Financial challenges facing small businesses in 2014
The economy is growing, but that growth has been slow - and it's got many small business owners understandably concerned about obstacles they'll have to face in the coming year.
Now the 2013 Christmas retail rush is over and 2014 is upon us, here are a few of the challenges US business owners will have to contend with:
Sluggish economic growth
The economy's growth took a hit in October when the government partially shut down. And while it's expected to pick up again in 2014, that boost may not give as much help to small businesses as they'd hope.
According to Kiplinger, the US GDP is expected to build momentum slowly, finally reaching a growth of 2.6 percent for 2014. Uncertainty about the economy's future is the main force keeping growth down. Congress only authorized funding to keep the government running until Jan. 15 and lifted the debt ceiling through Feb. 7.
That means another showdown over the debt ceiling is likely, and many businesses (especially those with government contracts) are spooked enough to put a temporary freeze on investment and hiring.
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Health care reform
While the ACA was meant to benefit small employers, many are still worried about the new law's effect on their bottom line. And the reality is, even the smallest employers will have to deal with a lot of new rules and reporting requirements - and, in some cases, new costs.
Without huge human resources departments slogging through the paperwork and making sense of new regulations, some small business owners may have to seek legal advice to ensure they're in compliance.
With these added costs, confusion, and uncertainty, the ACA is one of the biggest challenges to small business owners going into 2014.
Finally, the ever-changing face of marketing poses its own set of unique challenges to businesses of all sizes. Content marketing surged to the forefront of everyone's marketing strategy in 2013, thanks to shifts in Google's search algorithms. That trend looks to continue into 2014.
That focus on content means small business owners will have to produce (or find someone to produce) more content than ever before.
But it's not just the quantity of content that presents a challenge: All of these materials have to also deliver quality and value, or they're a wasted of effort. Outsourcing, creating an editorial calendar for the year, and repurposing content across channels can all help alleviate this burden.
Social media and mobile marketing have also become huge forces, and their importance is likely to grow in 2014 and beyond. Small businesses need to integrate these channels into their marketing plans, if they haven't already.
The 2014 outlook is cautiously optimistic, but that doesn't mean businesses won't have some serious obstacles to overcome.
Those who look ahead and build a strategy now to deal with those obstacles stand a good chance of seeing healthy growth into next year - and beyond.
About the author
Freelance blogger Angie Mansfield covers a variety of subjects for both consumers and small business owners, including marketing, social media, and personal finance management.
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.