Forecasting Small Business in 2024

Loan Mantra Reveals How to Plan for the Fiscal Future in 2024

As the new year begins, many small businesses are hesitant about the road ahead in 2024. It’s human nature to want to predict the future – and in the business world, vital for owners to have a plan to move forward. While no financial expert has a crystal ball, there are key factors that impact the fiscal future.

“While the economic outlook improved in 2023, there are no guarantees that 2024 will be the same. The one constant is change. Financial service professionals can help business owners and leaders manage these economic and cultural shifts to stay adaptive and resilient during the coming year and for years to come,” says Raj Tulshan, founder and partner at Loan Mantra.

Here are financial considerations for making business plans and strategies that will work today and tomorrow.

Photographer: Markus Spiske | Source: Unsplash

Interest Rates and Inflation

High interest rates and inflation have a direct impact on those that seek commercial loans and how much funding is available. With an economic constriction, the availability of credit opportunities for business will lessen. As challenges mount, it will be more important to have a financial education. Financial literacy is gaining recognition as a crucial life skill. In 2024, there will be a growing emphasis on financial education, with schools, organizations and governments working to enhance people’s understanding of money management.

Redefining Retirement

The concept of retirement is evolving. More individuals are opting for phased retirement or exploring flexible work options. This trend will continue in 2024 as people seek purposeful post-retirement activities and income streams. People will also seek more control over their money in the coming year with the use of personal financial apps becoming integral for money management. In 2024, expect these apps to offer more sophisticated features, from AI-driven budgeting to customized investment advice, empowering users to take control of their finances.

It's also vital to note that in the wake of the upcoming election, social security and medicare reform will be at the bottom of the United States government’s political to-do list. Alternatively, on October 31 2023, the White House announced a Retirement Security Rule, which legally protects consumers seeking financial guidance.

Sustainable investing is also gaining momentum. Investors are seeking opportunities that align with their values, focusing on companies making a positive environmental and societal impact. In 2024, this trend will continue to grow as investors emphasize responsible investment choices.

Photographer: Max Harlynking | Source: Unsplash

The Rise of Artificial Intelligence (AI) and Machine Learning (ML)

AI and ML technologies are already being used in fraud detection and investment research in the Fintech industry. ChatGPT is a new tool that is generating interest in average consumers who have interacted with it out of curiosity. Chatbots are already augmenting customer-facing service roles, increasing speed and simplifying complex transactions. Personal finance, budgeting, operations and management apps are becoming integral for business owners who want to use business data to take control of revenue and meet financial goals. Adoption of these technologies and resulting changes present large business opportunities – and a quantum shift for the business over the long term.

Digital Payments and the Blockchain

As was seen during the pandemic, the shift to digital payments continues to accelerate. Further declines in cash usage will be seen with an upsurge in alternative payment methods, including cryptocurrencies. In 2023 we saw cryptocurrencies go mainstream as patrons used crypto to purchase goods and services, real estate, and more. With wider adoption comes greater regulation, and global governments are exploring new cryptocurrency regulations. This year we can expect to see clearer guidelines and potentially greater acceptance of cryptocurrencies in mainstream finance. In addition, there is some great debate of a standardization of one central digital currency, the Central Bank Digital Currency or CBDC.

Hitting the Debt Ceiling

As the past year saw banks collapse, new debt ceiling highs and potential interruptions of government created anxiety and lack of confidence in political leaders. These actions will give rise to new bank systems, options and alternatives to banking. Decentralized Finance (DeFi) is also reshaping traditional banking and finance. In 2024, we can anticipate more DeFi projects and platforms emerging, offering decentralized lending, borrowing and trading options.

Looking ahead, strategists now expect that while the U.S. economy is likely to slow, it should avoid recession. The lower likelihood of a painful economic crash should help with financial decision- making as we forge into the year ahead. Other economists are skeptical that the U.S. can maintain economic growth with interest rates so high. The Conference Board predicts slow GDP growth slowing means a “shallow recession” in the first half of the year. They also said wage growth is slowing, pandemic savings are declining and U.S. household debt is spiking.

At the same time the labor market is resilient heading into the new year. The unemployment rate has risen to just 3.8%, and the economy has averaged more than 250,000 jobs created per month over the past three months. The Federal Open Market Committee projects the U.S. unemployment rate will average a healthy 4.1% in 2024, still well below its long-term average of around 5.7%. The firm said softening consumption, coupled with rising interest rates, will also weigh on U.S. business investment in early 2024.

With these points in mind, plan for the coming year knowing that the ability to be flexible, adaptable and agile will be of significant benefit.

About Loan Mantra

Our mantra? To improve the future of human entrepreneurship through best-in-class technology, financial literacy, and commitment to equitable market access. Reach out today at www.loanmantra.com.