As the economy shifts from an incredible boom to an unpredictable 2019, many small businesses are considering their future operational costs. A big concern for small firms are the interest rate hikes from the Federal Reserve, making borrowing more expensive. While the next interest rate hike is not clear, there are many who believe that another increase will happen in early 2019.
Small businesses looking to expand need to be aware of this increase moving forward. In addition to interest rate hikes, a changing Congress means that policy geared towards the economy is more uncertain than ever. In an industry where uncertain can mean a loss of billions, business owners must take a close look at their balance sheets and make decisions according.
“Loading up on debt is the biggest mistake most small businesses make, Frances Newton Stacy, director of strategy for Optimal Capital, told CBSN. It’s a particularly easy mistake to make in boom times, when consumer spending is at a peak.”
One commitment small firms should look at are storefront leases. “Most leases require a personal guarantee from the tenant—meaning if the business goes south, the owner of the small business could be on the hook for monthly payments.”
Take on debt is crucial for business growth, but in a time of uncertainty, a close look at what you can afford is absolutely necessary.