If you are anything like me, you are likely weary hearing that ‘we live in unprecedented times.’ There seems to be a crisis every year or two that fires up the media machine to announce “unprecedented times” and run story after story to support the claim. It becomes a sensational headline to put on every market correction, world event, and change of administration.

I share all this to emphasize that my next statement is not made lightly or for the sake of being sensational. No click bait here, just an experienced business woman’s observations and an offer to help.

Here is my ‘unprecedented times’ statement: It is harder than ever for small to mid-sized businesses to turn a reasonable profit. “It’s just a downcycle” some will say, others may wonder if we are experiencing a market correction, or a protracted recovery after Covid. While there is certainly room for those to be true, this one just feels different to me.

With over 40 years in business, there are signs that what we, as business owners, are going through now is more of a permanent shift in the path to profitability as well as team management, a business’s biggest cost and asset. This goes past the ups and downs of the business cycles of the past.

Here is what prompts me to make such a bold statement:

Back in 1980, I started my career as an entry level employee at a tech startup. I was actually only employee number seven, if you can believe it.  Seagate Technology manufactured the first Winchester hard disc drive, and it sold for $1500 – these hard disc drives revolutionized the computer industry, and the company took off. It’s almost amusing to me now as those little disks couldn’t even handle the amount of data we send in a single email now, but at the time they were the most advanced tech available.

This was my first exposure to the business world. I felt confident it was as simple as:  great idea, get funding, make the idea work, go public and rule the world.  Rainbows and unicorns, all around!

Fast forward a rather profitable 15-20 years and you will find me in the glory days of the dot com era.  There were these “new business models” having huge valuations and no profits forecasted, and they were ruling the financial landscape. I remember thinking it wasn’t going to be sustainable. And as we all know – that era crashed hard. Only companies built on real revenue and real profits survived.

Unprecedented times, you say? I would call it more of a market correction. A painful one to be sure, but one where you could point to the cause and the solution, buckle down and come out on the other side more resilient.

After that business had to survive the mortgage crisis in 2007-2009.  Another difficult time, this time businesses built with real revenue, real profits and, for many, longevity in their industry, were the ones that survived.  Business and the market slowly gained its footing and the economy recovered. We began to see economic prosperity, profits for well-run businesses were attainable.

Enter the pandemic crisis of 2020 – nothing was predictable. Unprecedented times, indeed – it was new territory for business owners and consumers alike.  Those companies that were able to adapt to working virtually had a better chance of surviving.

Now we are on the other side of that crisis – but the business model has not rebounded. Unlike the other financial crises mentioned above, the business landscape seems to have permanently shifted and many businesses are still learning to navigate this new terrain.

You may be wondering – what changed this time to make it different from the past? There are a number of factors …

The Worker Factor

Mass adoption of virtual working solutions spurred on the gig economy. Many workers who have traditionally been employees are converting independent contractors over the alternative of returning to an office. They are embracing freedom and calling the shots in hours, deadlines, and flexible schedules. This has changed the landscape of talent acquisition and how many businesses function.

The New Tech Factor

Currently we are seeing the rise of AI playing a larger role by the day, contributing to entire industries shifting business models. While some view AI as a job killer, we are also seeing new and uniquely qualified talent in demand to support this growing industry. And so the workscape has shifted again.

The Expenses Factor

As business owners and consumers alike will attest – expenses are up across the board. in some cases double or triple digits and beyond. There is no sign of reduction in sight. It’s not usual for costs to rise during a crisis or shortage, but typically we see most of these costs come back in alignment. This time around I believe we’re at a new base level of expenses.

That means it will take more sales, more customers, with more effort to make the same profits.

Oh and those new sales and customers? Well, those will cost more as well. Across industries the consensus is that it is harder and more expensive to land new customers.  The buying cycle is longer and it costs more to acquire new customers.  A number of top tier marketers have confirmed that their ads costs have tripled over the past year alone.

The Regulation Factor

In our business as a Strategic Workforce Partner, we’ve seen federal, state and city compliance and regulations reach an all-time high. This is putting a greater burden (read: expense) on employers and business owners – eating further into struggling profit margins.

Growth and Profit Margin in 2025 

Wow, that may have sounded like a lot of bad news, but it’s not intended to bring us down. It is simply time that we as business owners have a reality check with the present and make a plan. It’s time to look at our businesses with fresh eyes and see how we can do business more efficiently and cost effectively.  One of our corporate initiatives this year is to analyze all of our processes, technology, and service offerings to see where we can do better and serve more businesses while being mindful of expenses.

Starting next week, ClearPath is launching a series of pieces to illustrate how businesses can be more efficient and cost effective. How they can turn their focus to incoming revenue while reducing costs without sacrificing high standards of service. Stay tuned.

I am curious, what is your biggest challenge today?  Send me an email using the form below and we will cover as many challenges and as much ground as we can in the coming series.

Wishing you much success always!

Renee

Let me know your biggest business challenges by completing the form below.  

ClearPath is a leading Strategic Workforce Partner company focusing on the contingent labor market. We’re committed to helping business owners stay compliant and minimize the risks associated with their contingent labor requirements.

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