The New Reality: When "Hard to Steer a Ship in the Fog" Becomes the Operating Standard
If 2020 taught us anything about uncertainty, 2025 is proving to be the masterclass. U.S. small-business confidence improved slightly in May to 98.8, but the uncertainty index rose to 94 as businesses grapple with unresolved tax policy and ongoing tariff volatility. As one NFIB economist recently put it: "It's hard to steer a ship in the fog."
For Canadian businesses, the fog has only thickened. The Bank of Canada projects GDP growth will slow to just 1.0% in 2025, with the economy expected to contract in Q2 due to trade tensions and tariff uncertainty. CEO confidence has hit a five-year low, and many business leaders are preparing for potential recession due to widespread tariff impacts.
Yet here's what's fascinating: the companies that built flexibility into their operations during previous uncertain periods—whether COVID-19, the 2008 financial crisis, or supply chain disruptions—are the ones best positioned to thrive right now. The question isn't whether uncertainty will continue (it will), but whether your business has the agility to turn threats into competitive advantages.
The Flexibility Imperative: Why Better Predictions Aren't the Answer
Most business leaders, when faced with uncertainty, instinctively try to improve their forecasting. But here's the counterintuitive truth: the greatest opportunity lies not in predicting the unpredictable, but in building the flexibility to respond quickly when circumstances change.
Think of it this way: imagine your business decisions are like getting dressed for unpredictable weather. You could spend hours studying meteorological data, but the smarter approach is to dress in layers and carry an umbrella. The weather will do what it does—your power lies in how quickly you can adapt.
This principle became crystal clear during my time managing a $30M telecom division in the mid-90s. We were burning millions annually trying to perfect our demand forecasts across global markets with 6-12 month component lead times. No matter how sophisticated our predictions became, volatile demand patterns kept creating shortages in some regions and excess inventory in others.
The breakthrough came when we shifted focus from better predictions to better flexibility. By collaborating with suppliers to reduce lead times by 43%, we suddenly needed to predict demand only 5-6 months out instead of 9-12 months. Those shorter-term forecasts were inherently more accurate with no change in methodology, and our inventory costs plummeted while customer satisfaction soared.
In today's environment, with tariffs creating an average $1,200 tax increase per household and supply chains facing unprecedented disruption, this flexibility principle is more critical than ever.
Four Strategic Pillars for Uncertain Times
Based on what we're seeing with successful businesses navigating 2025's challenges, here are the four areas that demand your immediate attention:
1. Pricing and Financial Resilience
Eighteen percent of small business owners now report taxes as their single most important problem, the highest since December 2020. Layer on tariff-driven cost increases, and margin erosion becomes existential.
The market expects price adjustments right now. In fact, customers would be more surprised if your prices weren't changing. Be extra diligent with quotes and contracts. Build escalation clauses into longer-term agreements. And remember: pricing conversations aren't just about covering costs—they're about communicating value in an environment where everyone understands costs are rising.
What are you doing to stress-test your pricing model against various tariff scenarios? How quickly can you implement price changes when input costs shift?
2. Talent as Your Ultimate Competitive Advantage
Canada faces the prospect of 180,000 job losses and unemployment potentially reaching 8% by 2026, but this creates both challenge and opportunity. In every industry, the competition for top talent now exceeds the competition for customers.
Smart businesses are building their "virtual bench" right now—maintaining relationships with potential hires before they need them. They're conducting "stay interviews" with key employees, not just exit interviews. They're investing in development programs that make their company irresistible to talent.
Remember: today's employees aren't just looking for a paycheque. They want to work somewhere with healthy culture, meaningful work, and growth opportunities. The companies that crack this code will have an insurmountable advantage when economic conditions improve.
3. Process Thinking and Value Chain Flexibility
Process is where the real magic happens. Dell Computers revolutionized manufacturing by creating a value chain that required zero forecasting—no components were ordered until a customer had ordered and paid for the finished product.
You don't need to be Dell to apply this thinking. In your business, where are the longest lead times? Which supplier relationships could be restructured for greater responsiveness? What decisions are you making too early in your planning cycle?
For service businesses, this applies equally. If demand spikes, how quickly can you scale? Fractional resources, strategic partnerships, cross-training—these aren't just operational efficiencies, they're competitive weapons in uncertain times.
4. Scenario Planning and "Thropportunities"
Our Chief Transformation Officer, Sean Fitzgerald, coined the term "thropportunity"—the opportunities hidden within every threat. While global growth forecasts are being downgraded and recession risks mount, research consistently shows it's easier to gain market share during economic downturns than during good times.
What if the current uncertainty forces a strategic reset in your industry? What if tariffs make your domestic competitors more attractive relative to international options? What if economic pressure pushes innovation in your sector?
Run best, worst, and expected case scenarios across your planning model. The numbers don't lie, and clarity of action emerges when you've genuinely thought through different outcomes. As the OECD notes, global growth has been downgraded to 2.9% this year due to trade policy uncertainty.
Making Decisions as Late as Possible
Here's a principle that applies to every aspect of business planning: delay irreversible decisions until you have the maximum amount of relevant information.
This doesn't mean procrastination—it means identifying which decisions require immediate commitment and which can be structured to preserve options. In the current environment, with tariff policies changing frequently and legal challenges ongoing, this flexibility can make the difference between thriving and merely surviving.
Consider your supplier relationships, inventory levels, expansion plans, and major capital investments. Which of these can be structured with shorter commitments or escape clauses? Where can you preserve optionality without sacrificing operational effectiveness?
The Strategic Advantage of Uncertainty
While the Bank of Canada acknowledges the trade conflict has made the economic outlook "highly uncertain", here's what uncertainty creates for prepared businesses: competitive advantage.
When everyone else is paralyzed by unpredictability, companies with flexible operations, engaged talent, optimized processes, and scenario-based planning pull ahead. They make quick decisions while competitors are still gathering data. They adapt to new market conditions while others are still processing what happened.
This isn't about being reckless or optimistic to a fault. It's about building systems that turn volatility into velocity.
Your Path Forward
The question isn't whether the economic fog will lift—it probably won't, at least not completely. With trade policy uncertainty expected to persist through 2025, the companies that will thrive are those that become comfortable operating in ambiguous conditions.
What's one decision you're making too early in your planning cycle? What if you could delay that commitment by 30 or 60 days and maintain the same operational effectiveness?
Where in your business are the longest lead times? What conversations with suppliers, partners, or internal teams could reduce those timeframes?
Who are the three people in your industry you'd hire immediately if they became available? When did you last have a meaningful conversation with them?
These aren't theoretical questions. They're the practical steps that separate businesses that get stronger during uncertain times from those that simply hope to survive them.
The fog isn't lifting anytime soon. But for businesses willing to build their navigation skills, that fog can become their greatest competitive advantage.
If your business is wrestling with uncertainty in today's economic environment, we'd be curious to hear what's keeping you up at night. The patterns we're seeing across industries suggest there are more opportunities than threats—for businesses willing to build the flexibility to seize them.
