Third quarter 2018 business expenses showed a decided thriftiness according to a recent study released by Certify, a leading travel and business expense tracking service provider. Their analysis consisted of reviewing more than 10 million expense reports that were submitted. Gone, apparently, are the Mad Men TV series days of two martini lunches.
Uber, Starbucks, and Amazon top the list of expense chits submitted. Even with this prominence, Uber’s 11% share and the other two’s 4% are relatively modest. Uber has negatively impacted traditional taxi services, but sees important competition from 6th place rival Lyft. Starbucks is making inroads with a more complete eating experience than just coffee service. Amazon is also catapulting on it’s known retail strength with more and more business users.
Other top ten companies expensed include travel-related carriers Delta Airlines, American Airlines, and National Car Rental. Familiar names rounding out the remainder of the leaders were Shell Oil, Walmart and McDonald’s. Hampton Inn, though not in the top ten, was the most expensed hotel chain. In food delivery, for those in-office working lunches, Grubhub continues to lead, but is threatened by fast-growing Uber Eats.
The number of international travelers rose slightly in 2017 to 76.9 million. Spending by these visitors hit a record $251.4 billion according to the U.S. Dept. of Commerce. While the number of international travelers was down slightly from 2015’s all-time high of about 78 million, the strength of visitor numbers helped allay travel industry fears about heightened federal government border and travel ban security policies.
These numbers showed a decided shift in the origin of international visitors as double digit increases in South Korea, Brazil, and Ireland offset not surprising reduced visits from Mexico and the Middle East. Mexican travelers totaled 17.8 million down from 2016’s 19 million, but still represented the U.S.’s number one source of cross-border travelers.
U.S. Travel, a travel industry trade group, noted that U.S. share of total international travel declined from 13.6% in 2015 to a forecasted 12% this year. They also are seeking an expansion of the U.S. visa waiver program beyond the current 38 countries as a means of spurring additional American visits. Under this plan, visitors need only present a passport from their host country to enter the country. South Korean visits jumped after that country was added to the list of visa-exempt nations.
While traditionalists lament the apparent decline of our domestic manufacturing capabilities in today’s global environment, a recently-released Brookings study found that our overall output standing has not changed precipitously since 1970. True, we have fallen to second behind China in total output, but, interestingly, they absorbed the most-labor intensive processes to grow their capabilities. This is evidenced by their 2015 20% global market share requiring a reported 129 million workers at a time when our U.S. 18 % share employed a much more efficient 16 million, down from 1970’s all-time highs of about 20 million jobs.
A national economic strategy should be to cherry-pick back the most attractive jobs that were likely offshored over the past several years which would also help regain the top spot in output. The Trump presidency has shown more interest in reclaiming the manufacturing sector than the prior administration that saw job growth largely occur in the governmental and service sectors.
Clearly, the U.S. has invented, grown and retained the most technically efficient manufacturing processes and industries in the world. In many ways, China is at a point where the U.S. was decades ago. Going forward, it’s important that we protect our most valuable U.S. intellectual property. Equally important is our U.S. cultivation of entrepreneurs and tech-savvy small businesses to further grow tomorrow’s manufacturing innovations . This will ensure our continued dominance on the world productivity stage, and give us added protection in a rapidly confrontational international world of nations.
If you examine 10 year trends in consumer marketing searches, whether TV, radio, print, internet, or mobile devices, not surprisingly the fastest rising sector is PDA’s. An Edison Research consumer survey indicates that, for the first time, more people view the internet as more important to them in their daily lives than TV. Traditional media like TV and radio, while still leaders in total views, have not shown any material growth during that time frame. Over 135 million of Americans have smartphones. Their utilization is more than 14 times that of a desktop computer. B2C mobile sales now account for about 15% of ecommerce sales. As highlighted in other Western Equity LLC blog articles, your business needs to prepare for on the go PDA-enabled marketing and selling.
Facebook is still the dominant player in social media with an over 50% share of social media use. Twitter and LinkedIn follow at less than 20% each. Content marketing is still key over advertising. Content that works best are social posts and updates, newsletters, and specific articles. Users tend to rely on new content first before looking at marketing add-ons. Twitter continues to make giant inroads in mobile marketing. Don’t ignore that growing audience.
If you want more information on this or related analyses, please see the 2013 Infinite Dial Report created by Edison Research or an article by Patricia Redsicker at Social Media Examiner. Good Stuff for the small business looking to expand their business.
As if small business doesn’t have enough to worry about, the looming mandates for providing employee health care threatens to derail future growth trends from this most important sector. Obamacare or the Affordable Care Act has already begun to curtail business expansion, new hiring, and reduce the hours worked component in job scheduling. A recent Gallup Poll indicated that 40% of small businesses (less than 50 workers) have frozen hiring. Another poll indicated that 38% have pulled back on expanding their business. The National Federation of Independent Business has long identified increasing health care coverage costs as the number one problem in member company viability. At least the federal Health and Human Services Agency has delayed the employee multiple-provider choice plan option (SHOP) or Small Business Health Option until January, 2015. Employers are still required in 33 states affected by HHP regulations to offer a company-wide plan to employees.
So while the quickest path to building a small business is to create company awareness, strategically target product offerings to potential clients, and build service and support levels, too many owners are distracted by macro issues like health care. The owner time spent on budget and pricing implications, as well as making employee decisions based on cost considerations rather than growth needs is a drain on future results. Our health care system is broke and too expensive as everyone knows. The current prognosis seems to indicate that the proposed changes (and the effects on small business) will make us sicker before any future recovery.
Earlier in May, the U.S. Senate passed the Marketplace Fairness Act that has as its aim sales tax collection from all internet site purchases. The U.S. House of Representatives has not yet acted upon this bill.
Until now, online shoppers have enjoyed buying items from ecommerce sites largely sales tax free. Most existing state tax laws only impose tax collection responsibilities on businesses that have a physical presence in that state, such as a retail store or warehouse distribution location.
Many retail associations like the National Retail Federation endorse the plan. Big internet sales sites such as Ebay oppose such collections.
2012 internet sales exceeded $225 billion, so forecasted tax revenues could approach $20 billion. There are plenty of persuasive and powerful pros and cons to this argument. Stay tuned.