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On the Rise

What will expected interest-rate hikes mean to you?

This story appears in the September 2004 issue of Entrepreneur. Subscribe »

The era of record-low interest rates may be coming to a close, pending anticipated hikes this year by a Federal Reserve worried about inflation. But the impact on entrepreneurs is likely to be manageable. "Moderate increases in inflation and interest rates happen when the business environment and consumer buying is better," says Robin Wantland, national director of business banking at Compass Bank in Dallas. That's good news as long as the rate climb stays within limits. "Anything north of 7 to 8 percent would be a warning signal," Wantland says.

Rates have held so long that businesses may be caught short adapting strategies to the changing economy. But with the Federal Reserve proceeding slowly, there's time to get in gear. The process is already underway for members of the Alliance of Chief Executives, a Walnut Creek, California, organization of people who run businesses in the San Francisco Bay Area. Bart Penfold, president of the Alliance, says members are reviving plans to expand product lines and increase investment. Companies are also boosting sales and marketing staff to take advantage of rising consumer spending.

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