Can you believe that half of 2025 is over? The first half of the year has been one of uncertainty for small businesses. Tariffs, inflation, and potential tax changes have created a period of insecurity for many, with lack of clarity about what to do and how to plan ahead. The NFIB Small Business Economic Trends for May 2025 shows optimism among small business owners remains above the 51-year average, but “uncertainty is still high among small business owners.” What are your plans for the second half of the year? Your actions may depend on how well you’ve performed year-to-date and your projections for the future.
Concerns impacting planning
What’s causing uncertainty?
- Inflation. The NFIB survey referenced earlier found that 14% of small businesses said inflation was their most important problem in operating their business. Inflation has led many businesses to increase their prices. Will inflation continue to come down in the second half of 2025?
- Interest rates. Will the Fed finally reduce its rate, which will lower the cost of borrowing for businesses?
- Tax rules. Will Congress finalize a tax bill and when will provisions in it become effective? This part of uncertainty may be settled very soon if Congress acts.
- Tariffs. Trade deals are still pending with many countries, so the ultimate tariffs are still uncertain.
- Geopolitical issues. Will events in the Middle East cause gas prices to rise? Initial reaction following the ceasefire was “no,” but who can say what will happen down the road?
Ideas for businesses doing well
If your business is profitable and you don’t see problems arising, there are a number of actions you can take now.
Invest in machinery and equipment. According to the NFIB survey, 22% of small businesses plan to make capital outlays. New tax rules (pending at the time of this blog) may provide additional tax incentives to spending money for machinery and equipment. In your decision-making, factor in:
- 100% bonus depreciation. This deduction is an immediate write-off for the purchase of eligible property–new or used—placed in service this year. The full deduction applies whether the purchase is financed in whole or in party.
- First-year expensing. This is another deduction for the cost of eligible property. There are dollar limits (yet to be determined by pending legislation).
Increase R&D. Depending on the nature of your business, you may also want to engage in new or additional research and development activities. Pending legislation likely will allow for a full deduction for eligible costs.
Expand your staff. If your business is growing, you may need additional personnel to service your customers. The NFIB reported that 34% of small businesses had job openings in May 2025 that they couldn’t fill.
Review your wages and benefits. BLS reported that average hourly wages increased year-over-year by 3.9% as of May 2025. Is your payroll keeping up? Are you offering fringe benefits that employees want?
Ideas for businesses underperforming their expectations
If your business hasn’t done well, forecast what you think will happen in the second half of the year. If you don’t expect significant improvement and are just hanging on, take steps that can help you survive.
- Reduce estimated taxes for the rest of 2025. There are two payments remaining: one in September and one in December for calendar year C corporations or January 2026 for owners of pass-through entities. Reducing the payments gives you more cash to use in your business.
- Get a handle on inventory management. Use technology and expert advice to optimize your inventory (the Goldilocks approach of not too much, not too little, but just right). SupplyChainDive offers 4 strategies for inventory management this year.
- Meet with your CPA or other tax adviser. Don’t wait until the end of the year to find ways that can help your business on a tax-advantaged basis.
Final thought
Charles Darwin said: “It is not the strongest of the species that survive, not the most intelligent, but the one most responsive to change.”
Know where you stand so you can adapt and be responsive to change. Make plans for the rest of the year that will ensure continued growth—or at least survival for those struggling now. And monitor what’s happening locally, nationally, and globally.
