|JOYCE M. ROSENBERG, AP Business Writer|
They're also heading into the new year with a lot of uncertainty. It's unlikely that negotiations in
That points to continued caution _ and perhaps slow hiring _ among the nation's small companies.
"Uncertainty is the bane of every small business," says
Small businesses aren't likely to get much encouragement from the economy. It's expected to grow by no more than 3 percent in 2013, according to the Federal Reserve. That's a moderate pace, better than the 1.7 percent that the economy grew during the first three quarters of 2012. But it's also far from robust.
Here's a look at some of the issues facing small businesses in the coming year:
Lawmakers are still haggling over what's called the fiscal cliff, the combination of billions of dollars in tax increases and budget cuts. Even if
"It almost surely won't be comprehensive enough that we won't be revisiting it next year," McCracken says. He's concerned that there'll be another fiscal cliff in six months _ which would mean more negotiations and more uncertainty.
Many small business owners are worried about their personal tax rates. Sole proprietors, partners and owners of what are called S corporations, all report the income from their businesses on their individual Form 1040 returns. That means their companies are in effect taxed at personal rates, which can be higher than corporate rates.
One of the most important tax provisions for small businesses, what's known as the Section 179 deduction, will shrink to
"It's a huge change for companies planning on making investments," McCracken says.
It's not known if
Health care has been another source of uncertainty for small business owners. The new year will bring some, but probably not all, of the answers to questions about how the new health care law will affect them. Many will have to devote some time to understanding the law _ or hire someone to help them do it.
"They'll have to get their arms around the law, look at their options, learn more about the exchanges," says
Under the law, companies with 50 or more employees will be required to provide affordable health care insurance for their employees starting
For some owners, that information will help them decide whether they will buy insurance, or whether they'll decide it's cheaper to not provide coverage and just pay the government a
Don't look for the small business lending climate to get easier in 2013. Owners who are uneasy about the economy, taxes and health care aren't expected to significantly increase their borrowing, especially as many have been paying down debt since the recession. But even those who are ready to borrow are expected to find it's still hard to get a loan. Bankers are unlikely to be more liberal in their lending policies.
Depressed lending levels may be with us well beyond 2013, says
The problem isn't just that banks are cautious about small business loans. Schrager notes that home equity loans, a traditional source of money for people starting or expanding a business, remain difficult to get, the result of the collapse in the mortgage market in 2008.
Small Business Majority's Arensmeyer is hopeful that a bill introduced in
But he's also not expecting major changes in lending next year.
"Sadly, I don't think we're going to increase our access to capital overnight," he says.
A trend that's expected to gain speed in 2013 is what's calling onshoring. That's the term for manufacturing that had been done overseas, and that's now taking place back in U.S. factories.
There are several reasons behind the trend. As
The rising cost of fuel, which has made transporting goods more expensive, is another factor in onshoring.
"Manufacturing in the U.S. is relatively more attractive than it has been in 20 years," Kaplan says.
SKILLED WORKER SHORTAGE
While companies' caution has weighed on the job market, many company owners who actually want to hire say it's hard to find workers to fill some positions.
It's becoming more difficult to find people who have the skills they need, these owners say. Many new manufacturing jobs require high-tech skills. They include positions at factories where computers are used to create products like airplane parts and machinery. And some require several years of training, says Shane, the
"You cannot take someone off the street to do it," Shane says.
Because of changing technology, owners are struggling to find qualified workers in 2013.
"There's a whole level of work that's going to require skills that weren't needed in traditional jobs," says Arensmeyer. He notes that community colleges around the country are offering courses that will help train workers to fill these jobs. But training takes time, and the demand for jobs may continue to outstrip the supply of qualified workers.
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