As 2015 comes to a close, it's the best time to reflect on the passing year and take a second look at established plans for 2016. Does the forecast for the new year simply rollover from the previous year or is there a renewed sense of purpose, determination and drive?
With a global changing landscape, in terms of economics, politics, policy and security, 2016 will prove to pose perhaps the most impact for franchisees than in years past. This year will lay the foundation for changes and adaptations for future strategies and business planning. More than ever, businesses will have to focus on stability because a lot of these changes will have long-term effects and as always, the goal is to be prepared ahead of time.
Here are four developments that franchisee owners will want to watch out for in 2016, as it could have tremendous impact on their businesses:
The 2016 Election
The 2016 election will take over and companies will have to compete to get the attention from consumers. Experts are predicting that this election cycle will have the highest and most consistent political TV spending in U.S. history, so businesses will have a hard time cutting through the clutter.
If you are buying local television and radio, it's smart to secure your plan at the beginning of the year so you can lock the best rates. You will need to take a proactive approach to media strategy in order to secure good advertising deals ahead of time.
More importantly, a new President will be taking office next year and with that, comes a lot of changes that can potentially impact small businesses. And, in your local communities, those who you elect to state and local offices also can have a big impact in policy and ultimately in your business. Make sure you take the time to evaluate the candidates and their stance on locally owned businesses.
Interest Rates
After a nine-year interval between interest rate rises, the U.S. Federal Reserve has raised interest rates by a quarter of a percentage point, from 0.25% to 0.5%.
The unemployment rate is now at 5%, a normal level. Falling oil and gas prices, in addition to tame inflation, has also created moderate household savings that may be translating into improving creditworthiness.
But, as interest rates rise, it will definitely affect business planning, especially if you don't have a fixed loan rate. Higher loan payments may lead to a reduction in profitability, which can make securing future funding more difficult.
Additionally, higher interest rates will affect customer spending and saving due to less disposable income and it also means limited cash flow for your business.
As interest rates remain low and everything else seems stable, now is the time for businesses to invest in expansion, whether opening new locations or improving their current locations. Consider securing a revolving credit line now to ensure you can take advantage of today's rates.
Affordable Healthcare
Individual health insurance is an appealing option that benefits small business employees because of its ability to be flexible, personalized, accessible and affordable -- especially when the employer offers a monthly allowance to defray monthly premium expenses.
"Today's numbers on national health spending show that as millions more Americans gained coverage in 2014, healthcare spending growth stayed well below the trend seen prior to the Affordable Care Act," said Richard Frank, an assistant secretary at the Department of Health and Human Services.
The truth is that it will take a while before we truly know what the long-term effects of Obamacare will be on businesses as there are still many changes that the White House is trying to implement.
Business owners that provide employees with healthcare options and invest in them--will definitely have more satisfied employees, which will help retain them and in turn, help have lower team member turnover.
Minimum Wage
Fourteen states will be raising their minimum wages in 2016, according to an analysis of state laws by Yannet Lathrop of the National Employment Law Project. This change will have a big impact on small businesses across the country, which employ nearly half of America's private sector workforce.
As franchise owners, your workforce may be comprised of skilled professionals and several employees earning minimum wage. Whether you believe that raising the minimum wage will be good for your business because it will retain employees and boost the economy; or you may have to pass along the higher wages to consumers, look for new operational efficiencies or simply cut hours and reduce hiring--you must have a plan in place and be prepared.
As a franchisee, there will always be multiple factors that will impact the business, positively and negatively, what's important it to understand these challenges. 2016 will be a year of many changes that will affect both businesses and consumers. The important thing is that franchisees remain informed and try to plan as much as possible for the year ahead.