Key changes in 2015 that may impact your business

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By James S. Cassel
Special to the Miami Herald
January 18, 2015

casselNo matter what vertical your business operates in, there is a strong likelihood this year that higher interest rates, lower unemployment, increasing demand, and decreases in the prices of oil, as well as increases in commercial real estate costs and healthcare, will affect your business in one way or another. It will be important for middle-market business owners to keep a close pulse on these changes and take the necessary steps to ensure their businesses are prepared.

 Interest rates: The Federal Reserve has continuously indicated that interest rates will begin to rise in 2015 — perhaps 50 basis points or more. Thus, take the time to consider how an increase may impact your business. Evaluate your borrowing needs and costs and consider your cash management systems. Furthermore, while there have been little to no yields on cash during the past several years, rising interest rates could create a new opportunity to get increased yield on your cash. Cash management will begin to reemerge.

 Unemployment: At the close of 2014, unemployment rates stood at 5.6 percent (the lowest since 2008), and they’re projected to drop another half-percent by the end of 2015. Lower unemployment rates generally mean that companies have to work harder to attract and retain quality talent. For example, salary studies show that 2015 salaries are projected to increase by 3.8 percent for professional occupations. In light of this, examine your employee compensation packages and the other benefits that you offer your current and prospective employees. Comprehensive benefits and 401(k) programs with a match and flexible scheduling are all ways to make employees happy and help ensure they stick around. See whether options or other equity components might be appropriate. Consider offering benefits that bring additional value to the employees, such as flexible work schedules and upward mobility.

 Increasing demand: The U.S. economy expanded at a 5 percent seasonally adjusted rate during the third quarter of 2014, and the U.S. economy is coming back strong even as the rest of the world slows down. U.S. GDP growth was the highest since the third quarter of 2003. This may result in increased demand for your products and services domestically. As part of your 2015 business planning and strategy, you may consider how you can capitalize on this increased domestic demand and sales momentum. You might consider restructuring your sales force and incentives, increasing pricing and points of distribution, implementing innovative digital marketing strategies to further stimulate demand and capture sales, etc. Be mindful of the weakness in Europe and other areas abroad. If your demand is not domestic, be extra careful.

 Technology: It’s always important to evaluate your technology and confirm whether it is meeting the needs of your business and your customers. As more systems and processes continue to become computerized and automated, you should determine whether and how this may impact your business. Pay particular attention to how mobile can affect your business. Also, evaluate if you’re accessible to your customers and meeting their needs wherever they may prefer to reach you, such as in social media channels. At the same time, it’s also important to consider how you could leverage new technologies for production, marketing and sales. Also, if you have complex internal processes, determine if your work flow could be streamlined through the implementation of more tech-savvy systems, marketing automation, and customer relationship management software. Lastly, be sure that your staff members have the right tools and training in order to maximize efficiency.

 Oil prices: Gas prices have been dropping, and some experts are speculating that the economy might experience some deflation but at a minimum reduction in certain costs. This is something to watch for, particularly if some of your costs are tied to the price of crude oil or its byproducts. Will your business still have pricing power in the event of deflation? Also, can and should you maintain your prices even if some of your costs are dropping? By way of example, look at the airlines that have lower fuel costs but are showing no signs of dropping their fares. Keep in mind that other costs may fluctuate, so be sure to consider all possible factors when making these decisions.

 Healthcare costs: There’s no doubt that healthcare costs are going up. Some firms are reacting by raising their insurance deductibles, copays or the contributions by employees toward premiums, which might mean that more people will wait to get treatment until they’re very sick. A sicker staff can weaken productivity, so you might want to explore other ways to mitigate the rising costs of healthcare without increasing deductibles through your group plan options, HMOs, or covering the inflation as a cost of doing business and helping your employees.

 Commercial real estate prices: While there’s certainly a major boom in residential real estate construction in South Florida, few new office projects are under construction or planned in the near term. This scarcity could affect your rent, so look at your lease arrangements and be prepared to be flexible when your lease comes due. Give yourself as much lead time as possible.

The unknown may be the real effect of lower oil prices and other unknown world events. While on the one hand this means lower costs, on the other hand this could lead to less exploration and more job cuts not only in the oil business but with all the suppliers and ancillary businesses like steel suppliers.

By keeping a close pulse on these key changes in 2015 and planning, you can help protect your best interest and ensure your business is in the strongest position in 2015. As always, it’s important to consult trusted professionals with subject-matter expertise who can help you develop the right strategic plans to overcome the obstacles and seize the opportunities.

James Cassel is co-founder and chairman of Cassel Salpeter & Co., LLC, an investment-banking firm with headquarters in Miami that works with middle-market companies. He can be reached at and

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