CT Expert Insights: What Small Businesses Can Expect in 2020 with Gene Marks

According to small business expert Gene Marks, 2020 is off to a great start. Business owners can feel optimistic this year due to a strong economy and a pro-business administration.

But to facilitate growth and remain competitive, owners will need to be proactive in managing business challenges and opportunities.

In this week’s CT Expert Insights, Marks explains how to tackle current issues—such as finding the right employees and improving cash flow—and how businesses need to do a better job at leveraging changes from the tax reform bill. He also talks about the impact of the SECURE Act on retirement plans and why this new legislation might be beneficial to your business.



Greg Corombos: Hi, I'm Greg Corombos. Our guest this week on Expert Insights is Gene Marks. Gene is head of the Marks Group. He's a speaker and a writer. He's been a guest of ours several times here on Expert Insights. He joins me to discuss what the road ahead looks like in 2020 for small business owners. And Gene, Happy New Year to you, thanks as always for being with us.

Gene Marks: Great. Thank you for having me on.

GC: Well, on the last day of 2019, you wrote a column expecting 2020 to be an easy year for the majority of small businesses. Now easy can obviously be misunderstood, that we all still need to work hard, of course. But you're saying a lot of businesses won't be fighting just to survive as they do in other years. So explain what you mean here.

GM: Well, first of all, I have to say there are 30 million small businesses in this country, right. So it's very, very tough; you never generalize about all of them. Sometimes people ask me, like, so you know, Gene, how are small businesses doing? And, you know, my sort of standard reply is, well, that depends on what the business is and where they're located. And, you know, what industry they happen to be in. But, you know, for the most part, 2020 should be a pretty decent year for the majority of small businesses in this country. And, and I would even, you know, suffice it to say that it's going to be a somewhat of an easier year for small businesses. Now, you know, as you know, Greg, like running, you know, running a business is not easy. You know, it's a lot of hard work and a lot of hours and a lot of stress. So you got to keep that, you know, relative. But some of the biggest headaches that a lot of my clients have had over the years are, not they've gone completely away, but they are minimized a little bit more this year. The economy for starters is doing pretty well. I mean, it's, some people would argue that it's, you know, it could be doing a lot better and that's fair enough. But, you know, consumer confidence is still very strong, retail sales are strong. Construction spending is strong. That impacts a lot of small businesses. And small business confidence, as a result, is also strong. Things dip, you know, they go up and down a little bit, but for the most part it’s pretty good. So although we're still going to be battling and competing for sales, I think for most of us, you can look into this year, we're not looking at any type of...barring any unforeseen events, you know, an economic crash or a big recession, at least for the first six to nine months of this year. So that's, that's good news. On the trade side, you know, the President has made, you know, forward progress in resolving some of these trade deals and issues with not only North America but of course with China. So I think that's sort of a, you know, a breath of relief for a lot of businesses. We're now two years into tax reform. So I think now, you know, accountants have gotten their arms around them. I think a lot of businesses themselves are seeing some payback on their taxes. They're seeing less cost infrastructure and that's positioning some to invest more in people and, you know, and equipment and capital items as well. So all those things are good. And I think finally in Washington, you know, we're not, Congress and the President, they're all so wrapped up in all sorts of political things now that it's an election year, you know, and impeachment and, you know, foreign policy issues and whatnot, that I don't see any significant bills or legislation coming out that is going to have an impact on businesses, positive or negative.

GC: And so what were the others...you've got some certainty.

GM: Yeah, you've got some certainty. That's exactly right. I'm not saying that's good, because there's a lot of stuff that Washington could be doing to make our lives better. But I just don't think there's going to be a whole lot of that going on this year. And I think that reduces the uncertainty as you said, and I just think it makes it easier for businesses to make some decisions. But there are two big issues looming for small businesses this year. Number one is going to continue to be finding people. You know, as we're recording this now, the most recent job numbers came out, and the unemployment rate is still like a 50 year low. Every company I talked to are struggling to not only find people but to pay them without going broke themselves. We're seeing minimum wages go up in a lot of places this year; new overtime regulations are increasing wages. So there's definitely some compensation and people issues that we're going to be challenged with this year. Just seeing them.

And then the other sort of big, big thing that you have to be wary of will be the election in November. Like him or not, and there are good reasons to like him or not like him. If President Trump does win reelection, one of the things that you can be certain now is that it will continue to be a very pro-business environment in Washington with minimal regulations and sort of easier for businesses to do their thing. And that obviously has proven to be a good thing for the economy over the past few years and for businesses. So that's fine. If the President does not get reelected, and one of his opponents take office, particularly people like Elizabeth Warren or Bernie Sanders, all have great ideas and good things they want to do. But certainly, some of the things that they want to do with education and health care and the environment is going to be costly. And that could result in more regulations and taxes and things, not that these are bad things. These certainly would present obstacles for businesses after the election. So I guess in summary, 2020 looks pretty good, pretty easy year, I think for a lot of small businesses relatively. But keep your eyes close on the election because, depending on how it turns out, it could create a lot more challenges for us after this year.

GC: We're talking with Gene Marks of the Marks Group. And Gene, you've also written on another important aspect because obviously the bottom line for most small businesses actually is the bottom line. And so you've written recently on some smarter accounting moves that businesses can make to better improve their cash flow. Explain what you’re talking about there.

GM: I wrote on a site called Striven. Striven, that's S T R I V E N there. They do technology and like a sort of all-in-one business software. and I've been writing some stuff for them to advise their clients on accounting moves, cash flow moves to make. One of them about just making it easier for your customers to pay. I know a lot of business owners...it drives me nuts, Greg. And maybe this is another conversation for another day. When I go into businesses that, for example, don't accept your credit cards. They make you take cash, or they have a minimum credit card requirement. And there are some accounting moves you can make if you get a better handle on your costs where you can accept credit cards. So just adjust pricing a little bit. And some other conversation for another day. But in 2020, you have to be able to accept payments any way that your customers want to present them. And it's, whether it's credit cards, mobile wallet, cash, e-coin for all of you Mr. Robot fans, anything like that. You can't be turning customers away in this competitive world, because you refused to accept a credit card for purchases under $10. It's, I think it's nonsense. And I think that business owners are killing themselves cash wise when they do that.

I also think a lot of business owners need to do a better job at leveraging tax reform. There were some big, big changes that were made that impact a lot of us. A lot of people don't know that you can deduct up to a million dollars in capital equipment purchases, and you don't even have to really pay for it. You can finance them. So you know, if you decide to buy a new car for your company, a truck, or a piece of equipment. Or pallets for your company, things like that. You can buy this kind of stuff and finance it where interest rates are still relatively low. And as long as you put it into service by the end of the year, you could take the full tax deduction for the full price of that capital equipment right away. And I mean, you know, geez, taxes aren't a big deal. They are only like 20 to 30% of our income. So capital equipment purchases, the big thing. Getting a handle on your retirement planning, putting as much money away for the 401k. And that kind of stuff is very, very important.

And finally, you're talking about attracting good employees, Greg. In 2020, one of the things that just happened in Washington, and I just wrote about this in the Philadelphia Inquirer, was the passing of what's called the Secure Act, S E C U R E A C T. And that just became live on January 1 of this year. And it's amazing because it was actually a bipartisan bill in Washington, of all places. And it had some big changes to retirement plans that really benefit business owners and their employees. It allows older employees to keep contributing to their 401k plans now to the age of 72. This means that if you've got good older employees, they don’t have to retire at the age of 70 and a half. They can keep going on and on and contributing. That's a good thing for both the employees and the business owners. In addition, it gives the business owners a tax credit for setting up a 401k plan. It gives business owners the ability to band together and negotiate better fees on retirement plans. And if you don't have a 529 plan in your business, you gotta get one. It's very inexpensive. And it's an after-tax plan where you and your employees can put money away. It grows tax-free. And then you can take the money out to pay for higher education costs. And this Secure act now expanded these 529 plans. You can take $10,000 out, each employee, and put it against their student loans, which is really a big deal for a lot of people and could help you attract some younger employees. So that kind of stuff when you talk to your tax accountant, talk to your benefits advisor. It's a great way to attract better employees this year if you take full advantage of the stuff that's in the Secure Act.

GC: Gene, let's talk about some other things that business owners ought to be aware of for 2020 and beyond because you closely follow emerging trends in the business world, whether it's emerging technologies or other innovations. What's on the horizon that has you excited and you think business owners ought to be aware of?

GM: You hear a lot about artificial intelligence, Greg, and AI, and bots and all that kind of stuff. And I just want to get the message across that as a business owner, yes, you should be very excited about it. But, no, you don't have to worry about it. A lot of people ask me, like, I'm hearing about this AI. Should I be doing something? Should I be investing in it? I don't even know what to invest in. What does it you know, what does it mean? I can tell you this much. If the software vendors that are out there, the Intuits and the Salesforce, Zoho and all those people that are out there making small business software, FreshBooks. They're worrying about artificial intelligence. They've got the money, and they've got the expertise. They're building artificial intelligence and automation tools into their products. And what you need to do as a business owner is you need to ask your software vendor about the latest features in their products. What AI features do they have, are they working on? Learn what they have and leverage them. Because I'm telling you a lot of these AI features...Greg, they can save you a lot of time. I mean, why not? If a customer sends an email to your customer service department, can a software bot look at that email, pull out, you know, figure out what the customer is asking, and then provide an answer to them automatically without an employee being involved? Or why not when an inventory level falls below a certain amount, can your software system just automatically reorder that inventory without a human being involved? There are lots of things that can be automated through AI that will save you time and money and cut your overhead. And you know, I'm telling you, if you don't take advantage of the stuff, if you run away or you ignore it, you're going to hurt yourself because your competitors are going to be taking advantage of this type of technology. They'll be running more efficiently, they'll be able to price their products better, and they're the ones that might eat your lunch one day. So AI, artificial intelligence, very excited about it. Talk to your software vendors and learn to...find out from them what they're doing with AI and then employ it yourself. Embrace it.

GC: We're talking with Gene Marks. And Gene, just about a minute or two left in our conversation here. And in addition to what you should be doing, there's also what you shouldn't be doing. You've recently written a column listing 20 different things that small business owners should not be doing for the Hartford. We don't have time for all of them, but what are you seeing most out there? What are some of the most common mistakes that do the most damage?

GM: Here's what I think the biggest mistake that business owners make is trying to do too many things themselves. We live in an overcomplicated world. When I see a business owner doing their own payroll, for example, or their own accounting. Or if I see them, you know, reviewing invoices, or doing quality work themselves. Your time is limited. You need to delegate, you need to outsource, you need to have experts to what they do so you can do what you do best. And if you don't do it otherwise, you might feel like you're saving a few dollars. But long term, you're hurting yourself. So focus on what you do best. And look around at all the different things that you are doing and say to yourself, should I really be doing this? Probably not. Cough it up, and pay for somebody to do it for you. They'll probably do a better job, and you focus on what you do best and grow your business that way.

GC: Excellent advice and some great encouragement to head into the year. Gene, always great to have you with us. We look forward to the next time. Thanks for being here.

GM: Thanks, Greg.

GC: Gene Marks, head of the Marks Group, speaker and writer. I'm Greg Corombos. This is Expert Insights.

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