Five Economic Reasons To Begin a Business in 2024
The Future is Looking Bright For Aspiring Business Owners
Every January brings another opportunity to make the upcoming year better than the previous one.
First, I want to wish all of our 5,000(ish) subscribers a very happy new year. My sincere hope for you is that 2024 is your happiest, most peaceful and prosperous year so far. Looking back over the last three years, I think we all have earned it!
Every January 1st we come into the new year with hopes, ambitions, and plans for the year ahead. For some those ambitions include things like losing weight and getting in shape, or spending more time with loved ones, or traveling more. There are those who are determined to gain control of their finances, get out of debt, save and invest more. And then some of us have grand ambitions to make this the year we finally begin a business and make plans to escape employment.
According to a January 1st CNN article, there are some very positive economic signs for the year ahead.
All of these signs point to 2024 being a better year for consumers, which in turn sets the stage for a very good year for you to begin the business you’ve been dreaming about. Let’s walk through the details of the article and discuss five related reasons this is shaping up to be a great year to begin a business.
Inflation Appears to Be Under Control
In June of 2022 we found ourselves bewildered and shell-shocked at how expensive everything had become, from SUVs to Bacon and everything in-between, with inflation rates topping 9.1%, the highest in four decades. With the inflation rate anticipated to be down to around 2% by the end of 2024, we can all breath a little easier, not because prices will drop, but because they will stop rising at such an alarming rate.
This is great news for those who plan to begin a business this year. When the prices of our daily necessary expenditures stabilize, consumers are more relaxed about overall spending, especially on non-essential products, services, and experiences.
Interest Rate Cuts are Coming
When inflation is out of control, the Federal Reserve increases interest rates to help reign it in. This is good news for investors, translating into higher returns on savings and portfolios, but terrible for borrowing consumers, and borrowing business owners.
When rates are high, consumers see their credit card balances grow at a faster rate, burying them more deeply under debt that will take longer to pay off. They also hold back on buying new homes and vehicles. High interest rates are equally as punishing for current and aspiring business owners who rely on borrowed money for improvements and expansions of current business, and instruments like SBA business loans and home equity loans to begin new businesses.
Rate cuts would bring relief to Main Street, lowering the cost to get a mortgage, get a car loan and carry a credit card balance. Mortgage rates have already plunged from nearly 8% in October to 6.6% at the end of the year. ~CNN
There is some consensus that we’ll witness four interest rate cuts in 2024, with Goldman Sachs projecting that they could begin as early as March.
Here at Quantum Franchise Group, some of our clients pumped the brakes on opening their new business in 2023 because the cost of borrowing money through an SBA loan was simply too high to stomach. As the Federal Reserve begins dropping rates this year, those business loans will become more affordable, accessible, and appealing.
The Stock Market is Winning
According to the CNN article, the NASDAQ and the S&P 500 ended the year with a roar spurring investor confidence. When Wall Street is doing well, corporations see it as an ideal time to emerge from the bunker and begin investing in and expanding their businesses, which is great news for the workforce. And the average Joe and Jane who are counting on their 401Ks, 403Bs, and IRAs to provide a comfortable retirement someday are more relaxed about their spending today on goods, services, and experiences.
Whether you’re thinking about opening a home services business, or a restaurant, or a wellness spa, a bull market on Wall Street will translate into more consumers feeling more comfortable about spending today’s money with you, while tomorrow’s money grows at a healthy pace.
Unemployment is at a Half-Century Low
The CNN article reports that unemployment is the lowest we’ve seen in 50 years, at about 3.7%.
“Claims are extraordinarily low,” Mark Zandi, chief economist at Moody’s Analytics said. If this trend lasts, it should support consumer spending — the main driver of the US economy.
It goes without saying that it’s a great time to open a new business when Americans are working, earning paychecks, and feeling comfortable about coming through your doors to spend their money with you.
Paychecks Are Rising
There appears to be a perfect storm forming that will benefit consumers and aspiring business owners, and that is the closing of the gap between inflation and paychecks. During the height of the recent inflation crisis we witnessed prices rising at a devastating 9% while wages rose at around 4.5%. Consumers were in a losing battle, holding on tightly to their money just to cover the essentials.
Both Zandi and Wolfers expressed optimism real wage growth will gather momentum in 2024. “As time goes on here and inflation remains low, incomes will catch up and pass inflation,” Zandi said. “People will start feeling better about things.”
And when people begin feeling better about things, and consumer confidence recovers, and even soars, the more confidence you can have as a new business owner that your business will get off to a great start and be poised to succeed for years to come. Most businesses don’t survive long-term when they struggle right out of the gate.
This very well may be your year to make the dream of business ownership a reality!
It’s been a rough and frightening ride for the last three years, a time when many of us hunkered down and focused on surviving. All of these signs we’ve shared here are pointing toward 2024 being a turnaround year, one where we can stop focusing on how to simply survive, and instead begin planning for how to thrive.
If you’ve been thinking about opening a business, this could be your year, and we’d love to help you by introducing you to one or more of the 800 franchise systems across 37 industries that we represent. Franchising is hands-down the best approach to opening a business as you’ll do so with an established brand, proof of concept, systems and processes that have been tested, proven, and replicated many times over.
About Quantum Franchise Group
Quantum Franchise Group is a full service franchise brokerage representing over 800 brands across 37 industries. We are a member of the Franchise Brokers Association with certification in FTC compliance. Since March, 2022, Quantum President William Huffhine has helped aspiring business owners to open nearly 100 franchises across the United States.
We serve aspiring business owners, at no cost to them, by guiding them step-by-step through the entire 6-step franchise ownership process.
Our role is not to sell. We're in the relationship business. Our role is to guide our clients toward successful business ownership with great franchise opportunities. All of our brands are carefully evaluated and vetted so our clients can be assured that all of the work we do together will be in their best interest.