Some people might have the audacity (even if misinformed) to say that every business expense will actually go up in 2011 but that will not necessarily be the case. In fact, some expenses may go down, things like company-provided employee transportation costs (as fewer companies provide company cars, instead opting to let employees provide for their own transportation), rent (as real estate companies are forced to compete for the fewer persons looking for the glut of available space), and advertisement costs (for those savvy business owners who bother to shop around before spending advertising dollars).
Yes, most other expenses are likely to go up, but some services and products are likely to go up significantly. Business owners need to know this in order to prepare themselves for the price hikes. Such knowledge, one hopes, may help them make appropriate preparation for the increases and, in some cases, avoid them by managing to tie into current prices-something usually achieved by signing contracts ahead of time. Here are some of those things expected to increase:
Most people are aware that liability insurance for healthcare professionals (especially doctors) has gone through the roof and is expected to keep increasing (until a solution can be found for the problem). What some people don’t realize, though, is that most if not all businesses carry liability insurance. It is difficult to do business without it these days. While the cost has been very reasonable for businesses that have been for the most part considered unlikely to face lawsuits, the reality is that very few businesses these days fall under that umbrella anymore.
The sad reality is that we live in a very litigious society. Some people want to blame those “greedy lawyers” but the forces at work go far beyond lawyers’ penchant to make money. For one thing, a bad economy motivates more people to file more lawsuits. Also, the readily available avalanche of information out there, especially that provided by the Internet, means that people know more than they ever did. They for the most part know what is thought to be harmful and they also know that they are entitled to compensation if injured, defrauded, or mistreated by a business, nonprofit, government agency, or individual. Because of this environment, liability insurance is expected to rise across the board in the coming years.
Municipal and state fees and taxes
As cities, counties and states hurt more and more for funds, they are willing and ready to turn to whomever to come up with the money they need. This means that no one in the community is safe from their far-reaching and powerful little fingers. As a consequence, expect all filing fees and taxes imposed on businesses to go up-sometimes dramatically.
Never mind that this will only drive more businesses either out of their jurisdiction or into bankruptcy-government officials, to be blunt, either don’t care or are not intelligent enough to understand that they are only shooting themselves in the foot. Instead of fostering businesses (which would increase over-all community revenue), they are stifling them, either by increasing fees and taxes or by coming up with additional ways to suck the life out of them!
Employee compensation and benefits costs
Although the US government passed a so-called “healthcare reform law,” the reality is that we are far from resolving the problems that have plagued our healthcare system. But health insurance coverage is only one of the many costs most businesses have to pick up. Businesses will likely have to pay more than ever before, if they offer health insurance coverage at all to their employees. “Free healthcare” is a dangerous myth. Someone will have to pay for the healthcare provided to the unemployed and the uncovered-that “someone” will more than likely be businesses. This means that businesses’ share of employee health insurance costs will likely greatly increase in the next few years.
Obtaining and retaining good employees (in spite of the glut of unemployed people in this country) will also be a problem. The hiring process, for example, which now includes background checks, regular drug screenings, etc., is more expensive than ever. Especially in technical fields, employers will have to dole out more, if they want to get the best available talent. Also, the fact that many companies are operating more efficiently in theory means that they should have more money available for employee compensation.
Businesses that, for example, had 10 employees last year may now be running the same operation with, say, 7 people. This means that more productivity is being expected out of each person in the organization. This arrangement will survive, though, only if those same persons are given some additional compensation for their added duties and responsibilities. Otherwise, these people will only burn themselves out, either physically or mentally.
Data protection technology
Yes, the technology available for the dissemination, storing and protection of data is more sophisticated than ever before in history, but so are the tools and methods out there that can be used to compromise that data. As a consequence, companies are going to have to dole out substantial amounts of money to protect their data. This means investing in better, in-need-of-constant-updating computer systems and data management/storing software, in well-trained personnel, and in facilities that can accommodate what will be needed. Since every company will deal with data and since organizations are expected to connect more and more, the safety of data will continue to be a going concern-the cost of which will certainly escalate.
Better security for customers and personnel
More and more companies are being forced to provide better security for their facilities. That means installing good lighting, security cameras, alarms, and, when the budget allows it, hiring security guards. All these things come at a huge cost to US businesses. As crime gets worse (as it always does during a bad economy), businesses have no choice but to better prepare for it. This situation has, ironically, provided a boom for the personal security industry, but it has added great burdens to businesses at a time when they need to cut down on expenses. This is a problem, however, which does not invite cutting corners.