Why 2025 Forecasts Are Shifting—and What Business Owners Can Do About It

As we move deeper into 2025, financial uncertainty is weighing heavily on small and mid-market businesses (SMBs) . According to a recent survey from The CFO Alliance, a growing number of CFOs are reporting that their forecasts for the year have deteriorated, reflecting a complex mix of inflationary pressures, unpredictable demand, cost concerns, and persistent macroeconomic instability.

This isn’t just a trend in finance departments—it’s a signal that business leaders across industries need to revisit their assumptions and adapt their strategies. The days of rigid annual planning are behind us. What’s needed now is financial agility.

The Numbers Behind the Concern

More than half of mid-market CFOs say their 2025 outlook has worsened since their last forecast. In practical terms, that means many companies are expecting:

• Lower-than-anticipated revenue growth

• Higher operating and capital costs

• Slower recovery timelines across sectors

• Less confidence in traditional forecasting models

Several factors are contributing to this outlook:

• Persistently high inflation that’s driving up input and labor costs

• A tightening credit environment making it harder to access affordable capital

• Geopolitical uncertainty, especially in global supply chains and resource markets

• Interrupted demand cycles as buyers change behavior or delay large purchases

This complexity makes financial forecasting harder, and for many business owners, that means greater risk in decision-making.

Why Traditional Forecasting Is Falling Short

If your financial planning process still relies on last year’s assumptions—or hasn’t been updated to reflect current volatility—it’s probably leading you astray.

The reality is that static annual budgets and outdated Excel models can’t keep up with today’s pace of change. Many mid-market companies are finding their forecasts diverging from actuals much earlier in the year than expected.

Key issues include:

• Relying too heavily on historical data with limited context

• Ignoring variable cost drivers like fuel, shipping, or wage trends

• Lack of scenario-based planning tied to real-world triggers

• Insufficient collaboration between finance, sales, and operations teams

What This Means for Business Owners

These pressing, urgent business and strategic challenges matter. If you don’t have a full-time CFO (as most SMBs don’t) on staff, a fractional CFO can be the solution. Poor forecasting doesn’t just affect financial reporting—it can create downstream problems like:

• Misaligned hiring and staffing decisions

• Cash flow shortfalls

• Over-ordering or inventory waste

• Missed growth opportunities due to caution or incorrect assumptions

In a time when margins are under pressure and competition is fierce, visibility into your financial future is critical.

Practical Steps to Take Now

You don’t need a full overhaul to improve your forecasting process. Consider these actions to build more resilience into your business planning:

1. Refresh your forecast quarterly (or more often). Don’t rely on a single annual plan. Adjust based on rolling actuals and near-term indicators.

2. Use scenario planning to map multiple paths forward. Build at least three versions of your plan: baseline, best-case, and worst-case.

3. Integrate financial and operational data

   Look beyond accounting—bring in marketing, HR, and ops data to see the full picture.

4. Re-evaluate cost structures

   Identify areas where fixed costs could be made more variable, especially in uncertain demand periods.

5. Seek outside perspective whether through a board, or fractional CFO, a fresh set of eyes can reveal blind spots or alternatives you hadn’t considered.

   
   

Building Resilience for 2025 and Beyond

The bottom line is that 2025 will likely continue to challenge midmarket businesses. But challenges don’t mean failure—they mean adaptation. Companies that are proactively revising their forecasts, building in flexibility, and prioritizing insight over assumption will be in a stronger position to grow—despite the uncertainty.

For business owners, this isn’t the time to double down on the old way of doing things. It’s the time to ask better questions, test smarter scenarios, and align your financial plan with the realities of today’s market.

If you're a business owner or CEO in the San Francisco Bay Area or Silicon Valley looking for experienced financial leadership without the full-time commitment, our outsourced CFO services offer the strategic insight you need. We help companies control costs, boost profit margins, improve cash flow, and uncover growth opportunities—all with the flexibility and efficiency of a seasoned finance team tailored to your budget.