For years, business experts have been crowing about what a great time it is to start a new company. While this still might be true over the long term, there are plenty of good reasons not to start your own business in 2016. In fact, this might be the first year since the end of the Great Recession with more drawbacks than benefits for budding entrepreneurs.
Sober-minded people who study global trade for a living do see some worrying signs for the short to medium term. Below, we’ll take a look at five of the top trends that might make you think twice about going all-in on your business idea anytime soon.
Before we do, let’s keep something in mind. It’s often said that the stock market has correctly predicted nine of the last five recessions. In other words, those who pay attention only to the ever-gyrating financial markets are likely to be scared out of their wits (and out of starting a new business). As you assess local and global business conditions, take a holistic view of the economy — paying attention to each strength, weakness, threat and opportunity in turn. Every market, every industry, and every entrepreneur is different. Your niche could be the exception to the gloomy rule.
1. Cheap Oil Has Drawbacks
The conventional wisdom holds that cheap oil means cheap gasoline, and that cheap gasoline means more money in consumers’ pockets. Maybe. But early signs indicate that consumers are saving, not spending, their windfall. What’s more, huge swathes of the global economy are tied to oil production. When energy investment slows, so do a lot of industrial companies.
2. China Is Slowing Down
Many observers believe that China’s government is intentionally inflating its official growth figures to make things appear better than they really are. That’s worrying for many reasons.
3. The U.S. Dollar Is Really Strong
A strong U.S. dollar means it takes fewer dollars to buy items denominated in other currencies, like euros and British pounds. That’s great news for U.S. residents traveling abroad, but not so great for U.S. companies trying to export overseas.
4. Commodities Are Crashing
Oil isn’t the only commodity that’s seen a wholesale price collapse since early 2014. Copper, aluminum, iron, you name it: If it comes out of the ground, it’s cheaper than heck. The commodity price crash is squeezing mining firms and value-added industrial processors, destroying untold thousands of well-paying jobs.
5. Big Companies Are Worried About the Future
Some of the world’s largest, most successful companies are sounding the alarm about the coming quarters. Two tech darlings, Amazon and Apple, recently sent shockwaves through the financial community when they announced that they expected 2016 to be much worse for business than previously projected. Amazon’s stock cratered after its most recent earnings report, which failed to meet Wall Street’s lofty expectations.
Big companies aren’t the only drivers of the global economy, and small businesses tend to march to a different tune anyway. But if household names like Amazon and Apple are worried, maybe you should be too.
Are you going all-in on your business idea this year, or are you waiting for sunnier times?