As 2024 concludes, businesses are looking ahead to 2025 with cautious optimism. Summit Bank’s Chief Executive Officer, Craig Wanichek and Chief Financial Officer, Chris Hemmings, share their professional insights on how small and mid-sized companies can navigate challenges, seize opportunities, and adapt to an ever-changing economic landscape. Their expertise offers actionable strategies to help businesses prepare for success in the year ahead. Â
Navigating Economic Uncertainty
The economic environment is dynamic, shaped by inflation, interest rates, and fiscal policies. Wanichek emphasizes the need for agility and preparation to thrive amidst these variables.
“Interest rates are a significant factor to watch,” says Wanichek. While short-term rates may decline in 2025, mid- and long-term rates could remain elevated due to federal debt and deficits. Summit Bank projects a 100-basis-point drop in short-term rates by 2026, though this outlook could shift based on inflation trends and post-election policy changes.
Businesses must also pay close attention to their operating margins. “Monitoring your margins and ensuring they align with your goals will be critical,” Wanichek advises. Evaluating expenses against forecasted revenues when planning for 2025 will ensure stability in an uncertain climate.Â
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Inflation remains an unpredictable force. Labor market strength and government policies will heavily influence core inflation, impacting costs and pricing strategies. “Keeping a close eye on inflation metrics is essential to anticipating its effects on your business,” he explains.
Building Resilience Through Strategic Priorities
In slower economic periods, resilience and adaptability are critical. Hemmings stresses the importance of a sound financial foundation to navigate uncertainty and capitalize on emerging opportunities.
“Liquidity and balance sheet alignment are critical in times of uncertainty,” Hemmings explains. Robust liquidity supports day-to-day operations and positions businesses to seize strategic opportunities, such as reduced costs of goods or investments in growth areas.
Long-term assets should be funded with long-term liabilities to reduce stress on working capital. Hemmings adds, “A contingency plan for raising additional capital or managing cash flow timing is essential to weathering economic challenges.”
His overarching advice is to maintain flexibility. “A nimble balance sheet isn’t just about managing risks—it’s about staying ready to seize opportunities as they arise,” Hemmings concludes.
The Intersection of Inflation, Taxes, and Consumer Demand
Inflation, consumer spending, and tax policies are deeply interconnected, shaping businesses’ financial decisions. Wanichek notes that the Trump-era tax laws, set to sunset at the end of 2025, could bring significant changes. “While these laws may be extended into 2026, businesses should prepare for adjustments to avoid surprises,” he advises.
Consumer spending, which has remained more robust than anticipated throughout 2024, will likely continue supporting the economy in 2025. “Resilient consumer demand has been a bright spot,” Wanichek explains, “but businesses should remain vigilant and monitor shifts closely.”
Inflation will also influence financing costs. “Understanding how inflation trends impact interest rates is vital for making informed financial decisions,” Wanichek adds.
Innovating for Growth and Security
Adaptability and innovation are essential for staying competitive in 2025. Hemmings highlights two key areas: succession planning and cybersecurity.
The rise of private equity acquisitions presents unique opportunities for business owners considering long-term strategies. “We’ve seen significant capital available for such deals, often at attractive multiples,” Hemmings says. This trend could offer a lucrative path forward for businesses exploring succession planning.
At the same time, cybersecurity remains a pressing concern. Small businesses are frequent targets for cyberattacks, such as fraudulent invoicing schemes and email compromises. “Investing in robust cybersecurity measures is no longer optional—it’s essential for protecting your financial operations and sensitive information,” Hemmings warns.
By prioritizing innovation and safeguarding assets, businesses can position themselves for growth and resilience in an ever-changing landscape.Â
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Strengthening Your Workforce for Long-Term Success
The labor market offers a mix of challenges and opportunities heading into 2025. Wanichek notes encouraging improvements in the pool of qualified candidates. “We’ve observed an increase in applications across various roles, which is a promising sign for businesses looking to make strategic hires,” he says.
Wage pressures, which were intense during the pandemic, have begun to ease, offering stability for compensation planning. Wanichek encourages businesses to focus on aligning workforce investments with their long-term goals.
“If business activity slows, it’s an excellent time to upskill your workforce,” he advises. Training and development boost morale and position businesses for more robust growth when the economy rebounds. “A strategic focus on bench strength—whether internal or external—can help maintain a competitive edge,” Wanichek concludes.
Preparing for Success in 2025
Wanichek and Hemmings share a clear message: preparation and adaptability will be the keys to thriving in 2025. Businesses can confidently navigate uncertainty by monitoring economic trends, aligning strategic priorities, and embracing innovation.
Summit Bank is committed to supporting its clients every step of the way. Whether you need guidance on financial strategy, liquidity management, or long-term planning, our team is ready to help.
Stay tuned for more insights and resources as we enter the new year, and connect with your Summit Bank advisor to discuss how we can help your business achieve its goals in 2025.