Crystal Ball

Will 2007 be a good time to bust some business moves?
Magazine Contributor
3 min read

This story appears in the January 2007 issue of Entrepreneur. Subscribe »

Thinking about raising money, buying new equipment or expanding your work force in 2007? The new year is shaping up to be a relatively good time for these moves, say financial and management gurus.

Finding Funding: Despite political turmoil, high oil prices and rising interest rates, the financing arena is fairly strong. "Right now the economy is stable, companies are doing well and there are large pools of private capital that have not been fully employed," says Lawrence Gelburd, a lecturer at the Wharton School in Philadelphia. "So in a general sense, this is a good time to be raising money."

Personal funds and what Gelburd refers to as "friends, family and fools" funding remain the easiest sources to tap. But entrepreneurs are also finding angel investors and venture capitalists more accessible. "A lot of funds that were only funding software are more open to funding services and related companies," reports Sashi Reddi, 41, founder of AppLabs Technologies in Philadelphia, which recently raised $10 million in VC financing. "That's probably due to pressure from investors to put money that's been sitting on the sidelines to work."

Business Investment: With economists predicting a relatively stable economy over the next year, now is as good a time as any to invest in your company. The caveat? Don't invest for the wrong reasons--such as to keep an ailing business afloat, cautions Frances McGuckin, CEO of Services and author of Taking Your Business to the Next Level. "The business should be stable, profitable, well-managed, and have growth prospects to justify an investment," she says. "And it's essential to prepare a business plan and talk to your account-ant and bank manager to determine whether your investment is a viable proposition."

Employee Compensation: Will the tightening labor market bring a return to the dotcom days of super salaries and pricey perks? Not anytime soon, says Don Nemerov, executive director of compensation practices at Grant Thornton LLP. "There's been an uptick in pay, but it's not significant," says Nemerov, who sees salaries increasing 3 percent to 4 percent in the broad market. "The exception is key talent with critical skills that are much in demand, such as technical R&D or biotechnology."

Reddi, who has had recent prospective employees request sign-on bonuses, agrees. "It's taking longer to fill slots than it did last year," he says, "but I don't see a big jump in salaries."

Interest Rates: What interest rates will do in the coming year is anyone's guess--which is why entrepreneurs should prepare for both the best- and worst-case scenarios. "Crunch the numbers in your business plan, and calculate the effect of a two to three point interest rate [change]," suggests McGuckin, who notes that a cautious outlook is smart planning. "One world event can change the economic situation overnight."


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