2025 Business & Economic Outlook - Part 4 of 5
(Based on insights from Alex Chausovsky, Bundy Group, shared at Allied Executives’ 2025 Business & Economic Outlook)
Alex Chausovsky didn’t sugarcoat it: your margins are going to get squeezed. Not “maybe.” Definitely.
Inflation is rising again. Input costs are climbing. Customers are pushing back on price increases. The companies that thrive through this won’t have the best revenue, they’ll have the best discipline.
Inflation and Interest Rates
Inflation sits near 3%, trending up toward 5% as tariffs filter through the system. The Fed has begun cutting rates, but not aggressively.
That’s good news for short-term borrowing. If you’ve been waiting to finance a project, now’s the time. But don’t expect it to last. Alex sees a high probability of future hikes if inflation keeps accelerating.
Translation: move while the window’s open.
The Three Margin Moves
Get Aggressive on Cost Management - Shop every major expense...utilities, insurance, shipping, software. Even if you don’t switch vendors, quotes create leverage. Lock in long-term rates while others hesitate.
Rethink Pricing - Don’t treat every customer the same. Tier your accounts. Protect your best ones and charge appropriately for the rest. Transparency helps, consider cost-plus models or temporary surcharges tied to tariffs.
Communicate Relentlessly - Talk to suppliers monthly, not quarterly. Check in with top customers biweekly, not monthly. Frequent communication creates stickiness. When buyers cut vendors, they cut the quiet ones first.
The Reality Check
Business optimism dropped to pandemic-era lows in early 2025. It has since rebounded to neutral—but that’s not confidence. It’s caution.
When everyone’s waiting, execution speed becomes a weapon. The companies that move first—locking contracts, renegotiating rates, reinforcing relationships—gain leverage while competitors are still calculating.
Key Takeaway
Margin compression isn’t punishment; it’s a test. The businesses that protect profitability through cost control, pricing discipline, and proactive communication will emerge leaner, faster, and positioned to win the next cycle.