The #1 hurdle for entrepreneurs in 2022 will be inflation. A 1% rise in the interest rate will increase the annual federal deficit by about $270 billion. The government will be a key competitor for funds available, which could especially hurt ventures. So how can entrepreneurs fight back?
Entrepreneurs will face just as many opportunities as hurdles in 2022. The biggest opportunities will be, hopefully, the unfettered re-opening of the global economy and the resulting increased demand for businesses. There will also be unicorn opportunities for growth-seeking entrepreneurs in the emerging industries. As for hurdles, the most important one is likely to be inflation. In addition to macro-economic issues, such as the practice of increasing the money supply at the slightest sign of economic discomfort (especially to the stock market), here are some other reasons: · Production moving out of China due to geopolitical risks, and raising costs · Baby boomers demanding more health care as they age · Millennials increasing consumption as their families grow · And the 600-pound gorilla – the increase in the national debt to around $29 trillion now. Consider the impact of this debt – a 1% increase in the federal interest rate will increase the annual interest payments by about $290 billion – and further increase the annual federal deficit from its current level of about $2.8 trillion. Adding this amount to the federal deficit, since neither political party seems to be interested in cutting the deficit, will only lead to a spiral of more borrowing. Despite our economists assuring us that this is not a problem, it means that the federal government will be a competitor for the limited funds available, which could especially hurt entrepreneurial firms.
