Small-business owners are increasingly concerned about inflation, which remains their top challenge according to a recent Bank of America study. The report reveals that 70% of business owners identified inflation as a primary concern, consistent with the previous year, while 77% reported an average cost increase of 18%. In response, 76% of these owners have raised prices by an average of 12%. Despite these pressures, there is a sense of optimism, with about 75% expecting revenue growth in the next year. Sharon Miller, president of business banking at Bank of America, noted that smaller firms tend to be more agile and feel they have control over their business strategies even amidst economic uncertainty.
Small businesses in the United States are also experiencing significant job losses, with companies employing 50 or fewer workers shedding 88,000 jobs over the last three months. In contrast, larger firms with more than 500 employees gained 151,000 jobs during the same period, highlighting a growing disparity in employment trends between small and large companies. According to a recent report by ADP, small businesses are struggling to absorb the impacts of tariffs and are often more credit-constrained than their larger counterparts, limiting their ability to invest in growth opportunities such as artificial intelligence.
Consumer sentiment in the United States has plummeted for four consecutive months, reaching one of its lowest levels on record, according to data from the University of Michigan. This decline is attributed to rising prices and stagnant incomes, alongside a weakening job market and a stock market that has seen a downturn after recent highs. However, not all Americans share the same concerns about the economy. Political affiliation plays a significant role in economic perceptions, with Republicans generally maintaining a more positive outlook compared to Democrats. Additionally, households with higher incomes and individuals who own stocks report feeling better about the economy, as they are less affected by rising costs. Notably, younger Americans under 35 are exhibiting increased optimism, buoyed by recent wage growth trends and potentially greater financial support from their families, according to the Conference Board.
Why do we care?
Small-business customers are optimistic, but their wallets aren’t. Costs are up almost 20%, prices only up about half that, and they’re cutting jobs. That tells you everything. They feel confident, sure—but they don’t have the cash to support big technology moves.
And that should change how IT providers show up. If you’re pitching anything that looks like a “nice to have,” expect it to stall. If you’re pitching tooling without tying it to a business result, expect a no. This is a market where SMBs are looking for survival advantages—cost control, better customer retention, and ways to do more with fewer people.
There’s also a political-perception trap in here. Owners may say they’re bullish because it fits their worldview, but when it comes to approving a five-figure IT project? Totally different story. Don’t confuse sentiment with spend.
So what should you do? Tighten every recommendation around financial impact. Show how automation removes specific tasks when customers are short-staffed. Provide flexible purchasing paths because a lot of them can’t take on big capital expenses. And if you have customers selling to price-sensitive consumers, be ready for slower decisions—they’re hurting.
But here’s the upside: if you can demonstrate real business value, SMBs will still invest. They have to. The winners next year are the providers who can literally connect the dots between technology and economic pressure relief. If you can do that, you’re going to stand out.