Now 2025 is in full swing, the North American business landscape is poised for significant change, presenting both challenges and opportunities, particularly for small to medium-sized enterprises (SMEs). The global economy continues to adapt to post-pandemic realities, technological advancements, and quickly shifting political dynamics. For SMEs, navigating these complexities will require strategic planning, adaptability, and access to tailored funding solutions to ensure that they can capitalize on opportunities as and when they’re presented. So what is the 2025 outlook for North American business owners?

The Impact of the Incoming US Administration

The new administration in the United States brings with it potential shifts in policy that could significantly influence the business environment. While specifics of the new economic agenda are still unfolding, several key themes are likely to emerge:

Tax Policies: Changes in corporate tax rates and tax incentives for SMEs could directly impact profitability and investment capacity. For example, proposed corporate tax reliefs for domestic small businesses and the introduction of permanent expensing of equipment and R&D, may provide opportunities for reinvestment in growth initiatives and improve a business’ cash flow position; for american-owned entities in any case.

Tariffs and Trade Policies: The administration’s potential tariffs on Canadian goods may have far-reaching implications for cross-border trade. Canadian SMEs reliant on exports to the US market may face increased costs, while US-based SMEs might encounter supply chain disruptions or higher prices for imported goods. Depending on how this all pans out, businesses on both sides of the border will need to reassess their trade strategies and explore new markets or suppliers.

Regulatory Environment: An emphasis on stricter environmental, social, and governance (ESG) regulations could create new compliance requirements. While challenging, this shift also opens opportunities for SMEs that can position themselves as leaders in sustainable and socially responsible practices.

The Changing Canadian Political Landscape

The landscape for Canadian entrepreneurs could change markedly with the changing political landscape. With an upcoming change in leadership for the Liberals and elections coming later this year, the uncertainty around potential policy shifts poses both challenges and opportunities for these vital contributors to the economy. These changes might impact SMEs and entrepreneurs in several ways…

Tax Policies and Incentives

Government transitions often bring changes to corporate tax structures, deductions, and incentives aimed at SMEs. A pro-business administration might increase tax breaks and funding for startups, while others might focus on adjusting tax rates to support broader social programs. Entrepreneurs must stay informed to adapt their financial strategies accordingly.

Funding and Grants

Election outcomes can directly influence access to public funding and grants. Programs designed to foster innovation, technological advancement, or sector-specific growth may either expand or face cutbacks, depending on the priorities of the incoming government. Entrepreneurs reliant on government support should monitor campaign promises and prepare for potential shifts.

Trade Policies and Export Opportunities

For businesses engaged in international trade, changes to trade agreements or tariffs can have a substantial impact. The upcoming elections might determine Canada’s stance on global trade partnerships, influencing market access for SMEs seeking to expand internationally. The incoming government will also need to tread carefully in response to the potential trade-limiting policies of the new U.S. administration, should they want to foster mutually beneficial trade relations.

Labour and Employment Laws

Labour regulations, minimum wage laws, and benefits policies are often revised with changes in government. These adjustments can affect operating costs for SMEs, particularly those in industries with tight margins. Entrepreneurs should anticipate how new regulations might impact their workforce management and costs.

Regulatory Environment

Governments with a focus on reducing red tape may create a more conducive environment for business growth, while others prioritizing environmental or consumer protections might introduce stricter regulations. Entrepreneurs in industries like manufacturing or energy should prepare for potential shifts in compliance requirements.

Support for Innovation and Technology

A government emphasizing technological development might expand support for startups in AI, clean tech, and other emerging fields. Entrepreneurs should align their innovation strategies with government priorities to maximize available resources and partnerships.

Economic Confidence and Market Stability

There are so many moving parts to the Canadian economy currently and 2025 will bring an unsettled business environment to say the least. An upcoming election often brings market volatility, which can impact consumer confidence and spending. SMEs in retail, hospitality, and other consumer-facing sectors should be prepared for potential fluctuations in demand in the run up to the elections and perhaps for a time after.

How Can Canadian Business Owners Best Position Themselves for the Year?

Stay Informed: Regularly track election developments and the election manifestos of different parties in order to anticipate changes and get ahead of them.

Diversify Revenue Streams: Mitigate risks by exploring new markets or expanding product offerings.

Leverage Advocacy Groups: Join industry associations that advocate for SME-friendly policies.

Plan for Contingencies: Develop flexible strategies and build cash flow reserves to adapt to potential economic or regulatory changes.

The upcoming Canadian elections present an unsettling period for SMEs and entrepreneurs. By staying proactive and adaptive, they can navigate challenges and capitalize on opportunities to thrive in the evolving political and economic landscape.

Overall Economic Challenges and Opportunities

The North American economy in 2025 is influenced by several intersecting factors:

Inflation and Interest Rates: While inflation has stabilized in many sectors, it remains a concern for SMEs with tight margins. Rising interest rates could make borrowing more expensive, posing a challenge for businesses needing capital for expansion. On the other hand, stable inflation rates provide predictability for long-term planning.

Labor Market Dynamics: SMEs continue to grapple with labor shortages and the rising cost of talent. Investing in upskilling existing employees and leveraging technology to automate repetitive tasks can help mitigate these challenges.

Consumer Behavior: Changing consumer preferences, particularly toward online shopping and ethical consumption, provide a dual-edged sword. SMEs that adapt their offerings and business models to align with these trends stand to gain a competitive edge.

Technological Advancements: The rapid pace of technological innovation creates opportunities for SMEs to streamline operations, enhance customer experiences, and enter new markets. However, the cost and complexity of adopting new technologies remain barriers for many smaller businesses.

Social and Geo-Political Challenges

Global Instability: Geopolitical tensions, including conflicts in other regions, can create uncertainty in global supply chains and energy prices. SMEs reliant on imported raw materials may face rising costs or delays.

Demographic Shifts: An aging population in North America presents both a challenge and an opportunity. While it may reduce the available workforce, it also opens new markets for products and services tailored to older consumers.

Environmental Concerns: SMEs are increasingly expected to adopt sustainable practices. While this can increase operational costs initially, it also provides an opportunity to differentiate and appeal to environmentally conscious consumers.

Opportunities for Growth in 2025

Despite these challenges, 2025 offers significant opportunities for SMEs that are proactive and innovative: If there aren’t already strategies in place, business may want to consider;

Diversification of Markets: Expanding into international markets beyond North America can help mitigate the risks associated with tariffs and trade tensions. SMEs can leverage digital platforms to access global customers more easily than ever before. Sallyport has the privilege of working with North American entrepreneurs expanding operations into the UK, where we also have an experienced team of alternative finance professionals, and vice-versa; for UK parent companies with their sights set on operations here.

Technology Integration: Adopting technologies such as artificial intelligence, blockchain, and data analytics can optimize operations, reduce costs, and enhance decision-making capabilities.

Partnerships and Collaborations: Collaborating with other SMEs or larger corporations can provide access to resources, expertise, and new markets. For example, partnerships in the green energy sector are expected to flourish as some governments incentivize sustainable initiatives.

Government Incentives: Many federal and local governments are offering grants and subsidies for businesses investing in innovation, sustainability and workforce development. Although this could be a rapidly changing situation this year, SMEs should actively explore these programs and what they can offer to help fund their growth initiatives.

Tailored Financial Solutions: A Key to Unlocking Potential

One of the most significant barriers to growth for SMEs is access to funding. Cash flow challenges, often caused by mismatched accounts payable and receivable cycles, can limit a business’s ability to seize new opportunities. This is where Sallyport Commercial Finance plays a pivotal role.

We understand the unique challenges faced by SMEs and offer flexible, tailored funding solutions such as accounts receivable financing. These solutions help businesses bridge cash flow gaps, invest in growth, and adapt to changing market conditions with confidence.

North American businesses will need to adapt to the significant upheaval of new governments on both sides of the border and any benefits or drawbacks that come along with this. There may be a less restrictive business environment for America’s entrepreneurs doing business within the country, however, building an export business could become much more difficult and expensive as countries’ take countermeasures against imposed new tariffs and trade policies.

As SMEs navigate 2025, having a reliable financial partner is more critical than ever. With Sallyport’s support, businesses can focus on their strategic goals, knowing they have the resources to overcome challenges and thrive in a dynamic environment.

A Promising Year Ahead

While 2025 brings its share of challenges, it also offers immense potential for growth and innovation. By staying informed, proactive and embracing adaptability while leveraging tailored funding solutions, SMEs across North America can not only navigate the complexities of the coming year but also emerge stronger and more resilient.

Sallyport Commercial Finance stands ready to support SMEs every step of the way, empowering them to turn challenges into opportunities and achieve their full potential. We’re looking forward to a successful and prosperous 2025 for North America’s businesses. Reach out now to find out how we can help you achieve your hopes and dreams in business this year.