2024 has brought its share of uncertainty, with geopolitical tensions impacting supply chains and costs. As we step into 2025, one key focus for businesses is how to prioritize and support their teams. The insights shared here are drawn from a variety of trusted sources, including the RCM Middle Market Business Index (in collaboration with the U.S. Chamber of Commerce), Vistage member surveys, The Wall Street Journal, the St. Louis Fed database, Morningstar, West Monroe, and ITR Economics. While the 2025 outlook remains broadly positive, it is not without challenges.
Q3 2024 economic growth was recently reported at 3.1%, surpassing the rate recorded in Q2 2024. Consumer spending remains strong, possibly influenced by a ‘buy now’ sentiment ahead of potential new tariffs under the incoming administration. Business investment continues to thrive, with a significant focus on AI-driven initiatives. Labor markets remain tight and are expected to stay constrained into 2025. Key insights from various middle-market business owner surveys include:
- Two thirds of CEOs expect general economic growth in the first half of 2025, likely 2.5%-2.75% GDP growth. The second half may see slightly slower growth.
- 68% of CEOs expect their revenue to increase in the next six months.
- Only 29% did not expect growth per RSM.
- Expectations for inflation average 2.5%-2.75% in 2025, and it will take longer for the Fed to decrease inflation while watching unemployment levels.
- The incoming administration is expected to ease regulatory activity and focus on reducing taxes. With the US national debt reaching $35 trillion in 2025, the political climate in the US will still be volatile.
- 56% of middle-market CEOs expect to continue hiring and 54% expect wages to continue at 4%-5% growth.
- Supply chain uncertainty is high as most CEOs are concerned about the impact of threatened tariffs and export restrictions being placed by China and the European Union.
- Two thirds of CEOs are concerned about pricing and how much of their costs can be passed on to their customers.
We recommend that you focus your team on employee retention, cost containment programs, and selective price increases. It is likely that you are optimistic about 2025 and having the resources to take advantage of a healthy market is the challenge. Productivity gains are primary goals for many CEOs, which will be accomplished by employee training, new software, and stream-lining operating processes. These steps will lead to competitive advantages.
At C Squared Solutions, we are following our own advice and will increase our staffing by 40% in 2025 while serving significantly more clients. By adding talent in advance of revenue growth, we are accepting the risk that we see in our markets. This risk is mitigated by having multiple action plans in place to pivot when necessary and continually measuring data that matters. Your risk is
specific to your markets and should be addressed with flexible plans. Flexibility leads to resilience!
C Squared Solutions provides interim or fractional CFOs, COOs, and CEO advisors in nearly all industries. We mentor and advise private companies frequently through sophisticated and experienced management advisory. Give us a call or visit our website for more information and details. We have been there and done that through serving more than one hundred companies, 250 years of combined experience, and having sold our companies totaling more than $500 million!
