The new year brings some uncertainty and change. This episode identifies several 2021 trends to be aware of that potentially could impact your business profitability.

This episode is Part 1 of 2 and talks about the COVID world we live in and being aware of new taxes coming. Being aware enables you to take action on the opportunities and lessen negative impacts.

Show Notes

2021 is looking like a transition year for most of us. There’s a lot of change going on. My goal here is to brings some things to be aware of, things that could potentially impact to your company’s profits in four areas.

To sail a boat against a headwind, mariners use a technique called tack or tacking. It’s basically a zig-zag course that uses sail positioning and the wind to move directly into the wind and thus, get to where they want to go.

Dealing with the trends:

  • Be Aware we are still in a Covid World.
  • Be Aware of new government taxes.
  • Be Aware of shifting customer preferences.
  • Be Aware that flexibility is needed in your company.

This episode covers the first two trends above.

Be Aware we are still in a Covid-World

This sounds obvious, but is easy to get caught off guard by false hopes (i.e. vacinces cure every problem) or by getting wary in being viligant against the virus.

  • New Government business programs
    • SBA Paycheck Protection Program (PPP) Link
    • Look for State and local grants and loans.
    • Have you looked into seeing if you business qualifies? If so, have you run the budget numbers?
  • Possible new stimulus checks.
    • There is serious talk in the U.S. Congress about a new $2000 stimulus check.
    • If it does go through this spring, how will you intentionally spend it?
    • Can your business capture some customers stimulus dollars by providing valuable solutions for them?
  • Potential national COVID lock-down.
    • Incoming President Biden has said he’s against it, but many scientists are calling for it and most democrat controlled states had tight lock-downs. Several European countries have also enacted lock-downs.
    • Does your business have a contingency plan if there is a lockdown?

 Be Aware of new government taxes

Just in you case you have been hiding under a COVID Rock, the incoming Biden Administration has been very upfront on their promised tax increases, particularly corporate tax and individuals making $400K or more. Plus, the qualified business income (QBI) deduction that allows eligible self-employed and small-business owners to deduct up to 20% of their qualified business income on their taxes may go away.

  • Does your business have a plan for a 5 or 10% increase in paid taxes? If you file Schedule C, what about 20% or more increase in paid taxes?
  • Do you have a plan to handle cost increases from your suppliers?
  • What happens if the market resists raising prices?
  • Have you talked to your tax CPA about the changing rules?

At least 25  states will be increase minimum wage this year, and last summer the U.S. House had a bill for a nation wide $15/hour minimum wage.

  •  Review your business model for these labor, insurance, and payroll costs.
  • Can you support $15/hr plus payroll taxes without raising prices? If so, does your business model support minimum wage indexed to inflation?
  • And as minimum wages goes up, skilled labor is goes up.  Are you ready?
  • In areas that have $15/hr minum wage, business owners have been very creative in adjusting their business model, or even inventing new ones.
  • If you might be heavily impacted, have you looked to see how others have adjust?

 

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