In the Midwestern states, especially in Iowa and Nebraska, we have a lower cost of doing business and it can cost less to get a business up and running. Land prices, building construction costs and residential home prices are all available at lower cost than on the coasts. Investments in wind energy and alternative fuels have even helped keep utility costs lower than in other regions. Last, but not least the Midwest has a high-quality, and well-educated workforce with a strong work ethic when compared with other regions.
A lower cost business environment and a high-quality workforce can really help a small business take off in the Midwest.
Three trends to watch in 2020
Despite the small business-friendly economy of the Midwest, there are still some things that small business owners, or individuals who are considering starting a small business, need to keep their eyes on in 2020.
- Right now the national business sector is softer than the consumer sector and business owners nationally have begun to pull back on investing in capital projects and equipment for their business due to the trade war with China, and uncertainty about future tax laws and regulations going into 2020, especially with it being an election year.
- The Midwest in general has been very blessed to have diversified industries that can all benefit each other within a community. In the “Main Street Communities” of the Midwest, there is a multiplier effect of how many times a dollar goes around. A dollar spent at one business will be spent many times over at the other businesses across all the industries in town.
The agriculture sector, however, has been struggling for several years now due to commodity prices, due in part by recent tariffs, particularly with China. When the agriculture sector is experiencing weaker revenues, that effect will touch the rest of a community as well and is impacting the multiplier effect in local communities
- Iowa and Nebraska are in good shape and operate within a balanced state budget and this helps alleviate some of the uncertainty of doing business in these states. However, in states operating without a balanced budget, uncertainty will grow over time as business owners consider the potential for their respective states to raise taxes in order to cover budget shortfalls. This could be in the form of corporate or personal taxes, or even on sales or gas.
Utilize Backyard Business Connections
Many of our communities are the type where everybody knows everybody, and everybody has a connection that can help them when it comes to managing and structuring their business. The key to thriving during uncertain economic conditions is to get help from these connections in your community.
In our banking footprint, there are people all the way from the state level down to the community level who care about and are very invested in the local economy and business community. There is more value to doing business with your neighbor in a small community as everyone in a community can benefit from each other’s success.
Surround yourself with a good group of advisors from your community, including:
- Attorneys to help you decide the best way to structure your business.
- CPAs to help you interpret your financial statements.
- Bankers to provide advice on how to make your financials work for you, inform you of loans you may qualify for, deposit products and electronic banking options, and where you can cut costs to make a little bit more money each year.
Your banker can also provide you with industry statistics and walk you through what works and what doesn’t work to help you make the best decisions for your small business.
Overall, your trusted advisors can provide counsel when times are good and expansion may be wise, and during challenging times when you may find yourself cutting back on business expenses. If everybody works together, things get so much easier and that’s why so many good things are happening in the business economy throughout the Midwest.
Contact a business banker today to learn how Northwest Bank can help your business thrive in 2020.
