Running a small business may be getting more complicated this year. Economic factors, political decisions, and consumer behaviors are some of the variables that influence corporate profitability. Government regulation and taxes are a constant source of concern. Inflation has wreaked havoc on supply and demand. This article will review these and examine the new challenges of small business growth for 2025, including:
- Artificial Intelligence (AI)
- New Political Policies
- Remote vs. In-Person Workforces
- Cryptocurrency Adoption
- Marketplace Saturation
- Stronger Financial and Business Integration
Things have changed since I talked about business challenges in 2024, but if you’ll notice a through-line: Businesses need to evolve to survive. New technology can integrate tax, accounting, financial, and business advisory services. Corporate adoption of the applications and platforms to make that possible is a self-imposed challenge.
Every business will face tough decisions when it comes to investment in AI.
Resistance to new technology is common. On the other hand, new technology is not a cure-all for every problem. Business owners should abandon binary thinking. They should embrace AI as critical to remaining competitive and increasing productivity or dismiss it as an overhyped and untested solution.
Integrating AI as a partner can provide a huge competitive advantage. However, the challenge to small business growth in this area will be striking a balance between using AI as a precision tool in discrete areas and avoiding irrational exuberance that can end in systems running people instead of people running systems. To most business owners and even creators of these systems, it’s especially clear how these large-language models operate.
Chatbots and virtual assistants made good headway into the corporate world in 2024. Those technologies are the building blocks for the next wave. The AI race is heating up with DeepSeek, which is now challenging Nvidia to dominate the sector, but it’s not just a two-horse race. Expect the AI program at the London Business School to make some noise this year, too.
Small businesses must remain agile to take advantage of the new administration’s policies and adapt quickly to unwanted or unexpected side effects.
President Trump is not a new variable in the economic equation. His policies in his second term should closely mirror those of his first term. Adding Elon Musk to the team may accelerate technology innovation, but the political focus will remain the same. Expect high tariffs on imports to impact international supply chains and boost domestic and fossil fuel production.
New political policies can cause short-term stock market volatility. Increased costs for materials and supplies could be a long-term problem. One way to handle that is to streamline operations to make the company more cost-effective. Another is to raise prices to maintain sustainable margins. This is one of the challenges of small business growth.
Determining the cost and value of remote vs. in-person work.
Wall Street banks, Silicon Valley technology firms, and the US Government have recently ordered remote employees to return to work. Other companies have adopted remote and hybrid business models that were made popular during and after the pandemic. Measuring and comparing the results of these two options will keep hundreds of analysts busy this year.
There isn’t a one-size-fits-all solution to this dilemma. It’s situational. Virtual and digital technology can enhance efficiency in service businesses and technology companies. Manufacturers need human bodies or robots to meet production quotas. Neither can work remotely in that scenario. Even fully automated plants can’t move around like virtual employees.
Businesses may need to adapt payment systems to accommodate cryptocurrency transactions.
Many companies have already overcome the challenges of adopting point-of-sale systems and payment gateways that accept cryptocurrency. The challenges here will be high-volume sales and familiarity with crypto and blockchain, both operationally and in financial and tax Traditional banks and credit unions may also oppose the change because cryptocurrency eliminates the middleman (and the fees).
An inherent problem with adopting a cryptocurrency is the devaluation of the fiat currency. In 2021, El Salvador adopted Bitcoin as its national currency. The Salvadoran Colon, the country’s original currency, is no longer issued and rarely used. WIll that happen to the United States dollar? But that doesn’t change the fact that reconciling crypto payments with dollar payments remains burdensome as does the process of reporting crypto payments to the IRS.
Small businesses will have to innovate to deal with saturated online marketplaces.
Social media and e-commerce platforms like Amazon connect retailers to millions of consumers. Unfortunately, they’ve also saturated countless markets, making it difficult for them to infiltrate. This is known in marketing circles as the “red ocean” effect. Blue ocean opportunities, where competition is non-existent, are scarce, which is why saturation one of the most significant challenges of small business growth in 2025 and beyond.
Innovation is the solution to this dilemma. For example, Facebook wasn’t the first social media platform, but its marketing plan made it a pioneer. Small businesses can be successful by repackaging an existing product or service, and companies that develop something new become unicorns—so the first thing business owners should look at beside innovation is finding a niche for their business—a product, a customer segment, or a need.
Stronger integration between financial and business systems offers opportunities for those who take them and liabilities for those who do not.
The application programming interface (API) was invented in the 1940s by British scientists Maurice Wilkes and David Wheeler. It took fifty years for banks to adopt it.
Today, technology companies integrate API connectivity into virtually every platform they launch, which can benefit small businesses. QuickBooks’s connection to a bank account is a good example.
Modern businesses need to be managed holistically. The days of using stand-alone software for tax preparation, accounting, financial planning, and business advisory services are over. API integration between systems allows data to flow freely. Some employees may resist that, but the results more than justify the effort. The right tech can provide a competitive edge.
Remember to stick to the basics of doing business.
Although the tools and technology are different, business is still business. The objectives are streamlining operations, cutting costs, and increasing profits. Seasoned business owners know what happens when they fail at any of these.
Entrepreneurs and startups learn as they go. The basic principles of this haven’t changed; the world just moves a lot faster now. It’s essential to learn from past mistakes. Knowledge and open-mindedness to innovation are tools business owners can use for that.
Small businesses do not need to face these challenges alone.
Prepare for the future with tax, accounting, financial, and business advisory services that lower the cost of doing business and prepare small businesses for future challenges. Schedule a discovery call today.
Talk soon
Jeremy A. Johnson, CPA