A lot of experts and pundits are making their predictions for 2016. These are guesses, at best. But small business owners like me don't want guesses. We want certainty. So I'm not going to make predictions for next year. I'm going to list 6 things that are definitely, absolutely, guaranteed going to happen next year. These are not guesses or hunches. They are certainties. And if you're running a small business you should be making your plans right now.
Healthcare costs are definitely going to increase.
You know your healthcare costs are starting to get out of control when your doctor asks you to bring your own People magazine to the waiting room. This is not good. And it's not getting better. The big healthcare companies have already submitted their rate requests to their respective state authorities and depending in which state your business operates you will be seeing some hefty rises. According to this report from USA Today: "The average rate increase in 30 of the largest insurance markets -- which cover about 60% of the consumers in the 38 states -- is 6.3% for second lowest-cost silver plan, which is considered the benchmark plan used to determine tax credits. Across all markets in the 37 states using Healthcare.gov for 2015, the cost of the benchmark plan will increase an average of 7.5%." If you're unlucky to be living in one of the states listed in this Kauffman table you'll see your rates rise more than 15% (Sorry, Montana...your big sky comes with a cost).
There are options. Among them are switching to a high deductible plan coupled with Health Savings Accounts. Or, like so many others, ask your employees to contribute more. But you'll need to do something. Smart business owners are already making their moves.
Wages are definitely going to increase.
In 2016, the Fair Labor Standards Board will increase the exempt overtime wages for salaried employees from $24,000 to $50,440. Higher minimum wages will go into effect at many cities and states around the country and these wages will push up the compensation floor for all your employees. If you're doing work for the Federal government you'll be required, in 2017, to provide a minimum number (7) of paid days off per year. If you're using independent contractors, now under much more scrutiny, you'll need to re-evaluate why and how and maybe move some of them onto your payroll. Unions will continue to organize faster under new rules that passed in 2015. And inflation will continue to slowly tick up, as it's been doing, putting more pressure on overall wages. All of this will definitely happen. And for God's sake, don't even ask about LinkedIn's time off policy because it'll just depress you.
As you enter the new year, you'll need to huddle with your accountant, list all of your employees and determine how your costs will be impacted in 2016 from any or all of the above certainties that will happen. Maybe it's now time to invest in more technologies. Move people to part-time. Outsource more. Or raise prices if you can.
Interest expense will definitely increase.
As I write this, it seems that the dark side of The Force is about to awaken again. And Fed has increased interest rates for the first time since 2008. And I'm not sure what's worse! A re-awakening of the Force's dark side has to be in response to the three lousy Star Wars prequels, of course. The Fed's response is due to a (slowly) growing economy and decreased unemployment. As the economy continues to (slowly) grow in 2016 there's likely to be another small increase in interest rates. I wouldn't expect these increases to have a major impact on your business. But an expense is an expense and the reality is that the days of zero interest rates are history. Going forward, big companies will actually have to pay banks whenever they borrow money and small companies like mine will be paying more. Higher interest rates will impact the stock market too which has become so risky I'd feel more comfortable if my money was managed by a FIFA executive. Budget for higher interest expense in 2016 - that's a certainty.
There will definitely be no big legislation from Washington.
Congress, and I am not kidding here, will be in session a total of 111 days in 2016. Now, I'm not a super mathematician, but if I deduct that from 365 days in a year my calculator tells me that Congress will not be in session for 254 days. That's 36 weeks. Repeat: Congress will not be in session in 2016 for 36 weeks. That's 9 months. Wait...what? Yes, this is true. Now that doesn't mean our elected representatives aren't working. There are plenty of dinners, political fundraisers and sporting events to attend. And it's not as if the government is wasting our money, like spending it on "$1.1 million in parties and conferences billed to the U.S. Agency for International Development by a contractor, $207,297 of State Department funding that accidentally backed an anti-American film, and $456,669 on walls in an Afghan training facility that melted in the rain."
The good news? No Congress means no big legislation from DC. And my dad, ardent right-wing Republican that he was, always believed that the less DC does, the better it is for business. You can argue that point. But you can't argue that there will be less uncertainty generated from rules and regulations in 2016. Use that as an opportunity and to get your house in order. Take a breather. Because big changes will be coming. That's because...
There will definitely be a new President.
In November, we'll elect a new President. That President will either be Hillary Clinton or a yet-to-be-named Republican. And here's what's certain: if your business prospered under President Obama, and you supported the majority of his policies and want to see many of them continued then you will lean towards Mrs. Clinton. If you had a different experience these past eight years then you will probably be looking for a change in leadership and the Republicans are certainly offering different options, supporting policies that reach from repealing the Affordable Care Act to deporting Aziz Ansari from this country forever. I will personally take a stand here and say that I'm a big fan of Ansari and am waiting for the next season of his excellent new Netflix show so I will not support any candidate that calls for his deportation. But I will listen to more reasonable plans and ideas for growing our country's economy and improving my business. And so should you.
Finally, aliens will again attack earth.
But don't worry. I guarantee you that Jeff Goldblum will figure something out. Again.