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May 22.2025
3 Minutes Read

Small Business Confidence Rises While Tariffs Continue To Bite Margins

Concerned mature woman working in modern office on small business confidence.

Small Business Confidence on the Rise: A Closer Look

In recent months, small business confidence has experienced a noteworthy shift. According to the WSJ/Vistage Small Business CEO Confidence Index, confidence levels rose by 5 points to 75.0 in May 2025, indicating a slight but meaningful rebound after a series of declines earlier in the year. Despite this improvement, confidence remains at one of the lowest points observed in the past two years, reflecting the ongoing economic challenges that small businesses face.

Understanding the Tariff Effect

The turbulent landscape created by recent tariff announcements continues to pose significant hurdles for small businesses. A majority of CEOs express concerns about the adverse impacts of these tariffs, with two-thirds reporting negative effects on their operations. Direct consequences include disrupted supply chains and increased input costs, while indirect repercussions manifest as decreased customer demand due to heightened uncertainty. Business leaders like Joey Nelson, president of JoeScan, Inc., share the troubling reality that planned expansions may be thwarted by these barriers. Tariffs create cost disadvantages and fuel negative perceptions of U.S. business abroad, stalling ambitious growth plans.

Shifting Workforce Dynamics amidst Economic Uncertainty

Amidst these challenges, a positive trend is emerging regarding workforce expansion. The percentage of small businesses planning to increase their workforce in the next year climbed to 43%, up from 36% in the previous month. An intriguing catalyst for this optimism may be the growing incorporation of artificial intelligence (AI) within business operations. As firms look towards AI to streamline workflows and improve efficiency, the issue of workforce size becomes complex. A shift towards automation could offset the need for extensive hiring while simultaneously enhancing productivity.

Maintaining Margins in a Fractured Economy

Despite rising confidence, small businesses are grappling with the implications of rising operational costs. Approximately 38% of small business owners report a decrease in profit margins since the beginning of the year, with 31% anticipating further declines in profitability. In response to increasing costs, 59% of small businesses have raised their prices by over 4%, demonstrating a proactive approach to managing their financial health. As input costs rise, this tactic is indicative of how firms are adapting to protect their bottom line.

The Future Outlook: Navigating Challenges

Looking ahead, small business owners face both challenges and opportunities. The sentiment around the overall economy is slowly shifting, with 30% of businesses expecting improvement over the next 12 months. This is an increase from 25% in the previous month. Yet, it’s important to remain cautious; a significant 44% still anticipate economic deterioration. This anticipatory landscape underscores the necessity for small business leaders to remain agile and informed.

What This Means for Business Leaders

For CEOs and business owners, understanding these dynamics is crucial for planning and strategy. Balancing optimism with realism can help navigate the uncertain waters ahead. Businesses that embrace innovation, whether through AI or strategic partnerships, may find new pathways to sustain growth despite external pressures.

As we continue to track these trends, small business leaders are encouraged to foster connections and gather insights to prepare effectively for the challenges ahead. In a time of turbulence, the collective wisdom of the business community may prove invaluable.

Take Action Now

As a leader, it’s crucial to stay informed and connected. By keeping up-to-date with industry trends and actively engaging with networks, you can position your business to thrive despite ongoing challenges. Join discussions, attend webinars, and explore resources available through platforms like Vistage to enhance your leadership capabilities.

Economic Trends

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10.28.2025

Navigating Economic Trends for 2026: Key Insights for CEOs

Update Projecting Economic Trends: A Comprehensive Overview As we edge into the latter part of 2025 and set our sights on the unfolding economic landscape for 2026 and beyond, it’s crucial to contextualize where we have been. The previous year has been predominantly characterized by the Federal Reserve's aggressive maneuvers to tame inflation, primarily instigated by supply chain disruptions stemming from the pandemic and government stimulus efforts. The direct correlation between federal spending and consumer price indices (CPI) has now become clearer, leading many experts to take a more discerning view of fiscal policies impacting national growth. Understanding Key Economic Risks Recent surveys conducted among North American executives reveal an alarming consensus: 84% cite geopolitics and a shifting balance of global power as the greatest threats to the American economy. This signals a pivotal shift in how business leaders perceive risks, moving away from internal concerns to external geopolitical shifts. Despite predictions of a modest GDP growth rate around 2% for 2025, many economists have consistently underestimated growth, indicating a potential economic resilience that could surprise analysts yet again. Debt and Inflation: A Ticking Time Bomb The trajectory of U.S. national debt is reaching precarious heights, with estimates suggesting it will breach 120% of GDP by 2030 if bipartisan agreement on fiscal reforms remains elusive. The implications are grave — economists warn of the negative consequences associated with excessive leverage including reduced investment and potential economic stagnation. Simultaneously, while it seems improbable that inflation will rebound to 6% in the short term, persistent employment pressures and inflationary policies could lead to unwelcome consequences down the line. The Fed's ability to balance its mandates of controlling unemployment and inflation is about to face unprecedented challenges, especially with embedded inflationary pressures likely to persist. Regional Manufacturing Trends Amid Global Changes With expectations that global manufacturing output will see marginal gains in 2025, U.S. manufacturers operate under increased scrutiny, particularly those engaged in a zero-sum market defined by complex tariff regulations. It’s worth noting the Biden Administration's intent to maintain existing Trump-era tax cuts, which poses further implications for the import-export landscape in the U.S. For instance, the imposition of significant tariffs — including a sweeping 100% tariff on Chinese electric vehicle imports — could drive costs up for American consumers amid heightened tensions in trade negotiations. Geopolitical Context: A Modern Perspective The world is experiencing a wave of geopolitical uncertainty, exacerbated by conflicts such as Russia's aggression in Ukraine and rising tensions between the U.S. and China. These factors are shaping firm behavior and investment strategies across many sectors. Research by the Federal Reserve Bank of Boston illustrates that firms are increasingly embracing caution when it comes to investments, leading to significant reductions in future spending — particularly in industries heavily affected by geopolitical dynamics. Future-Proofing Investments Amid Uncertainty To navigate this evolving economic environment, business leaders must develop strategies that take into account both geopolitical risks and domestic economic trends. Firms with strong cash positions appear more resilient to fluctuations in geopolitical risk. This insight is paramount for CEOs and decision-makers as they consider their long-term capital investments in physical assets. The challenge lies in balancing risk management with growth initiatives, all while observing the rapidly evolving international trade environment. Conclusion: Navigating the Economic Path Forward In conclusion, the economic outlook for 2026 and beyond is interwoven with complex geopolitical threads and domestic fiscal challenges. The successful navigation of this landscape will depend on adaptability and forward-thinking strategies among business leaders. Companies must remain vigilant in monitoring economic indicators and geopolitical events to seize emerging opportunities while mitigating risks effectively. Call to Action: For CEOs and business leaders looking to equip themselves with strategies that can help them thrive amidst these economic changes, consider joining forums and discussions focused on leadership strategies and economic resilience.
10.24.2025

High Insurance Costs and Economic Uncertainty Sour Small Business Outlook

Update Rising Costs Trigger Concerns Among Small Business Leaders A recent decline in the WSJ/Vistage Small Business CEO Confidence Index to 85.8 in October signifies that rising costs and economic uncertainties are taking a toll on small businesses across the country. While lower interest rates offered a glimmer of hope, small business leaders contend with heightened insurance costs, government shutdowns, and tariffs that are further eroding their confidence and future expectations. Insurance Costs Are a Growing Burden The most notable challenge for small businesses is skyrocketing health insurance costs. Over half of small business owners are witnessing increases exceeding 10%, threatening their profitability. Nina Dittmar, CEO of Roadready Transfer Service, expressed frustration, stating, "Health insurance is a joke — we pay so much as an employer for major medical for our employees. It’s not sustainable for employers or employees." This sentiment reflects a larger crisis, as firms are increasingly exploring self-insurance models or risking employee care accessibility. Seeking Innovative Solutions: Pooled Risk and Advocacy In North Carolina, innovative efforts like Carolina HealthWorks are emerging to address these challenges. After new legislation enabling a pooled risk model, the service aims to enhance access and affordability for small and midsize employers. Gary Salamido, President of the NC Chamber, emphasizes these efforts as crucial for “security for personal health” while supporting business growth. Such initiatives are gaining momentum as many small businesses search for collaborative strategies to mitigate rising costs. The Silver Lining: Interest Rate Reductions Despite the overwhelming burden of increasing costs, the recent interest rate cuts present a silver lining for small business owners. Taylor St. Germain from ITR Economics underscores that direct engagement with these cuts will yield better outcomes than simply waiting for additional reductions. Business owners can refinance existing debts, potentially enhancing cash flow. As Michael LeBlanc, CEO of CCi Voice, notes, a cumulative rate cut of 1.00% could ignite development projects, providing much-needed momentum in a stalling market. Future Predictions: Challenges and Opportunities Ahead The future outlook remains uncertain, as 70% of small business leaders acknowledge that interest rate cuts must go beyond a single reduction to effect significant change. However, the expectation of multiple cuts could stimulate demand, paving the way for recovery in sectors like real estate, investments, and capital expenditure projects. The question now is: how swiftly can these cuts translate into tangible benefits for small businesses? Conclusion: Adapting in a Challenging Environment In conclusion, while higher costs and uncertainty loom large for small businesses, proactive measures—like adopting pooled risk models and hazard management through interest rate engagement—can provide pathways to stability. In a competitive landscape, navigating these challenges and finding creative solutions will be crucial for leaders looking to thrive and sustain growth. For small business owners keen to adapt and learn more about innovations, networking opportunities, and navigating this economic landscape, staying engaged with educational resources can provide the tools necessary to forge ahead.
10.21.2025

Unlocking the Future: CEOs Must Embrace Agentic AI by 2026

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