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3 Key Business Predictions for 2015

With 2014 wrapping up, entrepreneurs are looking to 2015 business and economy predictions to prepare their companies. This year is wrapping up with low interest rate, low energy costs (gas is actually below $3 in some parts of Chicago as of publication), and rising housing prices. Regardless of which industry you operate in, this is good news for all businesses depending on the U.S. economy, which is everyone in the country and many foreign businesses as well.

The unstable political climate around the world and fluctuating commodity prices have a large impact on currency values, international trade, and other factors that affect small businesses in the U.S. Here are some volatile situations to watch for 2015:

  • The U.S. military and international armed forces are back in the Middle East fighting ISIL.
  • Russia’s instability is multidimensional - declining oil prices, global sanctions due to the Ukrainian conflict (and many world leaders believe that Russia is still involved), plummeting currency value, and internal political turmoil. Credit rating agency Moody’s recently downgraded Russian debt, and the cost of insuring this debt doubled over the past year). Russia has previously defaulted on a debt and another default could ripple through the global economy.
  • Interest rates are expected to rise in 2015, which can lower consumer spending and corporate capital investment.
  • Although the U.S. is experiencing economic growth, Europe and China are still in the middle of a significant slowdown.

Going into 2015, here are three key economic and business predictions for small businesses and international economies alike.

1.   Rising interest rates

Interest rates are expected to increase over 2015 and this will restrict access to low-cost capital. The economic growth we saw in the U.S. during 2014 was fueled in part by low interest rates and from homeowners mortgaging their homes. In 2015, banks will have increased capital requirements, which also decrease the availability of loans (debt). The economy works like dominoes - one factor affects everything.

Rising interest rates will slow home financing and that hits consumer spending, which then slows national economic growth. This can be mitigated by low energy costs in the short-term.

2. Energy availability and price volatility

Many countries depend on oil royalty revenues to keep their economies afloat so a decline here means slowed economic growth for oil-producing countries, which will have an increasing effect on the U.S. In the summer of 2014, the U.S. exported its first barrels of oil in decades, heading for South Korea. OPEC met last month and decided not to cut their output, which collapsed oil prices around the world. 

This is expected to be less of a threat because energy prices should recover in 2015, as the U.S. will bank its oil reserves to earn more on them later. Oil production from both OPEC and non-OPEC countries is not expected to decrease, but traders will likely be hedging and buying oil futures at low prices, which forces prices to rise. 

3. Outsourcing

Outsourcing is among consumers and businesses, and this will only increase in 2015. Time is money - people have conducted cost-benefit analysis and they found that outsourcing personal services is the way to go. These services include meal, laundry, and grocery delivery, but there are countless varieties of courier services. Business operating in this space will see booming revenues.

Businesses are also outsourcing tasks in order to streamline operations. Many companies, particularly small businesses, are refocusing on their core functions and outsourcing duties like accounting, marketing, human resources, and manufacturing. Outsourcing will be a fast-growing industry in 2015. 

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