Why business optimism matters – and how to stay realistic

The last few years have been a bit of a rollercoaster for businesses. From soaring energy costs to unpredictable tax policies and ever-changing consumer habits, long-term planning has felt more like fortune-telling than strategy. And while things are looking up, it’s not all sunshine for businesses just yet. 

Take energy prices, for example. While the worst of the crisis might be in the rearview mirror, some experts say we won’t see pre-crisis prices for at least another two years. That means UK businesses are still dealing with high running costs, tighter profit margins, and the ongoing challenge of keeping expenses in check. A 2024 survey from Resolve Energy found that over 60% of UK businesses have already upped their prices to offset energy costs.

But here’s the twist. Despite all the challenges, business optimism is still surprisingly strong. The CFO’s Playbook for 2025 found that 70% of UK businesses are optimistic about their business performance in the coming year. In Spain and the Netherlands, that number jumps to about 74%.

That being said, optimism doesn’t mean smooth sailing. Over half (56%) of UK businesses expect 2025 to be tougher than 2024. So, while there’s reason to be hopeful, it looks like businesses will need to stay sharp to prepare for what might be around the corner.

The power of optimism

A positive outlook can be a powerful tool for businesses, especially when it comes to keeping teams productive and happy. While market conditions are unpredictable, optimism can:

• Motivate teams: A confident, forward-thinking mindset from leadership can inspire employees and create a culture of resilience.
• Drive innovation: Businesses that remain hopeful about the future are often more willing to invest in new ideas, technologies, and new ways of working.
• Enable future-proofing: In uncertain times, an optimistic yet adaptable approach can help businesses pivot quickly when faced with unexpected changes.

Even in challenging economic climates, many CFOs continue to prioritise investment in technology, such as automation and AI, to improve financial efficiency.

The CFO’s Playbook for 2025 found that 68% of CFOs and 78% of CEOs rate AI as valuable. In the UK, 39% of businesses see AI skills as a top employee asset this year, the highest globally.

The risks of blind optimism

However, unchecked optimism comes with its downfalls. While confidence is valuable, businesses that rely too heavily on a positive outlook without preparing for downturns may find themselves in hot water.

Overlooking financial risks: If businesses assume continued growth, they may underestimate potential cost increases or shifts in market demand.

Underestimating external challenges: The CFO’s Playbook for 2025 found the UK’s top concerns for 2025 include inflation (which 42% of businesses cite as a key challenge), high energy bills (36%), and increased business taxes (35%). These pressures could weigh on profitability.

Hiring and pricing pressures: Some business leaders warn that rising employee-related taxes could impact hiring decisions. In The CFO’s Playbook for 2025, 62% of UK businesses indicated that these costs might make it harder to expand their workforce, and 68% suggested they may need to pass cost increases onto customers.

Stress-testing your financial health

To convert optimism into growth, businesses must stress-test their financial health and agility. This means assessing resilience to challenges, preparing to react, mitigating risks and maintaining stability. To ensure optimism is grounded in resilience, businesses can take practical steps to prepare for the year ahead:

• Keep the big picture clear: CFOs are juggling more than ever, from strategy to HR to sustainability and cybersecurity, you name it. Their skills are in high demand, but piling too much on their plate can lead to decision overload.
• Automate the tedious stuff: Nobody has time for endless spreadsheets. The more finance teams can automate, the easier it is to make smarter and faster decisions.
• Give treasury a modern makeover: Treasury is stuck in the past, drowning in manual work. Streamlining cash flow tracking and finance ops means more agility, whether it's an SMB managing subscriptions or a global giant handling multiple currencies.

The bottom line

Business optimism is a powerful tool. It keeps teams motivated, fosters innovation, and drives long-term success. But optimism alone won’t (and can’t) pay the bills. By balancing a positive mindset with solid financial planning, businesses can navigate uncertainty with confidence and come out stronger on the other side.

A clear-eyed approach to both opportunities and risks will be essential in navigating 2025 successfully. Download The CFO’s Playbook for 2025 to uncover strategies, tools, and insights designed to help you tackle today’s challenges and seize tomorrow’s opportunities.