4 Ways for Your Small Business to Hit the Ground Running in 2025

Small businesses are the backbone of our local communities but can face challenges when it comes to financial stability.

Accessing and managing affordable funding, finding ways to invest in growth, and building and maintaining strong credit profiles are just a few hurdles small business owners encounter.

With the right strategies in place, however, businesses can position themselves for long-term growth. Here are actionable steps to help your business.

Effectively Manage Your Debt

Interest rates have begun to decline, but it is vital for businesses to remain disciplined and manage debt effectively. The upcoming change in presidential administrations will bring with it some policy changes, so it is also important for business owners to keep in mind potential impacts to their business and future interest rate fluctuations.

If you have existing debt and rates continue to decline, exploring refinancing or consolidating that debt may help free up cash flow.

Build Your Business Credit

Another opportunity for business owners to improve future rate offerings is to focus on building their business credit score. A few ways to do so:

• Separate Personal and Business Finances: Use a dedicated business account and credit card for all business-related transactions.
• Pay Bills on Time: Timely payments are one of the most significant factors for creditworthiness. Work closely with your suppliers that report payment history, as consistent on-time payments can improve your score as well as your relationship with the supplier.
• Monitor Your Credit Report: Regularly review your business credit report for errors or inaccuracies and report them immediately.
• Keep Credit Utilization Low: Avoid maxing out credit lines and aim to use no more than 30% of available credit.

Invest in Your Future or Grow Your Reserves

The end of the year is a great time to plan growth initiatives for the year ahead. Borrowing strategically can help businesses cover cash flow gaps, invest in their future, and more. Among a few options:

• Lines of Credit:A business line of credit offers flexibility like a credit card. You can draw funds up to your limit and only pay interest on the amount used. This is useful for managing seasonal fluctuations in cash flow or addressing short-term financing needs like inventory.
• SBA Lending Options:The SBA provides loan programs with attractive terms designed for small businesses, such as SBA 7(a) loans, which are a versatile option for working capital, equipment purchases, or real estate. SBA loans often come with lower interest rates and extended repayment terms, making them ideal for small businesses.

If your business doesn’t currently have growth initiatives to invest in, consider taking advantage of still-elevated interest rates by choosing the right deposit accounts to grow reserves.

Money market accounts typically offer higher interest rates than traditional savings accounts. For small businesses with variable cash flow, these accounts can be a practical way to earn passive income while ensuring easy access to funds.

For businesses with longer-term savings goals, certificates of deposit (CDs) typically offer higher interest rates in exchange for locking in funds for a fixed period. While this option isn’t ideal for day-to-day operations, it’s a great way to grow reserves for future projects.

Strengthen Your Relationships

Holiday shopping season is key for many small businesses, particularly retail-focused businesses. Build on sales momentum and grow customer loyalty heading into the New Year by offering discounts and incentives for shoppers to continue purchasing your products and services.

And don’t forget about your vendor relationships. Work closely with your vendors to negotiate discounts for early payments. This can help reduce overall material costs, build creditworthiness through early and on-time payments, and avoid potential late fees that could strain cash flow.

As we head into the New Year, now is the time for small businesses to prepare for future success. Setting time to speak with your accounting and banking partners can help you make informed decisions on managing your debt, investing in your future and more.