End-of-Year Planning for Small Business Owners: Trends for 2025 and How Franchising Can Elevate Your Business
As 2024 draws to a close, small business owners and entrepreneurs are likely reflecting on their successes, challenges, and goals for the year ahead. End-of-year planning is a crucial time to assess the performance of your business, set clear objectives for 2025, and adjust strategies to ensure long-term growth. From a sales and marketing perspective, it’s important to be prepared for trends that are shaping the business landscape in the new year. Additionally, 2025 could be the perfect time for owners to consider scaling their operations by franchising their business—a strategic move that can dramatically increase your business's value over time.
In 2025, sales trends suggest that businesses will continue to embrace digital transformation. Online sales platforms, social media marketing, and AI-powered customer service tools are becoming essential for businesses of all sizes. Small business owners must adapt to these changes by integrating advanced marketing automation tools to streamline lead generation and customer outreach. With more businesses adopting e-commerce and digital marketing, companies that maintain a strong online presence will have a competitive edge. Additionally, personalization in marketing will continue to thrive as consumers increasingly expect customized experiences. Entrepreneurs should think about how they can harness the power of data to better target their ideal customers and craft offers that resonate on a deeper level.
From a tax perspective, 2025 is expected to bring new challenges and opportunities. Entrepreneurs should be proactive in understanding potential changes to tax laws, especially those related to small businesses. One important area to watch is tax credits and incentives for businesses that adopt sustainable practices or make significant investments in technology and innovation. Additionally, with inflation continuing to impact many sectors, planning for potential tax rate changes and adjusting your business structure can help optimize tax savings. Entrepreneurs should work closely with their accountants to ensure they are taking advantage of all available deductions and credits, helping to reduce their taxable income and reinvest in growth opportunities.
One growth strategy that many small business owners overlook is converting their business into a franchise. This shift can take your business to the next level by allowing you to scale without bearing all the costs and risks yourself. Franchising creates a system that generates recurring royalty revenue from franchisees, providing a more stable and predictable cash flow stream. Additionally, franchisors often benefit from 10-year contracts with franchisees, which adds to the long-term stability and valuation of the business. In fact, successful franchisors often sell their businesses for multiples of 8x to 15x EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) because of the recurring nature of their royalty revenue and long-term contracts with franchisees.
In comparison, a non-franchise business typically sells for much lower multiples—usually 3x to 4x EBITDA. This is because a non-franchise business may have limited scalability and can be heavily reliant on the founder or key employees to maintain relationships with existing clients. Once the owner is ready to exit, the business’s value can be significantly impacted if those relationships are not properly maintained or transitioned. With a franchise system, the business model is more replicable, which increases the buyer’s confidence in future revenue potential, making it a far more attractive investment.
As we head into 2025, now may be the perfect time to reevaluate your business’s potential. If you’ve reached a point where you’re looking for growth but don’t want to take on all the risk and capital expenditure yourself, franchising could be the strategic move that transforms your business. Take the time this year to evaluate your operational processes, ensure your business is ready for franchising, and make sure that your marketing and sales strategies are aligned for continued growth. By the end of next year, you may find yourself in the enviable position of watching your business expand nationwide, with a scalable system in place and the added benefit of a significantly higher valuation.
Planning ahead, staying informed about trends, and considering strategic options like franchising can position your business for greater success in 2025 and beyond. Whether you decide to franchise or not, the key is ensuring that you’re adapting to changing trends in marketing, sales, and tax strategy while making informed decisions that set your business up for long-term profitability.
If you'd like to discuss what franchising your business could look like and the help I can provide, please reach out - 608-576-4592 or [email protected] or go here to learn a bit more about the ecosystem of companies I'm part of that will aid in your set up and success: https://aaronbakken.com/franchiseyourbusiness