Smart cash flow moves for small-business owners in 2025

Although optimism has been rising lately, 2025 will still be a challenging year for many of the area’s small businesses. Inflation remains sticky, interest rates are high, labor is tight, the regulatory environment is uncertain, and tariffs are looming.

All of this means healthy cash flow is more important than ever. Here are a few strategies to help.

To cut your utility bill, look at what your business is consuming on an annual basis.

Most big utility companies offer help for small businesses to manage their energy consumption more efficiently. For example, Peco’s Small Business Solutions Program includes an energy analysis with recommendations — and financial incentives — for installing more efficient HVAC, water heating, lighting, vending, refrigeration, and kitchen equipment.

“Our small-business solutions program is directed at small-business customers that may typically lack the time or financial resources necessary to investigate and pursue energy efficiency upgrades,” said Shannon Christie, a senior energy efficiency program manager at Peco. “Our customers see a direct benefit through reduced energy use and bill savings.”

Finding good talent is still a major issue for small business. To get the most out of the existing workforce and compensation costs, business owners can focus on providing training.

“By investing in training programs, you can enhance employee skills and productivity, which may lead to increased customer satisfaction and sales,” says Ralph V. Estep, president of Saggio Management Group, a financial advisory firm in Middletown, Del. “Well-trained employees are also more likely to stay with your company longer, reducing turnover costs.”

One way to keep payroll costs down is outsourcing. Sadaf Abbas of Oak Business Consultant in Claymont, Del., said many clients consider doing so for “noncore business functions.”

“Outsourcing remains a very cost-effective strategy for managing tasks that do not require in-house expertise, thereby reducing overall labor costs,” Abbas said. She also recommends considering part-time roles or flexible hours.

“This approach includes cross-training employees to work in multiple roles, allowing for a more versatile workforce deployment,” she said.

A generous tax deduction for capital equipment is available as long as you purchase the equipment and put it into use during the year.

This also applies “for certain improvements to a building’s interior, roofs, HVAC, fire protection, alarm, and security systems,” says Suzy J. Feldman, CPA of Horsham-based Wouch, Maloney & Co. LLP. Building enlargements, elevators, escalators, and internal structural framework are excluded, she noted.

The incoming Trump administration is pushing to increase these deductions for small business and make them permanent.

Health-care costs are expected to increase by as much as 8% this year. Controlling this expense could have a significant impact on a company’s cash flow.

Many of my clients are opening Health Reimbursement Arrangements, where they contribute funds to their employees’ health accounts, which are then used to purchase health insurance through brokers on the healthcare.gov exchange. This gives the employer more control over what they reimburse for health care and reduces internal administrative costs.

“HRAs can save a small business and its employees a significant amount of money and provide a competitive health benefit for employers to offer,” said Rob DeNinno, a principal at Precision Benefits Group in Philadelphia.

Another strategy is to self insure, or use a “level funded plan,” in which a business pays for certain health-care benefits such as doctors visits and then a stop-loss policy kicks in for anything requiring larger outlays.

“A level funded plan is like quasi-self-funding,” said Noah Glassman, the president of Philadelphia Life & Health, a benefits advisory firm. “If you have a young healthy group, or even a larger group that has a good health history, this may be a good option.”

Credit cards remain a popular option for many small-business owners to finance their operations, thanks to their ease of use and availability. But interest rates can be steep.

“We tell our clients to make sure they’re paying down our credit card debt and any other higher-interest loans with variable rates,” said Clifford P. Haugen, a financial adviser with BLB&B Advisors LLC in Montgomeryville. “The interest on this debt could become very costly.”

Haugen recommends paying down these higher-rate loans if you can. If not, then try and convert this debt — or portions of it — to longer-term loans with fixed interest rates, even if it means pledging collateral to secure these loans.

Getting a loan approved through a Small Business Administration-backed lender is generally easier, and the agency recently introduced a new working capital loan program.

Chris Brown, a senior vice president and the director of SBA lending at Lancaster’s Fulton Bank, said the new option is “cost-effective” and “flexible.”

“It helps lenders like us to add another tool to help more small businesses obtain the capital they need to more affordably fund their business.”