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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.

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02.19.2026

Small Business Confidence Rising: What It Means for Hiring and Growth

Update The Rise of Small Business Confidence in 2026 As we embark on 2026, small businesses are feeling a surge of confidence that hasn't been seen in over a year. According to the latest WSJ/Vistage Small Business CEO Confidence Index, confidence levels have risen to 97.3 in February, up significantly from 94.1 in January. This resurgence is a promising sign for entrepreneurs navigating an ever-changing economic landscape. Assessing Economic Drivers Behind Growth Several factors are contributing to this renewed optimism. Notably, reports indicate a decline in the number of small business leaders who view the economy as worsening, down from 34% in January to 30% in December. In contrast, the percentage of leaders seeing improvements has risen from 24% to 27%. This shift suggests that businesses are beginning to adapt better to ongoing economic conditions, setting the stage for growth. Strong Revenue Growth Expectations The outlook for revenue growth is also promising. Over 71% of small businesses anticipate revenue increases in the upcoming year. This figure marks a notable increase from 67% in January. Simultaneously, profitability expectations have climbed to 60%, up from 56% last month. These trends indicate that many small businesses are not only hopeful but also optimistic about turning that hope into tangible profits. Hiring Trends and Workforce Growth Strategies With revenue projections on the rise, hiring is set to ramp up as well. A noteworthy 55% of small businesses plan to add staff in the next 12 months, a significant increase from January's 50%. However, caution remains among some businesses, with 9% planning to cut jobs. It is evident that many companies are grappling with immigration-related operational challenges. As highlighted by business owners like Chris Lamphear and Ronnie Kahan, these challenges are impacting labor availability and creating emotional stress within the workforce. Leadership Development: A Crucial Investment As small businesses gear up to meet increased demand, the focus on leadership development remains vital. According to recent findings, 68% of small businesses are investing in leadership training, recognizing its importance in workforce satisfaction and engagement. Ensuring strong management not only aids in navigating business challenges but also fosters a healthier company culture that can lead to improved retention rates during tighter labor markets. Comparative Insights from Other Economic Studies Looking beyond the Vistage survey, similar reports from the National Federation of Independent Business (NFIB) indicate a slight downward trend in overall small business optimism. While the NFIB Small Business Optimism Index dipped by 0.2 points in January, it remains above historical averages. Insights from their report show that many business owners are still concerned about labor quality and other operational hurdles, underscoring a complex economic environment. The Role of Legislative Decisions The legislative environment plays a significant role in shaping small business futures. The NFIB encourages lawmakers to focus on pro-business policies, suggesting that unnecessary taxes and regulations can stifle hiring and growth. In contrast, positive legislative support can provide a robust framework for economic acceleration, lending necessary confidence for expansion. Looking Ahead: Future Trends in Small Business With projections indicating continued growth and optimism for small businesses, it's clear that understanding and adapting to economic currents will be essential. The emphasis on leadership development, nurturing a skilled workforce, and maintaining a proactive stance on policy changes are strategies that can set businesses apart in a competitive landscape. Conclusion: Take Action for Sustainability As the small business landscape transforms, leaders must strategically position their companies for sustained growth. Investing in leadership development, navigating workforce challenges, and advocating for beneficial policies can empower business owners to meet the demands of an evolving economy. Equip yourself with insights and trends that can make a difference in your business strategy.
01.30.2026

Small Business Confidence Rises: Strategies for 2026 Success

Update Small Businesses Show Optimism as Market Conditions Stabilize As we transition into 2026, small business confidence is starting to rebound, shaking off a year defined by uncertainty. The recent WSJ/Vistage Small Business CEO Confidence Index reported a steady score of 94.1 in January, mirroring trends seen in December. Improved revenue expectations are driving this optimism, with 67% of business leaders predicting increased revenues and 56% forecasting higher profits in the coming year. Shifting Strategies: Exploring New Marketing Avenues Among the strategies small businesses are employing is a significant investment in marketing, with nearly a third of leaders allocating extra budget to explore innovative avenues for customer engagement. As a result of adapting to evolving market conditions and technological progress, especially generative AI, businesses are seeing an uptick in demand. A robust 43% plan to boost their marketing spend in 2026 compared to previous years, focusing on growth goals, organizational shifts, and responses to competitive pressures. Growth Goals Drive Investment: Aiming for Market Share Small businesses are particularly focused on growth aspirations as they allocate marketing budgets to maximize their market share and expand their client base. Chris Sutton, principal of Sutton Engineering, encapsulates this sentiment, expressing plans to double revenue this year. This growth mindset reflects a broader ambition across the sector to not only enhance product and service offerings but also diversify client segments amidst economic headwinds. Professionalization of Marketing: A New Era for Small Businesses As businesses seek to formalize their marketing efforts, there’s a distinct trend toward professionalization. Companies are hiring agencies, reworking their strategic marketing approaches, and utilizing new technologies. This shift is partially driven by a new generation of leadership that acknowledges the need for a modern marketing strategy that can effectively navigate the complexities of the current market climate. Understanding Customer Relationships: Building Brand Loyalty Post-pandemic shifts have prompted a growing emphasis on transparency and authenticity in customer relations. As Sabine Leveiller pointed out, today’s consumers are increasingly drawn to brands that showcase genuine stories and relatable journeys. This cultural shift signifies that small businesses should be candid about their processes, challenges, and even failures, fostering deeper connections with customers based on shared values. Utilizing AI: A Tool for Enhanced Engagement Artificial Intelligence (AI) is no longer the exclusive domain of large corporations; it’s become an invaluable asset for small businesses striving to enhance their marketing strategies. With AI, small businesses can improve customer experience through personalized approaches while maintaining their unique brand essence. The key to success lies in using AI as a creative collaborator to boost engagement, thereby ensuring marketing efforts resonate more effectively with target audiences. The Fun Factor: Adding Creativity to the Mix To truly captivate audiences, small businesses should embrace creativity in their marketing endeavors. The evolving landscape in 2026 calls for a knack for surprise and engagement that keeps customers excited about their offerings. Whether it’s a unique event or a playful social media campaign, businesses should lean into their brand personality to enhance customer relationships. Conclusion: Navigating the Path Ahead With shifting market dynamics, small businesses face both challenges and opportunities heading into 2026. By focusing on authenticity, embracing technology, and fostering creative engagement, businesses can build resilience and adapt to these changing conditions. As the landscape continues to evolve, the commitment to transparent storytelling and customer connection will be crucial for long-term success. Investing in these strategies could set the groundwork for thriving in a competitive marketplace. If you want to explore more about effective business strategies tailored for today's environment, consider joining a community that supports business leaders by providing valuable insights and collaboration opportunities.
01.15.2026

Measuring CEO Confidence: What to Expect for 2026

Update CEO Sentiment Shows Gradual Recovery Amid Uncertainty As businesses gear up to enter 2026, recent data from the Vistage CEO Confidence Index reveals a cautious yet measured improvement in CEO optimism, with confidence rising to 88.9—reflecting a 7-point uptick from the previous quarter. This sentiment is markedly above the three-year average, suggesting that leaders are gradually adjusting to a new operating reality shaped by fluctuating economic conditions. This cautious optimism comes after a tumultuous period during 2025, during which many CEOs adversely reacted to rising costs, shifting trade policies, and uneven consumer demand. Transforming Challenges into Opportunities Despite the overall improvement, a significant number of CEOs remain pessimistic about the current economic climate, with 40% stating conditions have worsened compared to a year ago. Yet, expectations moving forward are less grim, as only 23% anticipate further deterioration over the next 12 months. In fact, nearly a third (32%) of CEOs foresee improvements, demonstrating a shift towards a more hopeful outlook. According to Lauren Saidel-Baker, a senior economist at ITR Economics, "Things will look better in 2026 than they did in 2025. A lot of uncertainty is now behind us." This indicates that business leaders are adopting a more realistic and resilient approach to planning, with many acknowledging that the opportunities ahead exist independently of macroeconomic cycles. Focus on Execution Over Expansion The increase in optimism is not rooted in some sweeping economic rebound; rather, CEOs are honing in on practical decisions regarding revenue growth and operational strategy. Notably, nearly seven in ten leaders expect revenue increases in the upcoming year. However, profitability expectations remain tempered due to ongoing wage pressures and rising costs from suppliers and insurance. Investment priorities reflect this grounded approach. Although there has been a slight uptick in fixed investment plans, half of CEOs expect their investment levels to remain static as they emphasize discipline over reckless expansion. Significantly, investment in talent stands out as a chief priority for the year ahead, underpinning the strategic importance of human capital amid economic fluctuations. The Role of AI in Shaping Business Strategy Following the trends of digital transformation, a notable number of CEOs are increasingly eyeing artificial intelligence as a significant player in driving business efficiency and innovation. According to a recent report, 62% of businesses plan to implement some form of AI, focusing primarily on process automation and market intelligence. This technological adoption is pivotal as firms navigate the complexities of labor market shifts and competitive pressures. Interestingly, amidst this AI integration, a dichotomy arises regarding job impacts. While many anticipate no changes in headcount, some foresee the potential for AI driving not just efficiency but also staff reductions. This underscores a critical balancing act companies face: leveraging technology to adapt while also managing workforce implications. Cautious Optimism in a Volatile Global Landscape As we delve into 2026, leaders must keep a keen eye on the global landscape, where uncertainties persist, including geopolitical risks and potential shifts in regulatory environments. While the national economic outlook appears to be stabilizing, global uncertainties may still present challenges that require proactive strategies. In particular, emerging markets are gaining attention, as J.P. Morgan's 2026 Business Leaders Outlook indicates a cautious yet encouraging sentiment among executives regarding their sector's performance. Despite the lingering pessimism about the overall economy, 71% of leaders report confidence in their company’s performance, highlighting their focus on leveraging strengths despite broader market challenges. Conclusion: A Call to Strategic Action Moving into the new year, CEOs and business leaders must continue to embrace adaptive strategies while honing in on growth opportunities fostered through disciplined decision-making, technological innovation, and talent investment. Establishing a robust foundation now is crucial as they navigate a landscape enriched with potential yet weighted by uncertainties. By fostering a culture of resilience and forward-thinking, leaders can position their companies for sustainable success in 2026 and beyond. For further insights into how to maximize your investments and improve business outcomes, consider participating in specialized webinars and forums offered through your business networks.

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