Planning for the Financial Trends of 2019 and Beyond


If you took a snapshot of the economic trends affecting small businesses at the time of the midterm elections in 2018, you’d feel pretty good. Business owners had just recorded the third-highest level ever in the 45-year history of the National Federation of Business’s (NFIB) Small Business Optimism Index.1

But a snapshot captures one moment in time. Savvy small business owners often track what kinds of financial or economic trends are taking shape today and could morph into forces able to determine the success or failure of their enterprise in the coming years and months. 

That can feel overwhelming. But even basic planning may help. Here are some potential economic headwinds to keep an eye out for, in both the short term and the longer haul. 

Interest rates

The Federal Reserve policymakers may keep raising interest rates to fight any inflationary pressures, pushing up borrowing costs. The worst-case scenario: lenders could become more conservative and limit access to less creditworthy customers. 

What you can do

Know what your borrowings are, and what you’re paying. Try to lock in any floating rate debt, so you know what those costs will be. Be upfront with your lenders if you think you’ll have trouble making payments on time; do whatever you can to solidify your banking relationships. 

Many sole proprietorships, partnerships and S corporations, as well as other “pass-through businesses” now get a 20% tax deduction. But that deduction expires in 2025. Talk to your tax attorney to find out if any deductions apply to your business.

Rising salaries and employment costs.

It isn’t just about campaigns for higher minimum wages any longer. The labor market is tight, with the official unemployment rate of 3.7% being the lowest recorded since 1969. If you need candidates with particular qualifications, it could be tougher still to find them: the NFIB Research’s Small Business Optimism Index reported in October, 2018 that 87% of employers struggled to find qualified applicants for open positions.1 

What you can do

With less room for error in their budgets, consider reviewing staffing needs closely. Perhaps training an existing employee with new skills could reduce the need for a new employee. If you want to expand into a new business area or hire someone to oversee your exciting new marketing strategy, move slowly and strategically. Consider using independent contractors for short projects instead of hiring a full-time employee. 


Tax laws for several types of company structures changed in 2017 and there may be new laws popping in the next few years that companies will need to be aware of. Be sure to talk to a tax attorney to find out what, if any, laws and deductions apply to your situation. Your tax attorney may recommend annual reviews to determine how best to take advantage of any new changes in your business and the tax laws.

What you can do

When it comes to taxes, knowledge and advance planning go a long way. Don’t get accustomed to that pass-through windfall: when it evaporates, you won’t be blindsided by a sudden hike in your taxable income. Stay in constant touch with your accountant, and be sure he or she is on top of the latest actual and proposed changes to tax laws that affect your specific industry.

Be upfront with your lenders if you think you’ll have trouble making payments on time; do whatever you can to solidify your banking relationships.


Conventional wisdom believes that smaller companies are relatively insulated from contentious trade relationships and tariff battles, but this is often an over-generalization. You might not be exposed, but your clients may, and the impact they feel could filter down to your business. 

What you can do

Be aware of which of your customers are vulnerable to being hit by tariffs in any trade disputes with likely counterparts such as China. Consider ways to minimize the shock, perhaps by working with them on payment schedules. Alternatively, try to diversify your client base. Above all, don’t be complacent, assuming you’re immune to this particular source of economic trouble. 

Potential recession

No matter how good the economic conditions, no one has found a way to repeal business and economic cycles. It’s safer to prepare for recessions.

What you can do

Just don’t let fear paralyze you, even as you avoid excess risks that could harm your business in a downturn. Planning for the worse-case scenario can cushion you from volatile economic events. 

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