Business, Feature, Freight News, Logistics

Businesses Gird for Recession in 2025

[ December 19, 2024   //   Gary G Burrows ]

Global mid-market business leaders are relatively optimistic for 2025, despite seeing a recession as a foregone conclusion, according to a survey by U.S. accounting firm Moss Adams LLP.
The 2024 Mid-Market Report, which targets owners and CEOs of businesses reporting US$50 million to US$500 million in yearly income, finds leaders largest concerns the worsening inflation (28 percent of 200 respondents) and tax and regulatory changes (24 percent).
Nearly all business leaders, or 94 percent surveyed, are preparing for a recession this year, with 64 percent believing a recession is imminent (6 percent don’t believe a recession will impact their business).
However, despite the dismal economic forecast, nearly all respondents feel assured of their company’s standing to navigate a recession and worsening inflation (97 percent), according to Moss Adams. Nine in 10 respondents are confident in their company’s ability to navigate an era of uncertainty (93 percent).
Moss Adams said this “we-got-this attitude” points “to a young but experienced leadership pool that isn’t necessarily hesitant to act when pressures emerge. These business leaders persisted through previous challenges – like the Covid-19 pandemic, the 2008 recession, and historic inflation – and thrived; they understand how to usher their businesses through hard times.”
Nonetheless, taxes weigh heavily on business owners and leaders. Increased corporate taxes (55 percent) is the top regulatory tax concern, Moss Adams said, while 51 percent worry the expiry of the Tax Cuts and Jobs Act that will expire at the end of 2025, pending renewal.
Supply chain functions likewise are cause for concern among respondents, as they’re vulnerable to geopolitical and climate events. Moss Adams said many respondents are monitoring extensions of project schedules or profit erosion related to material availability (40 percent), while another 31 percent are anticipating higher freight rates or fuel and energy costs.
These challenges of erratic inflation, record high interest rates and geopolitical unrest and weighing on the bottom line, as four in five business owners surveyed noticed their profit margins impacted by economic or sector pressures (83 percent). Of those experiencing this impact, 56 percent say they faced difficulty meeting margin goals, while 52 percent saw the impact in failure to meet margin expectations.
As leaders preparing for a recession, they are investing in technology (53 percent) and improving customer relationships and experiences (51 percent). Others are focused on creating new revenue streams (46 percent) and maintaining cash reserves (41 percent).
Many respondents indicate they’re adopting and implementing different technology (57 percent), focusing on employee training and retention (46 percent), and increasing investment in sales and marketing (45 percent).
Proactive leaders are increasing prices (53 percent) and cutting operational costs (51 percent) to counter inflation. Nearly half (48 percent) have found cheaper alternatives throughout their supply chain or have dipped into their cash reserves (46 percent).
Cost-cutting measures have included allowing more flexible or hybrid work-from-home policies (65 percent), downsized their office spaces (45 percent), implemented hiring freezes (41 percent), or removed certain in-office perks (44 percent).
Moss Adams’ 2024 Mid-Market Report can be downloaded at https://www.mossadams.com/2024-mid-market-report.

Tags: Moss Adams LLP.