2013 Small-Business Trends to Watch
Enough about the "cliff!" A deal has been signed that steers the nation away from a dire economic combination of higher taxes and broad spending cuts. But small-business owners still have plenty to tackle in the coming year.
Here's a look ahead at key trends to watch—from the rise of cannabis businesses to the mounting pressure on digital deal platforms such as Groupon. And hint: the anxiety on Main Street isn't over just yet.
1. Daily Deals Under Pressure
Deal site Groupon, once a tech star, is under $5 a share, down roughly 85 percent since it went public in November 2011. The platform that offers deals, often directly to consumers' smartphones, initially garnered buzz. But some entrepreneurs have struggled to translate those first-time buyers into loyal customers.
"Someone who comes in the door at half price (for products and services) isn't gong to come back at full price," said Barry Moltz, a small-business consultant and author. "People are wary of those kinds of deals and merchants are tired of it," Molts said. In November last year, embattled chief executive Andrew Mason said he's not firing himself, and that Groupon deals are "never boring."
2. Bring on the Pot Entrepreneurs
Voters in Colorado and Washington states legalized marijuana possession for adult recreational use, without any prescription or medical use. The new laws ultimately will permit cannabis to be legally sold and taxed at state-licensed retail stores in a system to be modeled after those in many states for alcohol sales.
From marijuana clubs to small related accessories, expect a new crop of small companies around cannabis. "As people start using, there's going to be a lot of startups around it," small-business consultant Moltz said. "And not just growing it, but all the accessories that go around marijuana use," he said.
3. Access to Capital
While the lending mood has thawed a bit since the recession, there's no reason for Main Street to party just yet. Small businesses broadly are not pulling in enough revenue to merit expansion and thus loans, said Scott Shane, an economics professor at Case Western Reserve University in Cleveland, Ohio.
"And there's evidence that banks are less willing to lend in part because they've been told by regulators that they made loans too easily," Shane said. Amid banks' tight lending policies, it's no surprise small companies are turning to alternative lenders that are upending banks' conservative standards for cash infusions. (Read More: Small Businesses Turn to Alternative Lenders)
Looking beyond mom-and-pop shops, the new fiscal deal that raises capital-gains taxes could make it slightly more challenging for high-profile startups to secure equity.
The tax hikes will mean less after-tax money for investors to sink into ventures, Shane said. Small companies on the cusp of securing equity will find the bar a little higher had capital gains not gone up, he said. Under the fiscal deal, tax rates on dividends and capital gains will rise, to 20 percent from 15 percent, on income over $400,000 for single people and $450,000 for couples.
(Read more: Why Venture Capitalists Are Bearish on 2013)
4. Yes, More Uncertainty on Main Street
Amid the backdrop of less credit and a sluggish U.S. economy, small companies still face uncertainty in 2013. U.S. executives largely panned the fiscal deal, saying Washington wasted a chance to resolve the nation's long-term debt. Sen. Richard Shelby told CNBC on Thursday the nation faces and even "tougher" debt crisis.
Small-business owners have been saying for some time that uncertainty about federal policies has prompted them to hold back on capital investment and job creation on Main Street — traditional drivers of economic growth. Research from Shane and Mark E. Schweitzer of the Federal Reserve Bank of Cleveland reveal a close correlation between federal policy uncertainty and slower business expansion and hiring.
But tell Charlie Arnold — who has been running a power-washing business in Lewes, Del. — something he doesn't already know. "People still have an overwhelming sense of uncertainty about their income and what the government is going to do next to impact them," he said. (Read more: Main Street Relieved After 'Cliff' Deal, But No Celebrations)
— Written by CNBC's Heesun Wee. Follow her on Twitter @heesunwee