Area experts outline trends, regulations to watch for business owners

In 2024, River Lights Bookstore owner Sue Davis is hoping to build on last year’s gains.

Last year brought some normalcy back to the store, she said, as customers and businesses alike continued their relative return to pre-pandemic life. Shipping times came down from their pandemic-highs, and in-person sales rose.

“Another year like last year would be fabulous,” she said. “People are still very concerned about cost, so we’re being conscious about what we promote and what we discount, … but the community has been very supportive.”

Like Davis, many small-business owners now are setting goals and enacting plans for the year ahead. While that process varies between businesses and industries, area experts attest there are several considerations that appear ubiquitously.

As the new year finds its footing, here are some of the trends and changes experts say should be on business owners’ radar.

Inflation, interest

After years of economic anxiety around issues such as interest rates and inflation, financial experts are holding their breath for the year to come.

The U.S. economy held up in 2023, despite early and heightened fears of a potential recession. Inflation began to cool late last year, and the Federal Reserve has hinted at plans to cut interest rates.

Tyson Leyendecker, president at Capra Bank, said area businesses seem to hold a sense of cautious optimism for 2024 while also recognizing the likelihood of continued uncertainty.

Many are keeping tabs on upcoming elections at the presidential and congressional level to glean potential impacts on future legislative and regulatory efforts.

“Election years typically lead to a little uncertainty. Different candidates offer different opportunities,” Leyendecker said. “But it seems to me that the overall business sentiment is good.”

Mark McCoy, senior vice president of business services at Dupaco Community Credit Union, estimated some entrepreneurs will tread with caution in case some of the more optimistic economic outlooks fall short in the year to come.

“Thoughts are that inflation is cooling a bit, but that doesn’t mean it’s going away,” he said. “Prices aren’t necessarily going backward at this point, they’re just going up slower.”

Regulatory changes

The regulatory environment is in near constant flux for business owners, but there are a few notable changes area advisors are recommending entrepreneurs keep in mind this year.

Starting in 2024, businesses will need to register with the federal Financial Crimes Enforcement Network to provide information about who owns and controls their companies.

Existing companies have until Jan. 1, 2025, to report all “beneficial owners.” New businesses must report the information within 90 days of their registration. A beneficial owner is anyone who exercises substantial company control or who possesses at least 25% ownership interest.

The reporting requirement was enacted by Congress to combat the use of shell companies, although businesses with more than 20 employees and more than $5 million in gross sales can qualify for certain exemptions.

“This is a new step for businesses. It’s not something they had to do previously,” McCoy said. “It’s not a huge lift, but it’s something that needs to be done or there’s an accompanying penalty (for noncompliance).”

This year also marks the rollout of a new Iowa law around how limited liability companies are formed and regulated, as well as changes to the wording of the state’s W-4 form to better mirror federal verbiage.

To best understand those changes and others, McCoy advised business owners to touch base with accounting, legal and financial advisors since regulatory mandates will affect various industries in different ways.

Fraud awareness, detection

Recent and ongoing advancements in technology have been a boon for business owners across many industries, but the same also can be said for tech-savvy fraudsters who use technology to defraud businesses and everyday citizens alike.

Dubuque Bank & Trust President Drew Townsend said addressing that issue and raising public awareness is one goal for DB&T in 2024.

“Unless it bites you personally or hits close to home, (fraud schemes) can easily feel like one of those things that only happens to other people, but we’re getting into a time where we all need to be better about elevating our awareness,” he said.

Like other technology-based crimes, fraud schemes have changed and evolved over the years. The infamous chain emails of the late 2000s may have fallen out of rotation, for example, but dozens of other schemes have popped up in their place.

Just this winter, Townsend said officials nationwide warned of “card draining” scams ahead of the holidays. Such scams are carried out when fraudsters gain access to physical gift cards in stores, tamper with them and then gain access to the funds when the cards are activated by a legitimate customer.

“They would know when the card was loaded and use it before the gift card recipient could ever use it,” Townsend explained. “It never ceases to amaze me the lengths people will go to manipulate others.”

Fraud schemes are expected to evolve in 2024 as technology advances. To address that issue for DB&T customers, Townsend said the bank has prepared programming around fraud awareness and detection for its business clients.

Wages, talent

On Jan. 1, Illinois’ minimum wage increased to $14 an hour, but even in places without mandated increases, area experts are telling business owners to plan carefully for rising compensation costs.

With unemployment hovering at or around 3% across the tri-state area, Townsend said many business owners are faced with the need to raise wages to recruit and retain quality workers. And that pressure isn’t expected to wane in 2024.

“Competitive salaries, career management, job satisfaction, these are all things that quality employees are looking for,” Townsend said. “All businesses, small and large, are having to factor in how to meet that expectation.”

To address those factors, Leyendecker recommended business owners find efficiencies within their existing workforce.

Technological upgrades at a manufacturing center, for example, can allow employees to complete tasks faster and in higher quantities. That efficiency improves returns, which can then be invested into wage increases.

“It’s about identifying the staff you have and how to best use their knowledge and capabilities,” he said. “If businesses can leverage what’s available to them to streamline operations, it makes them more competitive.”