I hate that many of my blogs lately have not been more positive, but I hear so many business owners sounding nervous (an understatement) about the future of their businesses, but they don’t really have any rational basis for feeling that way. I hope in some way some of my more pessimistic blogs (like today) will help small business owners put the entire ongoing financial crisis in better perspective so they can take proactive steps to protect their businesses.
A few weeks ago, I was asked to make some predictions for 2009 and how small businesses in
Credit conditions for small businesses and consumers shows no sign of loosening for 2009. Without credit, small businesses simply cannot operate with any meaningful efficiency.
Currently the Federal Deposit Insurance Corporation (FDIC) has 170 banks on the troubled bank watch list. Many of these banks will fail in the first half of 2009. Many of the failed banks will be in South Florida and
Home foreclosures are continuing at high rates throughout the
Jobless rate hit 14 year high (6.5%) in October 2008. Average jobless rate predicted to be approximately 8.0% nationwide for 2009. Real jobless rate including those unemployed who have exhausted benefits and aren’t counted will reach average of 10% for 2009.
Retail businesses have had a terrible year and we will see many retailers and even entire shopping centers and malls close their doors during the first quarter of 2009. Many well known retailers will be included in either bankruptcy or complete closings. Many have already filed bankruptcy including
Ending 2008, there will be two kinds of retailers – those that survived, and those that didn’t. Only Wal-Mart will come out as a clear winner.
Small businesses that distribute goods or provide services to automakers, transportation, retail, and service industry businesses will have the toughest time next to retail.
Health care costs for small businesses and individuals will continue to rise. For 2006 health care costs averaged a staggering 16% of the U.S. GDP. As boomers get older, this percentage will increase, putting tremendous pressure on employers and health care recipients alike. Many small businesses will simply not be able to afford to contribute to health care costs for their employees in 2009.
With all these contributing factors impacting the economy, expect the number of personal and business bankruptcies to rise to over 2 million in 2009 which will be an all time high number. Previously, the most bankruptcies in any single year (2004) were 1.6 million.
I hate to make these predictions, but I see the bottom line is one of survival for 2009 for small businesses being affected by the economy.