Canadian businesses are facing mounting financial pressures in 2025, with rising costs eating into profitability. Whether you run a small accounting firm or a large enterprise, inflation, interest rates, and regulatory changes are making it more expensive to operate. Here’s what’s driving costs up and what business owners can do about it.
1. Higher Interest Rates and Debt
The Bank of Canada has kept interest rates high to combat inflation, making it more expensive for businesses to borrow money. For firms looking to expand or acquire new assets, the cost of capital is a significant concern. If you’re planning to finance an acquisition, now is the time to assess your debt strategy and explore fixed-rate options before any further rate hikes.
2. Wage Increases and Labour Shortages
The ongoing labour shortage means businesses must offer competitive salaries to attract and retain talent. Minimum wage increases across various provinces, including Alberta and Ontario, are adding to payroll costs. Automation and outsourcing are becoming key strategies to mitigate labour expenses while maintaining efficiency.
3. Rising Tax and Compliance Burdens
New tax regulations, including increased corporate tax rates for large businesses and stricter compliance requirements, are creating additional challenges. Accounting firms are seeing increased demand for tax planning services as businesses look for ways to legally minimize their tax liabilities.
4. Supply Chain Disruptions and Energy Costs
While global supply chains have stabilized since the pandemic, Canada is still dealing with high transportation costs and energy prices. Small and medium-sized businesses must find ways to optimize operations and cut unnecessary expenses to maintain profitability.
How Business Owners Can Adapt
• Evaluate Your Cost Structure: Conduct a financial audit to identify areas where expenses can be reduced without sacrificing quality or efficiency.
• Explore Mergers & Acquisitions: For those looking to exit, selling to a larger firm may be a strategic move to secure value before costs erode profits.
• Leverage Tax Incentives: Work with tax professionals to identify deductions, credits, and deferral strategies to improve cash flow.
• Invest in Technology: Automation and AI-powered tools can reduce labour costs and increase efficiency.
At Maverick GP, we help business owners navigate these challenges, whether through acquisitions, strategic partnerships, or financial restructuring. If you’re considering selling your business or looking for opportunities to grow, let’s connect.
