Business leaders plan for growth amid economic uncertainty

Published March 2025

Key takeaways:

Despite macroeconomic uncertainty, business leaders are conveying cautious optimism. In early 2025, Citizens conducted two surveys of C-level executives and business leaders to gather insight on the challenges and opportunities facing middle market businesses.

The 2025 Citizens Business Leaders Survey polled decision makers at mid-size U.S. businesses about their outlook for economic conditions and assessment of key business inputs in the year ahead. Additionally, our 2025 Middle Market Business Challenges Survey highlighted challenges that middle market companies face as it relates to workforce development and sustainability.

The results of both surveys paint a picture of a positive, albeit cautious, outlook, as businesses navigate uncertainty while poised to make longer-term investments in technology, talent and growth.

Optimism amid uncertainty

Macroeconomic headwinds have created some uncertainty for business leaders into 2025 and inflation remains their top concern. In fact, when asked what factors represent the greatest risk to their company’s financial performance this year, 59% cited inflation.

Business leaders also identified additional risk factors including:

• Interest rates (44% citing it as a concern)
• Tariffs (42%)
• Financial market volatility (39%)

Yet, in the midst of legitimate, macroeconomic concerns, many business leaders remain optimistic about their company's growth and financial position. The vast majority, 83%, believe their business is in a better financial position now than it was at the start of 2024. More than three-quarters (77%) believe the results of 2024's election will positively impact their company's growth plans. And, as they look to grow, 76% view private equity as a current or future source of partnership and funding, up from 72% in 2024.

57% of business leaders expect their companies to invest more in growth in 2025 than they did in the previous year. Where could they benefit the most from the guidance of a trusted advisor? Talent acquisition, technology and sustainability are among the areas of focus.

Investing in talent

One area where business leaders expect to see growth in 2025 is in hiring. 56% anticipate hiring more personnel this year while 84% of executives stated that attracting and retaining talent is a top or high priority. Just 10% are planning on reducing their workforce.

A staggering 87% of middle market leaders expect workforce challenges to directly impact their growth over the next three to five years. As organizations seek to recruit employees, challenges include:

• Competition from other companies (32% of respondents cite this as a concern)
• A lack of skilled or qualified candidates (31%)
• Rising labor costs (31%)
• A lack of candidates with the necessary soft skills (30%)
• An aging workforce (29%)
• Limited training resources (27%)

To address workforce development concerns, organizations are investing in their people. 39% are putting more resources into employee training and development to improve retention and recruitment. 36% are doubling down on workplace culture and employee engagement, and one-third of companies plan to offer higher wages and better benefits.

These workforce investments are delivering real returns. Nearly two-thirds of executives (63%) stated that they believe these initiatives have been significant to their growth, with 44% reporting enhanced creativity and innovation as a result.

The majority of business leaders (87%) also plan to invest in technology in 2025, with AI and automation driving the agenda. The results echo Citizens’ 2025 AI Trends in Financial Management survey, which found that clear use cases for AI are emerging.

As companies invest in technology, they are also prioritizing upskilling efforts in areas like:

• 42% want their employees to improve on cybersecurity
• 40% want their employees to improve on generative AI
• 37% want their employees to improve on AI and machine learning

As businesses prepare for 2025, a clear focus on talent acquisition and development emerges as a priority. To address challenges such as competition, rising labor costs and skills gaps, companies should emphasize hiring and retaining skilled employees and enhancing employees' technological competences.

Addressing sustainability concerns

In addition to workforce issues, business leaders today find themselves navigating the effects of extreme weather and natural disasters as well as accompanying customer expectations and regulatory demands. More than half of middle market leaders (54%) stated that their executive management team or board is paying attention to lowering the company's carbon footprint. In part, this attention is driven by concern over investor and client expectations, with 50% saying it is expected by investors or owners and 51% saying it is expected by clients and customers.

As companies face a transition to a lower-carbon economy, executives are up against several challenges. Regulatory compliance is one — for 41% of companies — while 42% cite technological adaptation and 41% see financial constraints as challenges as well.

In the face of technological, financial and regulatory concerns, companies are open to various approaches to navigate the energy transition. Mergers and acquisitions could be one possibility: 39% of companies are looking for M&A support focused on climate tech solutions and green entities. More than one-third are seeking green or sustainable debt issuance (37%) and project finance (35%) to fund their climate initiatives. Beyond financing, 32% of companies are looking for advisory support, and 32% are seeking access to environmental commodities such as carbon offsets.

Cautious optimism for 2025

Companies that stay proactive and agile in the face of current macroeconomic and business challenges will position themselves for growth and sustainability in 2025 and should consider the following action points this year:

• Monitor inflation: Keep track of effects on financial performance and prepare for potential challenges.
• Evaluate interest rates and tariffs: Assess the risks posed by interest rate changes and tariffs, considering how they might affect your business operations.
• Invest in growth: Despite macroeconomic challenges, consider increasing investments in key areas such as technology, talent and innovation to position your business for long-term success.
• Focus on workforce development: Prioritize attracting, retaining and developing talent by offering competitive wages, improving workplace culture and investing in employee training and development programs.
• Leverage technology: Plan to invest in advanced technologies, especially AI and machine learning, to improve efficiency, drive innovation and stay competitive.
• Develop AI skills: Invest in upskilling employees to meet evolving technology needs.
• Address sustainability concerns: Implement strategies to reduce your company’s carbon footprint, meet client and investor expectations and comply with regulations, including waste-to-energy initiatives and risk assessments.

With plans for growth, particularly in hiring, and a proactive approach to sustainability concerns and technological changes, your businesses can stay ahead of risk and promote continued success.

Explanation of Methodology:

Citizens Business Leaders Survey: Business leaders at 502 middle market U.S. businesses who are directly involved in corporate decision-making completed a web-based survey in February 2025.

Citizens Middle Market Business Challenges Survey: C-level executives at 250 middle market U.S. businesses completed a web-based survey between January and February 2025.