The U.S. economy shrank 0.3% in the first quarter of 2025—its first contraction in over three years—following 2.4% growth in Q4 2024, according to the U.S. Bureau of Economic Analysis (BEA). While some analysts still debate whether a formal recession is looming, the economic slowdown is palpable for entrepreneurs and small business owners.
The BEA also reports decelerating consumer spending. With roughly 10 of the largest merchants accounting for nearly 35% of all U.S. consumer spending, according to Bloomberg’s 2025 analysis of alternative data, the drop in demand disproportionately impacts small businesses, who are left with a shrinking share of an already-constrained market.
Meanwhile, rising tariffs—which have an outsized negative impact on small businesses, according to Apollo Chief Economist Torsten Sløk—and ongoing cost pressures are compounding the challenges. For entrepreneurs—especially those running lean, service- or product-based ventures—this moment calls for decisive strategy shifts. The old growth playbooks simply won’t cut it in 2025.
Here are five growth strategies every entrepreneur should be considering this year.
1. How Entrepreneurs Can Reframe Their Offerings For 2025 Demand
In times of economic contraction, consumer priorities shift dramatically. Discretionary spending dips, while “must-have” products and services tend to fare better. That means it’s time to reassess your offerings.
Ask yourself: Does your product or service solve an urgent problem for your customer? If the answer is no, consider repositioning—or even reconfiguring—what you sell to better align with current needs. This could mean pivoting from premium, luxury-focused products to essentials with strong practical value, or reframing a service in terms of efficiency and ROI, or VOI (value-on-investment).
Whether you’re a product-based brand or a consultant, lead with the outcome: what problem do you solve right now that your customer cannot afford to ignore?
2. Rethink Pricing And Build In Predictability
Customers are more cost-conscious in a downturn, but that doesn’t mean slashing your prices across the board. Instead, explore pricing strategies that balance flexibility with consistency.
Subscription models, loyalty programs and bundles that offer clear value can help retain existing customers while keeping cash flow steady. Consider tiered pricing to reach different audience segments—offering a low-commitment entry point and a premium upsell for those who can invest more.
This is especially useful for service businesses, where recurring revenue models (think retainers or memberships) provide predictability and build customer stickiness.
3. Double Down On Operational Resilience
Tariffs and supply chain disruptions are no longer occasional hurdles—they’re structural risks. Continued instability in global trade and pricing means businesses need to future-proof their sourcing and fulfillment strategies.
Start by diversifying your suppliers and tightening inventory management. For service-based businesses, that might mean identifying multiple delivery partners or freelancers to avoid over-reliance on any one person or tool.
Operational agility—not perfection—is what sets resilient businesses apart this year.
4. Build A Marketing Flywheel, Not Just A Funnel
Linear sales funnels worked well when customer attention was more predictable. Today, attention is fractured, trust is harder to earn and many consumers are holding onto their wallets—reserving spending for brands that feel relevant, values-aligned and consistently engaging.
That’s where the flywheel comes in.
A marketing flywheel emphasizes repeat engagement, community building and referrals over one-time conversions. Instead of merely capturing leads, think about how your content, events, customer service and brand presence reinforce each other over time.
This is especially potent for entrepreneurs running digital-first or community-focused businesses. Not only does it lower your cost per acquisition, it builds the kind of loyalty that withstands economic headwinds.
5. Use Data To Make Real-Time Decisions
When the market shifts quickly, relying on gut instincts alone is no longer enough. Entrepreneurs need to develop fast feedback loops using analytics tools that help them spot and respond to trends early.
This doesn’t require expensive enterprise software. Even free tools like Google Analytics, Shopify’s dashboards or CRM insights from email marketing platforms can show what’s working—and what’s not. Paired with AI-powered analysis tools, these platforms can now provide tailored insights, make predictive suggestions and even help automate campaign optimization—making it easier than ever to respond to changes in real time.
Yes, data is king—but only if you’re reviewing it regularly and taking action on what it reveals. Whether you’re A/B testing a new offer or tracking cost of goods sold, make real-time decision-making a core business habit in 2025.
Looking Ahead: Adaptation Is The Name Of The Game For Smart Entrepreneurs
If 2024 was a year of cautious optimism, 2025 demands clarity and action. Entrepreneurs who treat this slowdown as a time to get sharper, not smaller, are the ones who will thrive when markets rebound.
Now isn’t the time to panic—but it is the time to pivot. Those who retool their business strategy, streamline their operations and deepen relationships with their customers are setting themselves up not just to survive 2025, but to emerge from it stronger.
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