Optimize and Grow: How Businesses Can Find Success in a Continuing High-rate Environment

With interest rates remaining elevated in 2025, many business owners are feeling the pressure. 

Higher borrowing costs, stricter lending standards, and reduced liquidity is posing challenges for industries across the board.  With these universal threats ever present, it’s time for small and medium businesses to identify and embrace opportunities for success.

An increase in efficiency is an increase in profit

 You can’t control an external threat like interest rates, but you can control internal weaknesses when it comes to spend.  Reducing labor costs through automating repetitive tasks or using AI, revisiting vendor contracts for cost savings, examining internal processes and inventory for opportunities to improve logistics are all ways you can begin to bring costs down.

 

Strengthen Your Financial Position

 While business owners wait for the financial environment to change it can feel like all plans for progress have been put on the backburner.  Use this time to improve financial conditions internally and set a timeline for results.  This could mean using capital meant for projects in limbo to pay down high-interest debt, continuing to build cash reserves, or working with internal teams or your bankers to improve the management of your working capital. 

Product Positioning and Pricing

 Now is the time to invest in operational marketing tactics.  Analyze your competitors’ products, their features, and pricing.  See where you can build greater value into your offerings through service or loyalty programs, keeping pricing competitive while increasing the value of your products to customers.  Make sure the products and packages you focus on have the highest margin, giving the greatest return on your investment whether it be the soft costs of employee time or the hard costs of advertising spend.

Think About the future

 You won’t be able to avoid the impacts of higher-interest rate lending, but you can be smart with the investments you make during this time.  Think about the future of your business and what it will need to prosper.  Technology upgrades, talent development, and improvements in infrastructure are imperative when it comes to an organization’s sustainability, if you have to invest make sure you’re putting your money in the most strategic bucket.

Want help navigating your business strategy in a high-rate environment? Connect with a banker today.