Early this year we adopted the phrase “flat is the new normal.” Hoping for a decent recovery in 2012 we all seemed grateful that 2011 was in the history books and we looked forward to improving business conditions. But, for many the improvement never materialized. When I ask business leaders now how they feel about 2012, the word “ok” seems to be the most common response. Not great, not thrilled, just ok. How you feel about 2012 depends on a number of factors: where you are located, which markets you serve, how well you managed your finances over the past three or four years, and what happened to your competition. By now I think we all agree that the growth and freewheeling business environment that took us through 2006 may not occur again during our lifetime.

Earlier this year I wrote in this column about headwinds and tailwinds. I encouraged readers to identify and plan for the headwinds that hold back growth in revenue and profits. Shifting spending patterns, availability of capital, rising healthcare costs, high unemployment, economic uncertainty, and government debt are just a few of the challenges we faced going into 2012. Frankly, every headwind we started 2012 with remains on the list as we enter 2013. While we cling to hope evidenced by an excruciatingly slow improvement in the national GDP and maybe a slight uptick in real estate values, it’s hard to identify business challenges of 2012 that won’t be with us through 2013.

If “The Affordable Health Care Act” is fully implemented in 2014, have you analyzed how it will impact your business? Chances are your healthcare costs will dramatically rise. Many businesses will be faced with the decision to continue to provide coverage or turn employees over to government programs and pay the penalties. The ramifications of this cannot be overstated, and deserves discussion among your managers, advisors, and eventually your staff.

If you spent the last few years trying to survive, you probably trimmed your expenses, focused more attention on cash flow, and learned to say no to low-margin work, concentrating instead on projects with higher profit margins even if it resulted in lower revenues. In other words, you managed your business rather than just going along for the ride. Most of us, while not satisfied, have learned to temper our expectations for a quick economic recovery.

Now is the time to begin looking for new opportunities. Diversification may be the word for 2013. If you have your business processes in order you may well be in a position to explore new markets and maybe even new product applications that could replace old vertical markets. If houses of worship aren’t spending money, would the telemedicine and the healthcare market be worth exploring? If your K-12 market has no money, does the private or charter school market offer opportunities? If your traditional customer spending on AV systems is way down, who are they using for their security needs? Is the security integration market worth exploring?

Most low-voltage business applications are only separated by a few degrees related to skills and training. The technology in different applications is likely within the grasp of your design and technical staff. It may be just a matter of training your sales staff to ask different questions or dig deeper with your traditional customers to find out what kind of technology they plan to spend money on in 2013.

So, will 2013 be better for you than 2012? Regardless of which way the political winds blow, there will be many business challenges next year. How and where you focus your efforts will be the deciding factor.

The New Employment Crisis

As if you didn’t have enough to worry about, the pieces may be in place for your business to experience significant employee turnover early next year. A recovering U.S. economy, increasing job growth, and unhappy employees are a few examples of current conditions. In a recent study conducted by The Society for Human Resource Management (SHRM), the majority of HR professionals agreed that once the job market improved, they expected that employee turnover would rise significantly.

The 2012 Aflac WorkForces Report indicates that:

• 49 percent of workers are at least somewhat likely to look for a job this year.
• 50 percent of workers say employee benefits are very or extremely influential on decision to leave.
• 76 percent of employees said they’d be at least somewhat likely to accept a job with a more robust benefits package but lower compensation.

Most employers have “no clue” how vulnerable they really are. They may lose valuable productivity, not to mention intellectual capital. Most of the people who intend to leave describe themselves as “top talent,” the kind of workers companies can least afford to lose. These workers are the highly valued employees companies need in order to remain competitive in a tight economy.

In 2013 be prepared to watch the employment market shift from employer to employee in the driver seat.

—M.B.