• China: How will China’s economic issues affect your business? With an increase in production costs, even companies in China will start looking for lower-cost producers. Should you consider moving production back to the U.S. (what I like to call “re-shoring”). The cost of labor is becoming less of an issue than getting products on time, and having lower shipping costs can help off-set that.
• Government business: Look at how much business you are doing with the Federal Government, the Defense Department, etc. It is difficult to imagine that there will not be spending reductions at the federal level irrespective of what happens. Some people think that as states begin to recover and receive increased tax revenue, there will be more opportunities to do business with state and local governments. There is much pent-up demand for matters that have been deferred during the past few years.
• Loans: Despite today’s low interest rates, middle-market business owners have continued to sit on their cash reserves rather than deploying the cash or borrowing to make investments while keeping their cash safe for other purposes.
Unless they are extremely confident about an opportunity, they are not likely to invest. However, it’s important to keep in mind that U.S. banking regulators are likely to begin implementing higher standards for reserves. Although they make the banking system safer by providing greater cushions for banks against market fluctuations, they may make it more difficult for banks to lend money. So, if you’re considering getting a loan, you might want to secure your loan before the new standards go into effect.
There’s no doubt that middle-market business owners are in much better financial shape today than they were back during the credit crisis. By planning ahead, consulting their advisors, positioning their businesses correctly and, just as important, adopting the right perspective, middle-market business owners can stand to benefit greatly from emerging opportunities in the New Year.
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. www.casselsalpeter.com