Nine Big Questions Main Street Will Be Asking in 2014by
Ask nine small business owners what they’re hoping for in 2014, and the answer will likely be something along the lines of a better economy and stronger sales. Ask them how to achieve that end, and you’ll likely get nine different answers. The list of questions below aren’t the only questions that will shape life on Main Street next year, but they’re among the biggest that people involved with small companies will be keeping on their radar.
Will Main Street start to get some certainty on health care?
We’re often told that uncertainty regarding the effects of the Affordable Care Act has been a drag on small business growth. The rocky launch of Obamacare’s online health care exchanges led the White House to announce last week that it will ease rules requiring all Americans to carry health insurance beginning next year. The employer mandate and the federal Small Business Health Options Program (SHOP) have also suffered setbacks, though an early look at New Mexico’s SHOP exchange showed promise for a few. It should be noted that small business owners have been dealing with hard-to-predict health-care costs since before the ACA. The bungled rollout means many small business owners and self-employed workers won’t have to embrace Obamacare until 2015.
Will President Obama ever get around to naming a new SBA chief?
Karen Mills announced her resignation as head of the Small Business Administration in February and left the agency at the end of August. That means President Obama has had either four or 10 months to name a replacement, depending on how you count. Critics have used the prolonged vacancy to argue that Main Street is a low priority for the Obama Administration. Putting political jabs (and conspiracy theories) aside, it would be nice to know why the process is taking so long. Meanwhile, the SBA appeared to do a good job preparing for and recovering from the government shutdown under acting boss Jeanne Hulit. Does the absence of a Senate-confirmed SBA chief even matter?
Can anyone solve equity crowdfunding’s “quality” predicament?
Investor advocates worry that when equity crowdfunding becomes legal, the best startups will continue to raise money from angel investors and VC funds. That would make crowdfunding even more risky for investors because they’d be buying shares in second- and third-tier companies that are more likely to go bust. The investor-protection crowd argues the “quality” problem demonstrates the need for stricter regulation. Proponents of crowdfunding, on the other hand, worry that rules intended to protect investors will scare off high-quality startups. If portals can’t offer promising companies, investors will lose money—and ultimately, interest. Here’s hoping that rule-makers can resolve the tension eventually. For all the difficulties in making equity crowdfunding work, it has the potential to be a boon to startups such as those owned by women, often ignored by traditional investors.
Will alternative lending get less expensive?
Bank lending to small businesses is still down since the financial crisis—and for reasons that have been well-explored: As banks pulled back, alternative lenders stepped into the void, offering more accessible credit, though often at astronomical rates. The U.S. market for merchant cash advances, a particularly expensive form of credit, was about $1 billion in 2013 (PDF), compared to $30 billion in SBA loans that were issued this year. Increasingly, new players in the alternative lending market have sought to distinguish themselves by charging less-expensive rates. Peer-to-peer lenders may finally make an impact next year on the small business credit market, offering an additional source of non-bank loans with more affordable rates. Alternatives are always going to be more expensive than government-backed loans; perhaps competition will push rates down for businesses that get turned down by banks.
Will the online sales tax finally pass Congress? And if so, will compliance be as easy and cheap for small businesses as proponents of the bill claim?
Recreational marijuana will be legal in Washington State and Colorado. That’s going to mean sales for retailers and growers—but also for a host of other businesses that finance, supply, and service the legalized-pot industry. Will a marijuana gold rush change state economies?