The Importance of Business Transformation

Change is inevitable—and it feels like it’s accelerating. In 2025, small businesses are navigating a volatile mix of economic uncertainty, technological disruption and shifting consumer behavior.

Inflation in the United States remains above target levels, tariffs have the potential to reshape supply chains and consumer confidence (which can affect buying intent) has been wavering. In April 2025, consumer confidence declined to levels not seen since the start of the Covid-19 pandemic in 2020, according to the Conference Board. At the same time, new opportunities like AI-powered tools and digital payment innovations are redefining how small businesses operate.

Thriving in this environment requires more than grit. It requires an intentional, proactive strategy to recognize and adapt to the evolving landscape. Whether you’re launching a new product, pivoting your approach to marketing or expanding locations, successful change starts with a plan.

Here’s how small business owners can recognize the need for change, prepare for it, communicate effectively and come out stronger on the other side.

Key takeaways:

• Business transformation helps small businesses stay competitive by adapting how they operate, serve customers or use technology.
• Watch for signs it’s time to make a change—like declining sales, supply chain instability or shifting consumer needs.
• Effective change management starts with a clear plan, backed by strong communication and the right resources.
• When making a change, stay flexible and measure results along the way to drive long-term growth.

What is business transformation?

Business transformation refers to adjusting how your business runs—whether that’s tweaking your tools, teams, processes or products. For small businesses, this can look like upgrading your point of sale systems, adding new digital sales channels, bundling products, offering loyalty programs or altering your business model in response to customer needs.

Unlike a one-time adjustment, transformation is often ongoing. It’s about positioning your business to adapt, grow and lead over time. Transformation isn’t just about big moves either. Even small, incremental changes can have a major impact when paired with thoughtful strategy and execution.

Understanding change management

What is change management? Change management, or strategic management, is how you support your team (and systems) through a business transformation. It’s especially critical for small businesses, where even modest changes can ripple quickly through a tight-knit team or customer base.

A good change management strategy ensures everyone—from leadership to front-line staff—is aligned, informed and equipped to succeed. It also accounts for emotional and organizational pushback, helping teams feel empowered rather than blindsided.

Recognizing the need for change

Before making changes, it’s important to identify when transformation is truly needed. Signs may include:

• Declining customer engagement or sales
• Rising costs or supply chain instability
• New competitors or technologies disrupting your industry
• Shifting demographics

Regularly reviewing your operations, customer data and financial performance can help reveal gaps and opportunities. And don’t underestimate employee feedback—your team may spot early signals of change before they show up in the numbers.

Business strategies: Planning for change

Once you’ve identified a need for change, it’s time to build a plan that accounts for your team, tools, timeline and goals.

Ask yourself:

• What exactly needs to change—and why?
• Does your entire business plan need overhauling, or can you simply tweak one key function?
• Who will be affected?
• What tools, skills or resources are needed to implement the change?

A strong business transformation strategy includes:

• Goal setting. Change is a process. Plan in short- and long-term stages, with regular checkpoints, so you can adapt as needed.
• Scenario planning. Don’t just plan for the ideal outcome. Plan for “what ifs” as well. What happens if costs spike, a supplier falls through or your customer base doesn’t respond the way you expected? Scenario planning will help your business be more agile and resilient in the face of uncertainty.
• Flexible operations. Whether you rely on suppliers, third-party platforms or seasonal employees, having contingency plans in place can protect you from unexpected disruptions. With tariffs and pricing shifting rapidly, consider diversifying your supply chain, exploring local and international options, and revisiting your pricing model. Credit options—including letters of credit, import financing and supply chain financing—can also support flexibility during change.
• Innovation readiness. Emerging technologies like generative AI are rapidly transforming small business growth operations—including everything from demand forecasting in inventory management to customer service workflows. To adopt these tools effectively, assess whether your current workflows, systems and teams are equipped to integrate new solutions. You may need to upskill staff or redefine roles to make the most of new capabilities.
• Financial preparedness. Growth often takes capital. Evaluate your funding options in advance—like a Small Business Loan or working capital line of credit. Knowing what’s available to you can help reduce stress when it’s time to act.
• Expert advice. You don’t have to navigate change alone. A trusted advisor, like your Fifth Third Relationship Manager, can support you during business transformation and connect you to consultants, technology specialists or legal experts. Getting outside perspective early can save you from expensive detours later.

Communicating change internally and externally

Successful change hinges on communication. Internally, leaders should clearly explain the what, why and how of any shift—ideally in ways that inspire rather than alarm.

Depending on your business size, that might mean:

• Hosting all-hands meetings or town halls
• Sending out email updates or setting up dedicated Slack channels
• Establishing one-on-one check-ins with affected team members
• Creating educational programs about new systems or workflows

It’s also important to tailor the message to your team. Not every employee needs to know every detail, but each team should understand how the transformation affects their role.

Having open channels for feedback—like surveys or small-group sessions—can also surface concerns early and allow you to make adjustments before issues escalate. Two-way communication reinforces that transformation is something your team is part of, not something that’s happening to them.

Externally, communicate only what your customers or partners need to know. If a change affects pricing, product availability or service hours, share that clearly via email, social media or in-store signage—and explain the benefit.

On the other hand, if your internal changes won’t affect the customer or client, you may not need to communicate anything at all.

Putting change into action

With a solid plan in place and your team aligned, it’s time to move from strategy to execution.

Here are a few tips to help you bring your transformation to life:

• Start small. If possible, pilot the change in a single location or with a limited group and then scale from there. This allows you to test new systems, gather feedback and make changes before a full-force rollout. A phased approach also helps reduce risk and improve employee confidence.
• Assign ownership. It might make sense to designate a project manager or transformation lead to coordinate change across departments and keep the process on track (some companies appoint a chief transformation officer, or CTO, for this)
• Empower your team. Make sure your employees have the tools, training and support they need to successfully adopt or execute a change.
• Resource the change. Don’t underestimate the time, money or staffing needed to make change stick. You may need to temporarily shift workloads, adjust schedules or bring in outside help during the transition.

Measuring success—and adapting

Once your transformation is in motion, it’s critical to evaluate whether the changes are having a real impact—and to stay flexible if they’re not.

Start by identifying the right metrics to track. Depending on your goals, this might include:

• Increased revenue or reduced operating costs
• Improvements in product or service quality
• Improved customer satisfaction or retention
• Faster turnaround times or streamlined workflows
• Greater employee engagement or lower turnover
• Digital adoption or productivity improvements

Use both quantitative and qualitative data to assess your progress. Digital tools—like dashboards, CRM platforms or customer feedback software—can help you track performance in real time. Don’t underestimate anecdotal feedback either. Conversations with employees and customers often surface insights you won’t see on a spreadsheet.

Be prepared to make adjustments. If a new process isn’t working, or if your team is overwhelmed, use what you’ve learned to tweak the plan. Flexibility is a competitive advantage—and some of the most successful transformations evolve over time.

Bottom line: Don’t treat measurement as a final step. Think of it as an ongoing loop: Plan, implement, evaluate, adjust. That cycle is what turns transformation into sustainable growth.

Three things to do

1. Discover ways to grow your business.
2. Learn about accelerating digital transformation for your business.
3. Listen to our podcast about Gen Z and how you can earn their business.