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Beginning to see the glass as half empty, small business owners are more worried about a recession than they were a few years ago, the 2013 Small Business Economic Forecast from Pepperdine University’s Graziadio School of Business and Management reports. Conducted in partnership with Dun & Bradstreet Credibility Corp., the annual study of more than 2,700 small business owners found that more than one-third (36.2 percent) of small business owners fear a recession this year. That’s substantially up from the 28.4 percent who were worried about a recession in 2011.
In addition, small business owners are less optimistic about growth prospects than last year. In early 2012, 54 percent said they were more or somewhat more confident than they were in 2011. By contrast, in early 2013, just 45 percent reported feeling more or somewhat more confident about their business’s growth prospects for the coming year.
“Small business owners, who are optimistic by nature, are still taking a highly cautious view of the economy and their personal business prospects,” said associate professor of finance Dr. John Paglia, founding director of the Pepperdine Private Capital Markets Project. “The ‘foxhole mentality’ among small business owners to dig in and stay low has the potential to slow the still fragile recovery.”
What’s holding small business owners back from growth? Four in 10 say government regulations–specifically, taxes and healthcare–are the biggest impediment to overall growth in the GDP, compared to 32 percent who said so in 2012. Four in ten (42 percent) of respondents also believe the Affordable Care Act will make their companies’ healthcare costs rise; as a result, 33 percent plan to make changes to their coverage that will negatively affect employees.
Probably because they’re feeling cautious, fewer small business owners are planning to give their staff raises (39 percent) than were planning to do so in early 2012 (41 percent). This is despite the fact that employees’ take-home salaries have been hurt by the end of the payroll tax cut in early 2013. Of course, it could also be because small business owners themselves aren’t seeing any increase in pay—61 percent say they are not making more than the year before.
Two bright spots on the horizon are the housing market, with small business owners overall feeling that housing prices will rise 3 percent this year, and unemployment, with small business owners predicting that the national unemployment rate will decline to 8 percent.
You can view the full 2013 Small Business Economic Forecast at http://bschool.pepperdine.edu/accesscapital.
Image by Flickr user Cali4Beach (Creative Commons)Google+
By Maria Valdez Haubrich
Has your small business already adopted a mobile payment processing option such as Square? Are you scared about the technology issues mobile payments present? Or are you eagerly waiting to see what kinds of mobile payments your customers demand? If your answer is “all of the above,” you fit right in with the predominant attitudes in the retail industry.
When it comes to mobile payments, it seems the retail industry is stuck in the middle—believing that mobile payments will be key to success in the very near future, but worried about implementation and concerned about choosing a solution that will keep customers happy. In fact, a new report on mobile payments from RSR Research says “uncertainty” about mobile payment technology was a top business challenge for 76 percent of retailers polled.
Overall, retailers are bullish on mobile payments. Even though just 1 percent say that mobile payments are currently the dominant form of payment in their business, almost 1 in 5 (19 percent) believe mobile payments will be their dominant form of payment in three years. The smaller retailers were more likely to believe mobile payment would be important to them. These retailers currently take most of their payments in cash, the use of which they believe will shrink as mobile options grow. (Retailers also think that debit cards will become increasingly important, while credit cards will be less so.)
Where are retailers looking for the mobile payment options of tomorrow? They’re not counting on traditional payment services providers to develop these solutions. Instead, they expect Google, PayPal and other consumer technology companies to take the lead in this arena. In fact, 63 percent say that traditional payment services providers are actually impeding progress toward mobile payments becoming ubiquitous. Many of them also expressed concerns about what types of fees such providers would charge for mobile payments.
Retailers are also following the lead of consumers. Many are waiting to see if rapid consumer adoption of smartphones for browsing and shopping will translate into similar adoption of smartphone payment technologies and “digital wallets.” Retailers are wary of taking a wrong step, and very concerned about the customer experience. More than half (51 percent) say that a consolidated, cross-channel payment processing service is crucial to their adoption.
Overall, the RSR report paints a picture of retailers poised and ready to jump on mobile payments, but hanging back until payment provider options shake out and a clear winner emerges.
Image by Flickr user Ron Bennetts (Creative Commons)Google+
As tax season approaches, you’re probably wondering why you never got around to using a cloud accounting system to keep track of your business finances. Even if you use an accountant, your business will benefit from cloud accounting. Connect your online bank accounts, business credit cards and stay on top of your cash flow with a simple dashboard. Since it’s cloud-based, you can access your books from anywhere. Each entry goes to your profit and loss statement and balance sheets automatically, and everything can then be shared with your business accountant online.Google+
How do your small business’s spending habits stack up against those of other entrepreneurs nationwide? PEX Card’s first SMB (Small and Midsized Businesses) Benchmark Expense Survey, conducted in December, has some good and bad news about small business expenses.
First, the bad news: PEX Card found that more than 60 percent of businesses expect their spending to increase in 2013. Among businesses with 25 to 49 employees, that figure was even higher (70 percent). Now, the good news: For more than one-third of businesses, spending is going up because of expenses associated with business growth.
Overall, PEX found, the average SMB spends nearly $800K annually in the categories that were itemized in the survey. Expenses vary widely, though, depending on the size of the company. For those companies with fewer than 10 employees, average expenses were $378K; for companies with over 25 employees, the average was $1.7M.
What’s taking the biggest bite out of small business budgets?
Staffing expenses (which include sales staff compensation and incentives, healthcare coverage and the cost of workers’ compensation insurance) accounted for 50 percent of itemized expenses overall. Those companies with 10 to 24 employees spent the biggest proportion of their expenses on staffing (57 percent).
Where were the biggest cost increases?
More than 50 percent of respondents said that fuel, taxes and licenses increased the most year-over-year.
What are the costs attributed to growth?
The more businesses grew, the more they spent on fuel and insurance. However, the more businesses grew, the less they spent on taxes and licenses, sales and marketing, and office supplies and equipment.
How much is spent on marketing and sales?
This was a fairly large portion of expenses, representing 30 percent of expenses overall. Companies with fewer than 10 employees spent proportionally more on this category (34 percent), while the largest companies (those with 25 or more employees) spent the least (26 percent). However, those companies spent 50 percent of their sales and marketing budget on advertising, significantly higher than the average of 34 percent.
Equipment and office supply expense accounted for 15 percent of expenses overall, but for the smallest companies, it accounted for 20 percent of expenses. Insurance accounted for 14 percent of total expenses; in this case, the largest companies were likely to pay proportionally more for insurance.
See the full survey results to compare how your business stacks up with others like you.
Image by Flickr user Tax Credits (Creative Commons)Google+
Getting a five-star rating from CNET is nothing to be humble about. NolaPro is a cloud-based accounting system that includes invoicing, order tracking and inventory tools. Not just for accounting, NolaPro also has extensive CRM capabilities and is customizable for your business. NolaPro can also act as an employee time clock, do your payroll and integrate with other Web apps. It’s also available in a desktop app. You can try the NolaPro tool for free for 30 days; after that, subscription rates start at $9.99 a month.Google+
Keeping up on government regulations affecting small business can be overwhelming for any business owner. In addition, it’s important to know what new regulations are being considered so you can make your voice heard. The House Committee on Small Business has created Small Biz Reg Watch, a website to help business owners stay informed about regulatory proposals that are open for comment and that may have a significant economic impact on small businesses. The Committee wants business owners to get involved by letting the government know how its proposals will impact them. The page lists current proposals and their impact on small business and provides a place to post your comment.
If you and multiple employees of your company all travel for business, you need an organized management system to keep track of all travel plans and expenses for the company. TripIt for Teams was developed to allow small and midsized businesses to centrally manage employee travel, keep everyone connected on the road, and provide insight into the company’s travel spending. Travel planners know who’s travelling when, where they’re staying, and how much the trip will cost. The TripIt for Teams travel calendar makes it easy for the whole team to see when and where their colleagues are traveling and have access to confirmation numbers, maps, directions and other trip details anywhere at any time.Google+
By Karen Axelton
If you are a home-based business owner but have never claimed the home office tax deduction because you don’t want to deal with the complex reporting and calculation that’s required—or because you’re afraid making a mistake could trigger an IRS audit—you can breathe a little easier this April. That’s because the IRS has announced a simplified, optional method for claiming the home office deduction.
The new optional deduction allows taxpayers to claim $5 per square foot of home office space up to a maximum of 300 square feet, or $1,500 per year. Currently, small businesses and others claiming a home office deduction have to complete Form 8829, a 43-line form that includes complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers who want to claim the optional deduction instead will complete a much simpler form.
The IRS estimates the change will affect more than 3.4 million taxpayers (the number who claimed the home office deduction in tax year 2010, the most recent year for which the agency has data) and will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours per year.
Here are a few things to be aware of in deciding whether you want to claim the traditional home office deduction or the optional simplified verson:
- Homeowners using the simplified option cannot depreciate the portion of their home used for business. However, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions do not have to be allocated between personal and business use, which the traditional method requires.
- Since the optional deduction has a cap of $1,500, if your home office is significantly bigger than 300 square feet or if you have extremely high utility bills or other costs, you may want to stick with the traditional method of claiming deductions.
- No matter which method you use, you still have to meet the current restrictions regarding the home office deduction. For example, the home office must still be used regularly and exclusively for business, not for personal use.
The new simplified option is available starting with the 2013 return most taxpayers file early in 2014. For more details on the new option, visit the IRS website to read Revenue Procedure 2013-13.
Image by Flickr user james.thompson (Creative Commons)Google+