In Canada, a long period of rising interest rates has just ended. Thanks to strategies that helped preserve your bottom line, your business didn’t suffer too much. Now that rates are falling, key positions – cash flow, debt level, pricing, etc. – need to be reassessed. Many business owners prefer to wait and see, but it’s best to prepare today for what 2025 might have in store.
TLPL
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Interest rates are falling, but inflation still takes its toll on businesses and consumers.
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Now is the perfect time to reevaluate your savings and borrowing strategy.
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Your company’s results will be all the better in 2025 if it focuses on what it has control over and prepares for different eventualities.
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Knowing how your customers react to the economic situation, you will be able to adjust your approach in terms of prices, stocks and the number of employees to plan for.
Inflation and interest rates decline but remain relatively high
According to the last Bank of Canada quarterly business outlook surveyinflation still weighs on the latter, but also on consumer budgets. Likewise, despite recent declines, interest rates are still high, historically speaking. Borrowing costs and the cost of goods therefore also remain.
Although the situation is not rosy, there are several positive signs: as demand has decreased, production capacity has been under less pressure; companies were therefore able to meet demand without too many problems. Additionally, given recent interest rate cuts and those expected in the short term, sales forecasts are slightly more encouraging.
As the new year approaches, SMEs should consider how lower rates will impact their financial planning.