Even in the midst of uneven and tepid economic growth, entrepreneurs remained optimistic at the end of 2006. Some 55%—the highest share in nearly three years—of small-business owners say they plan to hire one or more workers, and those who expect higher sales next year outnumber those who expect sales to be lower. Even the National Federation of Independent Business' optimism index climbed out of its summer slump.
But what will 2007 actually bring? We asked experts in a variety of fields to do a little soothsaying on subjects such as angel investing, health-care premiums, and the availability of credit. Here's what they see.
"Overall, premiums are going up. Small firms pay about the same as large firms for health insurance, but they get less, with policies that have higher deductibles and less coverage.
In 2007, insurers will be offering more consumer-driven plans to small employers. Brokers will talk about plans that are connected to health savings accounts, and some companies will go this way because there is the promise of lower costs."—Gary Claxton, Vice-president and director, Marketplace Project Kaiser Foundation
"We see traditional small businesses using e-commerce to supplement sales. That speaks to measured growth moving forward."—Ray Boggs, Vice-president, small and medium business research, IDC
ANGELS ANTE UP
"We see a fairly sustainable number for angel investments. We will probably see a slight uptick next year."—Jeffrey Sohl, Director, Center for Venture Research University of New Hampshire
THE URGE TO MERGE
"Next year, I look for 10% growth in volume. Bigger companies have a lot of cash and will want to use it to acquire smaller businesses. Initial public offerings are out of reach for many small businesses.... It is almost a merger or acquisition or nothing. The good news is that this is a very liquid market for profitable, stable small businesses."—Peter Falvey, Co-founder, Revolution Partners, a mergers-and-acquisitions advisory group in Boston
THE MONEY GAME
"Credit conditions will remain favorable in a low-interest rate environment, and this will be good for small businesses. What we are going to see is probably the slowing of the economy, coupled with weaker top-line revenue growth. Banks will be a little more careful in their lending."—Keith J. Leggett, Senior economist, American Bankers Assn.
By Jeremy Quittner