6 Transformative Events to Watch in 2013
This article is part of Inc.'s special report on How (and Where) to Make Money in 2013 (and Beyond). Follow the links at the end of the story for more game-changing trends, bold predictions, and hot markets to watch next year.
As 2012 winds down, the smartest experts are pulling out their crystal balls to predict what will be hot next year, where the growth will be, and what trends to look for. But in addition to these forecasts, a handful of events are slated to happen in 2013--some bearing good news for small businesses, others not so much. Here's what to keep on your radar.
1. Obama begins his second term.
The very first thing looming for the president in 2013 is the fate of the so-called fiscal cliff--the more than $500 billion in tax hikes and widespread spending cuts set to take effect after January 1 unless he and Congress come up with another plan.
Obama is pushing Congress to raise taxes on the top 2% of Americans--people who make more than $200,000 annually and families that report adjusted gross incomes in excess of $250,000. Republicans have pushed back, saying that many of these folks are employers and penalizing them will inhibit job growth.
According to Keith Hennessey, a lecturer in political economy at the Stanford Graduate School of Business and a former economic advisor for the George W. Bush White House, the negative effects of such tax increases far outweigh the benefits. The reason? He says most small businesses are "flow-through" entities such as LLCs, Subchapter S, and limited partnerships, meaning everything passes through the owners' personal tax returns.
"If only taxes on 'the rich' go up, then successful SMB owners will pay higher taxes," Hennessey says. "Those are, of course, the SMBs that are often the engines of their communities, and that hire the most people."
2. It's decision time on employee healthcare.
Some of the major facets of Obamacare (formally known as the Patient Protection and Affordable Care Act) will take effect Jan. 1 2014, including the mandate that businesses with 50 or more employees offer affordable health insurance. That means you have one year to decide how you're going to pay for your staff's premium costs--or pay the $40,000 penalty for not covering them (plus an additional $2,000 for each uncovered employee). Another alternative--and one that could have big repercussions for the struggling economy--is to forgo full-time workers in favor of part-time or temporary employees, which aren't covered by the mandate.
But there are other provisions that will affect your business in sooner. For instance, Oct. 1, 2013, kicks off open enrollment for state health insurance exchanges, which will enable individuals and small businesses to shop online for health insurance. However, since most of these exchanges don't exist yet, the costs are unclear.
3. The U.S. gets into the natural gas exporting business?
In the last few years the U.S. and Russia have played a tug-of-war over which country produces more natural gas. For the record, Russia has about three times the amount of the U.S.'s reserves, so the question is rather moot. A more interesting debate in 2013, however, involves what the U.S. will do with its newfound gas wealth.
According to Nick Hodge, managing editor of Energy & Capital, some companies want to export it, and a handful have asked the government for permission to do so. If they get the go-ahead, it will be pivotal for the country’s energy roadmap.
"Do we hoard our gas to benefit all U.S. citizens and allow prices to remain near decade lows... Or do we do the pure capitalism thing and send it wherever it fetches the highest price, such as Asia?" he asks. "The answer to these questions is the real story of 2013."
The Obama administration has indicated in the past that it is not opposed to exporting, Hodge says, but to date has largely avoided making any decisions no doubt because of the election.
Hodge says if the U.S. decides against exporting, in addition to keeping businesses' utility prices low, the move would likely lead to a boom in natural gas-fueled big rigs, delivery trucks, and company fleets. "The cost per gallon equivalent is much cheaper and it's a domestic energy source," he says.
4. The SEC unveils equity crowdfunding rules.
A new crowdfunding model becomes legal next year thanks to parts of the JOBS Act signed by President Obama in April. Under the law, everyday Americans will be able to take equity stakes in start-ups in return for their funding dollars. Obama gave the SEC until the end of this year to nail down new rules governing equity crowdfunding, but they likely won't be finalized until sometime in the first quarter of 2013 or later.
When the regulations are set both accredited and non-accredited investors will be able to invest in start-ups, although people with $100,000 or more in annual income will be able to invest at most 10% and those who make less than $100,000 can only sink up to 2.5% of their income into start-ups. Accredited investors currently fund upwards of a trillion dollars every year to early- and later-stage companies, but Chance Barnett, CEO and founder of Crowdfunder, predicts crowdfunding will help grow both investment markets.
"I'd estimate we'll see single-digit growth in these markets in the first few years, which considering their trillion dollar size is real movement. Then, as the markets gain traction and prove themselves with successful fundraises, we'll see double-digit growth in this market over a 5-7 year period," Barnett says. And that will mean more growth for local ventures and, ultimately, job creation, Barnett adds.
5. Developers will get their hands on new wearable computing devices.
Since Google released its concept video for Project Glass, the augmented-reality glasses prototype has made appearances on skydivers jumping out of a Zeppelin and even on the runway. In 2013, developers will get their hands on them so that they can start building out apps and evolving the technology for broad consumer use.
But Google isn't the only company trying to get a foothold in the wearable computing space. The Android-powered Vuzix Smart Glasses M100 are set to launch in early 2013.
Patrick Moorhead, principal analyst with Moor Insights & Strategy, says wearable computing is still an emerging technology, but 2013 may bring opportunities for developers and small businesses interested in building out the hardware, software, and services to support it.
Eventually the technology could change the way you operate. "Imagine shopping in a store and overlaid on top of the glasses are comparison prices from other retailers," Moorhead says. "[Wearable computing] essentially enables small- and medium-sized companies to act more like large businesses."
"The first is very straight forward, and that's physical accessories for the glasses, whether it be cases, attachment mechanisms to devices like helmets, and even storage devices to capture more real-time content," he says. "Next are the apps and services, which work with the wearables, and could span from driving navigation, to sight-seeing to shopping to games. Imagine shopping in a store and overlaid on top of the glasses are comparison prices from other retailers."
6. Start-ups vie to rule the galaxy.
Several significant space milestones are scheduled for 2013, including two missions that will demonstrate American companies' abilities to transport cargo in space. China has said it plans to land a rover on the moon for the first time in 2013 and in November India aims to launch a space probe to orbit Mars.
But possibly the most interesting thing to watch in space exploration next year will be the heating up of the competition for Google's Lunar X Prize. In 2007, Google announced it would give $20 million to the first team that can successfully land on the moon, travel 500 meters, and send back hi-definition photos and video by the end of 2015.
Currently 24 teams are vying to win the Lunar X Prize and while they still have some time before the deadline, next year will be pivotal as they race to develop and test their technologies. The best part of this race? Many of the players are smaller companies operating in a start-up mode--some, such as Team Phoenicia and Independence X, are even building out of garages.
“It’s not possible for every team to win the competition, but many are prepared to be the pioneers and frontrunners that contract out their developed technology for anyone who decides to make a business out of lunar commerce,” says Leo Camacho, a representative for Google's Lunar X Prize.