2025 Landscape: What Small Businesses Can Expect

We are a few days shy of 2025, and the stage is set for a precarious year for Jamaica. Small businesses, entrepreneurs, and aspiring startups can expect to confront a complex external environment in the upcoming months that may be shaped by general elections, tightening credit conditions, low growth, geopolitical tensions, a slowdown in the global economy, and radical US policy positions. It isn’t a rosy picture. Business concerns will need to evaluate these major external risks and assess the potential impact on their activities as they strategise for a successful year. Among these, however, two stand out as highly critical because of their considerable threat to small businesses:

1. General Elections

General elections in Jamaica are expected to be held in 2025, but we can only speculate as to the date because the country still doesn’t enjoy fixed election dates. As I have shared in prior columns, snap elections are very bad for business because of the uncertainties, volatility, and exacerbated security risks for businesses. In the lead-up to elections, businesses are drowned out by political campaigning in terms of marketing activities, advertising and promotions, and general communications with consumers. The public is bombarded with election news, political party ads, and messaging that distracts and detracts from business as usual. Consumers pause or are hesitant to spend, travel, go to events, make major purchases, and so on. There is also considerable shift in government spending, contracting, delays in decision-making, disruption to government and business operations, changes to events and plans, and heightened concerns for public safety and security. For most industries, this is not welcome news. Therefore, businesses must contend with these challenges as well as the outcome of the elections, which can considerably impact the markets and the environment, generally.

A few issues to consider are

- Campaign promises that impact consumer spending, public spending and national issues generally.

-New policy proposals that may affect your industry

- Possible changes in taxation, laws, and government regulations.

- Advocacy around certain business interests.

2. Tightening Credit Conditions

I cannot emphasise this enough: Cash flow is the lifeline of a business because bills can never be paid with revenue or profits on the books. They must be paid with cash in the bank or on hand. This is where the rubber hits the road for small businesses and where the dominos always come tumbling.

Although we have seen positive signs of lower inflation across many regions, central banks around the world are still cautious, and global interest rates still remain relatively high. Credit conditions locally have been tightening as past-due loans continue to balloon.

Consumer and tourism loans, which are now more expensive thanks to increasing interest rates over the past few years, are among the poorest performing, with a growing number falling into the pack of past due or non-performing, which are 90 days overdue.

The tightening credit conditions is bad news for many businesses that are in need of funding. In October 2024, the JCC Business and Consumer indices, which, for the first time reported on demand for loans, found that 58% of businesses are in immediate need of financing.

A few issues to consider:

• As receivables grow across the business landscape, financial institutions will likely employ stricter loan-approval processes, by-the-book credit checks, and even longer processing times;

• This, in turn, creates delayed payments or defaults from customers, which may drive a cash crunch, or, at the very least, exacerbate cash-flow constraints.

Critical recommendations:

1. Prepare those financial statements and get close to your accountant. As a small business operating in this environment, you can’t afford to go into 2025 without proper cash flow projections through the rest of the year.

2. This is the time to have strict and disciplined cash-flow management by aggressively tackling receivables and implementing stricter credit terms.

3. Diversify products and services where possible to focus on cash-generating activities as a priority. Fast cash is always better than slow in an environment where credit is tightening.

4. Check on all of your lines of credit and credit facilities to ensure that you are clear on what is available because your financial institution has the ability to make unilateral changes to any facility that they offer to your business.

5. Negotiate extended credit terms even where they are not needed to proactively provide your business with a buffer against negative or reduced cash flows.

6. Build an emergency fund - seasoned entrepreneurs who have operated small business in Jamaica would understand how difficult this is, however, it is not impossible. One of the hallmarks of a well-run business is to have reserves or an emergency fund that can be used to cover several months of expenses should the need arise.

As we look forward to the new year with great hope and optimism, business owners must be aware that the external environment will present a hefty dose of challenges and stingy opportunities. General elections and tightening credit will likely have the biggest impact on your operations, so it is important to stay informed and proactive, and where possible, fluid, with your plans to avoid major disruption.

One love,

Yaneek Page is the programme lead for Market Entry USA and a certified trainer in

entrepreneurship.