Our Economic Roller Coaster Ride!
Are you confused about the economy and how it’s affecting your small business? If so, you’re not alone! I was reading some articles the other day; one was about the economic upturns and the other about the downturns. I don’t know about you, but I don’t always know whether I should be happy or sad! I feel it’s important we know both sides to get a better understanding of what’s really going on.
Let’s begin with the ups, because the ups are always better than the downs. According to a quick poll by the International Federation of Accountants’ SMP Committee, small and midsized accounting practices indicated that increasingly fewer of their small business clients are burdened by economic uncertainty. This is where you stand up and shout, “HOORAY!!”
The International Auditing and Assurance Standards Board’s 2013 Auditor Reporting Exposure Draft’s (try saying that five times fast!) poll shed light on the value of different services and projections for their relative growth. SMP (Small and Mid-size Practices) Committee chair Giancarlo Attolini said in a statement, “Over the last few years, economic uncertainty has cast a shadow over SMPs and their clients. Improving conditions in the small business sector, a barometer for economic growth, are a terrific sign for SMP professionals and for the economy at large. As their clients prepare for growth, SMPs will, in turn, also help propel the local economies in which they operate.”
Now, for the downs, hold on to your seats! Just for a minute, forget the Congressional Budget Office’s economic models and take a real-world look at how the Affordable Care Act (ACA) is affecting jobs; go talk to the small business owners. The National Small Business Association did just that, the answers it got weren’t encouraging or pretty. Despite the promises of this new health care bill being affordable, it does not appear to be driving down the cost of insurance for small businesses, according to NSBA’s survey of 780 small business owners. More than 90 percent reported that their premiums went up for their health plans during their most recent renewal. One in four reported that premiums jumped by more than 20 percent: OUCH!
Now, I know some of you are thinking, “Well, that’s nothing new”. You are correct, two-thirds of small businesses experienced a 20 percent or more increase within the past five years. However, health care reform was supposed to offer better deals on health insurance for small businesses. Sadly, that’s not been the experience for most small businesses.
Here’s the part where I’m going to throw numbers at you; let me know if I need to slow down. Small businesses paid an average of $1,121 a month per employee for individual coverage, during their most recent renewal. In 2009 it was $590: that was the year before the ACA was enacted. Shocked? I was. That equates to an 90% increase!
Small businesses are expecting insurance to keep getting more expensive in the coming years. Now, that being said, it follows that small businesses will create fewer jobs than they would if health insurance weren’t so darn tootin’ expensive. Todd McCracken, President of NSBA said, “These costs have real-world implications. One-third of small businesses held off on hiring a new employee, and more than half say they held off on salary increases for employees.” To compound the down side of the economic outlook, the survey also found that health care reform is leading 15 percent of small businesses to subcontract more projects instead of hiring additional employees and 14 percent are hiring more part-time employees instead of adding full-time staff.
So, is our economic outlook good, bad, indifferent…just plain confused? My opinion is that it is a combination of good and bad, much the same as it always has been. Opportunities are available for small businesses. It takes an open mind and clear vision to see them and a bit of fortitude to capitalize on them. Also, who was it that said we need to continually reinvent ourselves? I believe one of the many who have talked about reinventing oneself is Reid Hoffman, founder and creator of LinkedIn, who said, “You have to be constantly reinventing yourself and investing in the future.” My belief is that we not only have to reinvent ourselves, but also how we do business.
Share your thoughts on this? I’d love to hear from you!
There is so much more to read about this topic! If you would like to see a full article go here: http://www.bizjournals.com/cincinnati/news/news-wire/2014/02/06/survey-obamacare-keeping-many-small.html?page=2
Accounting Today has even more information and details. http://www.accountingtoday.com/news/Small-Business-Accountants-See-Improving-Economy-69546-1.html
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