How may the Fiscal Cliff affect your retail store?

The Fiscal Cliff is something that six months ago many Americans had never heard of before. Now it is as common as Y2K was before the turn of the millennium. Unfortunately, Y2K was easier to fix, as it was computer-based; the Fiscal Cliff though, is politically-based.

Unless something rash happens in the next few days, the Fiscal Cliff will happen and will have an impact on your life and your business. Many of you who own your own shops, your business is your life, and you have spent years building both into what they are today. You should be commended on achieving the American dream. Unless you are aware of what will happen in the next few weeks and months though, that dream may become a nightmare.

The Fiscal Cliff is going to hit everyone; depending on your taxable income you will see different effects. Your clients though, are the ones you need to worry most about.

  • The lowest income earners, the bottom 20% will have their taxes raised $412
  • The 60% of the nation that makes up the middle class will see and increase of $2,125.
  • The top 20% will see an increase of $14,173.
  • The extremely wealthy, the top 1%, will enjoy a tax increase of $120,537.

How does this affect you personally, and your business? Remember, 75% of all small businesses, which are the backbone of the fishing industry and the U.S. economy, will be feeling this tax increase in their personal taxes. Due to the increase in personal and business taxes, you will see the Temporary Payroll Tax Cut disappear at midnight, and will have Obamacare Taxes kick in as well. It is widely assumed that the Fiscal Cliff will bring about another recession, which would begin early in 2013. Unemployment would rise to 9.1% by the end of 2013.

How else will this affect your business and customers? What tax bracket does the majority of your clientele fall into? I assume the first two levels, as they tend to be the most active in the outdoors. Where will the additional $400 and $2,100 come from for their taxes? From the money they would normally be spending on vacations and recreation. From money they should be spending in your store.

Since the Mayans were obviously wrong and we’re all still here, what can you do for your business? First thing I would do is stay calm; this nation has been through much worse before. Try to plan any and all sales to maximize your returns. No matter what the fiscal climate, people will still be buying fishing tackle – just make sure they are buying from you. Internet sales will likely increase due to an increase in gas prices and the lack of local taxes on most Internet sales. You need to combat that; how you do it is up to you. Realizing where people are buying is over half of the battle, getting them to buy from you though is something we will cover in the coming weeks. Social media, which is free, and a great source for marketing campaigns is a great way to keep your business’ name at the top of the list.

Now more than ever is when you need to work with your suppliers and see how they can help you, either with special deals or with advertising dollars. Talk to your friends within the industry. What are they doing to combat the Fiscal Cliff? What is your competition doing as well? The final thing to do is to look to the leaders within the industry – what stores are succeeding in this climate, what are they doing? What can you take from their playbook, make you it your own and survive all of this?

In the end there are no clear-cut answers or must do’s to survive something like this. We all need to realize that at the end of the day we’ve all had some hand in creating this mess and must work together to get out of it. Happy New Year, from all of us here at Fishing Tackle Retailer, we look forward to being a part of your business in 2013.