What Small Businesses Can Expect in 2025: Global and US Political Influences

Any business that wants to grow needs to consider the big picture of changes politically, globally and within their industry. Following up on our last blog, we arexploring that to expect in the coming year.

As we said, being prepared means staying informed, so here are some areas to keep an eye on globally and on the U.S. political front.

Global Politics: Uncertain, But Full of Possibilities

In 2025, small businesses will likely face a range of challenges and opportunities based on the ongoing geopolitical situation.

Key factors to watch out for include:

Global Supply Chain Disruptions

• Geopolitical tensions, such as the ongoing trade disputes between the U.S. and China, the war in Ukraine, and rising tensions in the Middle East, will likely continue to affect global supply chains.
• Small businesses may experience increased costs and delays in sourcing materials, which could push them to seek alternative suppliers, diversify sourcing, or even consider nearshoring or reshoring to mitigate risk.

• Rising inflation, driven by supply chain issues and energy price volatility (especially if energy markets remain unstable due to geopolitical events), could continue to affect small businesses.
• Small businesses may face higher operational costs, forcing them to either increase prices or absorb the costs, potentially impacting profitability.

Cybersecurity Risks

• With increasing cyberattacks from state-sponsored actors, particularly related to geopolitical conflicts, small businesses will face a growing need to invest in cybersecurity measures.
• Ransomware attacks, data breaches, and disruptions to online services will remain a concern, particularly for those with less robust security infrastructure.

• In response to global political shifts, small businesses may see changes in regulations, such as tariffs, export restrictions, and financial sanctions. These changes could affect businesses with international operations or those dependent on foreign markets.

• Geopolitical decisions about immigration and labor markets could impact small businesses’ access to skilled workers, especially in industries dependent on international talent.
• Policies regarding work visas, immigration reform, or restrictions on foreign workers may present challenges in hiring and retention.

• In light of these factors, small businesses will likely focus more on resilience, adopting flexible business models that can quickly adjust to changes in the geopolitical landscape. This includes diversifying revenue streams, investing in technology, and streamlining operations to stay competitive in uncertain times.

Opportunities in Local and Regional Markets

• As global tensions affect international trade and investment, there may be a greater emphasis on local and regional business development.
• Small businesses that can cater to regional needs or adapt their products/services to local markets may find growth opportunities closer to home.

A New Presidential Administration

As the new administration begins, small businesses can anticipate several regulatory and policy changes that may impact their operations:

• The administration has proposed extending provisions from the Tax Cuts and Jobs Act of 2017, including the qualified business income deduction, which allows business owners of pass-through entities to deduct up to 20% of qualified business income from their taxes.
• Additionally, there’s a proposal to lower the corporate income tax rate from 21% to 20%, with a further reduction to 15% for corporations that manufacture their products in the U.S.
• Eliminating taxes on tips and overtime pay is also under consideration, potentially easing financial pressures for service-based industries.

Regulatory Rollbacks

• The administration aims to reduce federal oversight across various sectors, including energy and healthcare.
• This deregulatory approach is intended to lower compliance costs and stimulate business growth. However, critics express concerns that such measures could lead to significant long-term consequences, such as environmental degradation and weakened consumer protections.

• Plans to increase tariffs, particularly on Chinese goods, could affect small businesses that import materials and products. While these tariffs may encourage domestic manufacturing, they could also lead to higher costs for imported goods, potentially impacting profit margins and supply chain dynamics.

• Tighter immigration policies may affect industries that rely on immigrant labor, such as agriculture, construction, and hospitality.
• Reduced availability of immigrant workers could lead to labor shortages, increased wages, and higher operational costs for small businesses in these sectors.

• The nomination of Kelly Loeffler to head the SBA suggests a potential shift in the agency’s focus.
• While specific plans have not been detailed, small business owners should monitor any changes in SBA programs and support mechanisms that could affect access to capital, grants, and other resources.

• The Federal Reserve’s projections for 2025 indicate an expected inflation rate of 2.5%. The administration’s policies, including tax cuts and regulatory changes, could influence inflation trends, impacting consumer purchasing power and business costs.

In summary, small businesses should prepare for a potentially more favorable tax environment and reduced regulatory burdens. However, they should also be mindful of challenges related to trade policies, labor availability, and economic factors such as inflation. Staying informed and adaptable will be crucial for navigating the evolving landscape under the new administration.

Smart Strategies to Succeed

• Stay Agile - build contingency plans for possible supply chain hiccups or financial fluctuations.
• Adopt Tech - streamline your operations with automation, data analytics, or a refreshed digital presence.
• Go Green & Social - more consumers want environmentally and socially responsible brands. Emphasize your commitments to sustainability and community support.
• Invest in Your Team - competitive wages, ongoing training, and professional growth opportunities help keep employees motivated—and loyal.
• Build a Cash Cushion - with potential interest rate hikes, strengthening your cash flow and securing financing options early can protect you against volatility.

Staying alert and proactive in a changing environment will be paramount to succeeding in 2025 and beyond. By understanding the economic climate, preparing for global shifts, and adapting to possible new regulations, small businesses can forge a path to sustainable, long-term growth.

If you have any questions or would like tailored guidance for your business, Lipresti Law is here to help you navigate the future with confidence.