As AI and automation become more effective, now is the time to embrace digital tools
Unpredictable U.S. tariffs and trade threats are creating a state of financial flux among Canadian SMB owners. It’s an incredibly tough time to navigate these unpredictable conditions, leaving many businesses struggling to find stability.
According to the Canadian Federation of Independent Business (CFIB), small business confidence has plummeted to an all-time low, with business confidence reaching a lower mark than it did at any time during the 2020 pandemic, 2008 financial crisis or 9/11.
Adding to uncertainty is the upcoming Federal Election, which can add more pressure to small business owners as they think about their financial future when it comes to taxes and funding opportunities.
It is a pivotal moment for small business owners, and optimizing financial processes should be at the forefront of their minds. We are witnessing a trend of savvy business owners using this time of uncertainty to optimize their financial processes. With optimization comes real-time data, which allows leaders to make smarter, quicker decisions in an unpredictable landscape.
Real-time data will unlock accurate scenario planning for businesses, enabling leaders to effectively navigate uncertainty and spot opportunities, setting themselves up for success in years to come.
Incorporating AI technology into financial planning
As AI and automation become more effective, now is the time to embrace digital tools that can give an accurate and real-time picture of a business’ financial health, including a view of how external pressures may create crunches or, for some, opportunities.
This is where scenario planning also comes in. Using insights built from data, business leaders themselves, or working with their accountant, can take the following steps:
- Identify key risks: To stay ahead, businesses need to pinpoint the biggest risks – whether that’s market volatility, supply chain vulnerabilities, or regulatory changes – that could truly throw a wrench in operations. Alongside looking at short-term factors, businesses must ensure they’re analyzing the long-term shifts in broader areas such as society, economics and technology. Not all risks are created equal, so it’s vital to focus resources on the threats that have the greatest potential to impact the business.
- Develop diverse scenarios: Facing fear of the unknown is tough for a business owner, but it is important to embrace this uncertainty with plans for different scenarios, from the most optimistic (i.e. price hikes with little impact on demand) to the worst-case (i.e. staff layoffs and downsizing), along with a middle ground (i.e. non-essential spending cutbacks). Ideally, it’s best to keep this to roughly three to four scenarios to avoid the risk of falling into the trap of analysis paralysis. Ultimately, by covering a number of bases, leaders can ensure their business is agile enough to proactively tackle challenges head-on, rather than waiting for circumstances to dictate a response.
- Engage stakeholders: By involving their employees, partners, accountants, bookkeepers and investors in the scenario planning process, leaders are not only crafting a more robust plan, but they’re also establishing a collective sense of readiness. This alignment accelerates decision-making and ensures that when fast execution is needed, the business is primed to respond effectively and with confidence.
- Establish and track key indicators: It’s important to identify the critical financial and operational metrics that indicate when things are really shifting in the business. By setting clear benchmarks for each key metric and establishing alert thresholds to signal any unusual changes, leaders can instantly spot emerging issues or opportunities, positioning the business for swift, precise action exactly when it’s required.
- Test, analyse and improve strategy: Don’t just stick to one plan – where possible, stress test different approaches and see what works best in different scenarios. Regularly analyze results digitally to identify any gaps and be proactive about implementing any improvements. By understanding what’s working and what’s not, approaches can be refined to ensure the business stays on course, no matter what changes come.
- Leverage digital tools: Implementing live tracking tools like digital dashboards and advanced analytics software, as well as automating processes, are crucial for delivering ease and efficiency when monitoring key metrics. This is especially effective in areas such as bookkeeping, where automated systems can consistently update financial records, ensuring instant access to the most current data. These real-time insights empower leaders to identify changes quickly and refine strategies on the fly, helping to keep the business optimised for success.
Adapting to thrive in 2025
Although the economic climate for the year ahead presents some financial challenges for business leaders, SME owners who lean into data-led scenario planning will be best positioned for stability and even growth.
