While the stock and property markets continue to grow, inflation has remained sticky and interest rates have been on hold for 12 months, held up higher and for longer with government subsidies and spending, and with no sign of being cut in the short term. As we come into the Christmas and holiday season, many business leaders and owners will be looking to 2025 to plan ahead. 

While crystal ball predictions are best left to fortune tellers, some factors are clear for 2025:

• Retail's Impact on Rates: Black Friday and Christmas spending levels will influence the Reserve Bank's decision on interest rates in the new year.
• Global policy: US policy under a Trump presidency from January - tariffs, tax policy, and China's underperforming economy create international uncertainty.
• Australian Election: A federal election looms in the first half of 2025, potentially with an early budget. This can lead to a frustrating "wait-and-see" period for businesses until election results provide certainty.

As a result, 2025 is shaping up to be a year of uncertainty, potentially with higher interest rates for longer and a tight labour market. 

But remember, where there's uncertainty, there's also opportunity. This could include developing a new product or service, entering a new market, bringing manufacturing operations in-house to reduce reliance on suppliers, or strategically acquiring another business to expand market share or access new technologies.

Here's how your business can navigate the coming year:

• Be Prepared for the Unexpected: Consider building a cash buffer – approximately two months' worth of taxes, fixed expenses, and loan repayments – to weather potential dips.
• Know Your Breakeven Point: Track your sales levels closely to understand the minimum amount of revenue needed to cover fixed costs.
• Stay Liquid: Maintaining a healthy current ratio (current assets divided by current liabilities) – ideally above 2:1 – demonstrates the ability to meet short-term obligations.
• Manage Your Debt Wisely: Review your debt levels and work on a strong relationship with your bank manager for future financing needs.
• Listen to Your Customers: Understanding their revenue challenges helps you anticipate changes in demand for your products or services.
• Be Ready to Invest: Having a financial buffer puts you in a prime position to capitalise on opportunities that may arise. However, carefully consider the right mix of cash and debt financing.



The key takeaway? 2025 may be unpredictable, but with the right planning, you can position your business to not just survive, but thrive. The best way to navigate 2025 is to be adaptable, informed, and prepared to thrive in a dynamic environment.