Here are four strategies to help small and midsize businesses focus on a holistic effort to overcome some of their anticipated macroeconomic impacts and remain resilient—if not growing—throughout 2025.
Small and midsized businesses (SMBs) are no stranger to economic volatility. Their soundtrack could be the chorus from 1997 hit “Tubthumping” by British band Chumbawamba: “I get knocked down, but I get up again. You’re never gonna keep me down.”
When the COVID-19 pandemic shook markets and flipped business operations on their heads in 2020, SMBs used their agility to their advantage. They innovated new distribution models, remote work arrangements, and product expansion and redesign.
But there are limits to what an organization can withstand when juggling thin profit margins, a specialized market niche, or a smaller staff.
Escalation of tariffs and trade tensions are new hurdles for SMBs in 2025. While the labor market remained strong early in the year, such disruption—especially to supply chains—historically correlates with an eventual business slowdown.
To say that SMB owners are concerned about tariffs would be an understatement: 70% of businesses say tariffs will impact their costs and operations in some way—nearly 80% identifying materials or supplies as where they’ll feel the pinch.
True to their agile nature, SMB owners have already responded or are planning to act:
- Nearly half are raising or will raise prices for customers.
- More than 40% are exploring alternative suppliers.
- Many are also trying to absorb the additional costs—at least for now.
Only 10% aren’t sure what to do. This suggests that SMB owners have used the past six months of uncertainty to their advantage by planning for different scenarios to give themselves options on when and how to pivot.
Some recent workforce trends could be exacerbated by the current economic volatility. For example, part-time employment for economic reasons increased through the first quarter of 2025
In the fall of 2024, the Principal Financial Well-Being Index, a survey of U.S. business decision makers, showed an end to the record high levels of businesses increasing staff, while concerns for attracting and retaining talent have eased.
Businesses at the end of 2024 were already losing some faith in growth prospects for the U.S. and their local economy compared to 2023. But they’ve felt more confident about their personal business growth—somewhat offsetting macroeconomic concerns.
Sustained tariffs could tilt SMBs into pessimism—especially those relying on foreign manufacturing and global distribution. The latest estimate from Principal Chief Global Strategist Seema Shah suggests that lingering uncertainty and tariffs still could “weigh on investment and hiring decisions” and make an economic slowdown more likely.
Business owners make hundreds of decisions daily to keep their business operating smoothly in the face of challenges. Here are four strategies to help SMBs focus those decisions into a holistic effort to overcome some of their anticipated macroeconomic impacts, and to remain resilient—if not growing—throughout 2025.
Remember, economic challenges are cyclical, but business resilience is enduring.
- Stay true to your staffing strategy. It’s best to look at cost levers other than staffing to pull to manage through volatility. A lesson learned from the COVID-19 pandemic was that finding and adding the right talent when you’re already poised for growth can be very difficult. Employers should strive to retain skilled and key employees in times of stress or crisis so the business can flex its agility when returning to growth mode.
- Find alternatives to critical dependencies in your supply chain. Employers have to understand how their supply chain works and affects their business. Not only should you regularly assess your supplier dependencies and identify alternatives, but it’s also especially critical in times of changing economic markets. Proactively develop your alternative suppliers and a solid Plan B.
- Protect cash flow. Protecting and maintaining cash flow is critical for SMBs. Employers should work with their financial advisors or accountants to anticipate how they might alleviate a dramatic cost increase, or ways to generate new cash flow by innovating new revenue streams. SMBs should also consider investors in their business; is there opportunity to recruit a new silent partner, perhaps a trusted fellow entrepreneur with enough liquidity to invest in the company when it is needed most?
- Embrace your agility as an SMB. Agility is the SMB superpower. Owners should take advantage of being in the driver’s seat of their business, where they have a unique ability to directly communicate with and lead their smaller staff more easily than larger organizations. This allows them to also embrace innovation opportunities earlier, spot challenges sooner, and implement change more quickly and efficiently throughout their entire organization.
