Small Business Sentiment Shifts After the Pandemic

A Shopify executive told me he and his wife run a $150,000 side hustle. He's not unusual. Talk to 10 people and 8 of them have something going. We've been sold a broken narrative about entrepreneurship. The hero's journey version—quit your job, burn the boats, bet everything on yourself. That's maybe 10% of what's actually happening. The other 90%? Side hustles that grow quietly. People keeping their day job, their health insurance, their sanity—while building something real on the side. We surveyed our customers about why they started. The top three answers: 1. Make a difference in my life 2. Economic security for my family 3. Make a difference in the world "Get rich" didn't crack the list. Covid accelerated this. The pandemic made people realize that economic uncertainty was scarier than starting something. The "safe" job stopped feeling safe. And technology keeps lowering the barrier. You don't need a co-founder in the Valley anymore. You need a laptop and a problem worth solving. The next Whole Foods might be running out of someone's kitchen right now—alongside a full-time job. Most great businesses don't start with a dramatic leap. They start with a side project that refuses to stay small.

MPs have warned that UK small businesses are now operating under pressures comparable to the pandemic – only this time there is no emergency support framework sitting underneath them. Late payment, rising energy costs, increased crime, tax and admin burdens are all squeezing the same cashflow. For owners, especially in manufacturing and other operationally intensive sectors, it shows up in very simple ways: • cash in the bank not stretching as far as it used to • every input cost creeping up – from labour to logistics • less room to absorb a delayed project, a bad debtor or a quiet quarter Westminster is now talking about late payment reform, business rates, VAT thresholds and high street support. That matters. But most SMEs I speak to cannot run their businesses on consultations and select committee reports. There are a few practical questions worth asking now: 1) Cash runway: How many weeks of cash do you really have if sales stay flat? What about if they drop 10–15%? Run the numbers in scenarios, not just a single forecast. 2) Price vs value: Are your prices still set for your 2022–23 cost base? Have you actually tested what the market will bear, or just added a token uplift and hoped for the best? 3) Customer quality, not just quantity: Which customers pay late, erode margin, or absorb disproportionate management time? In an environment where late payment is endemic, your worst payers are often your biggest risk. 4) Fixed cost discipline: If you had to take 5–10% out of your fixed cost base without damaging your core service, what would you do? That thought experiment often surfaces options you’ve mentally parked. 5)Decision pace: How quickly can you spot when a line, site or product has tipped from “tight but viable” to “consuming cash we can’t spare”? That’s usually a data problem as much as a leadership one. None of this removes the external pressures. Policy still matters, and many firms genuinely need a better framework around them. But tightening the basics – cash discipline, pricing, customer mix, cost base – buys you time and options while the policy debate rumbles on. If this resonates, it may be worth carving out an hour with your numbers – and, if helpful, with someone independent – to look calmly at your next 12–18 months before “pandemic-style pressure” turns into a more permanent problem. ________________________________________________________________________________ I’m Talitha - I work with business owners on growth strategy and partnerships, connecting them with the financial expertise of MPA & EFM to support scaling through outsourced FD support, innovation funding, tax advice and accountancy.

Check out the BDL's new Q2 2024 CSBC report: Budding optimism as rates fall, but labour disputes could spoil the party: https://lnkd.in/eD8jcsiQ With the Bank of Canada kicking off the monetary policy easing cycle among G7 countries, we may be seeing the first green shoots of business optimism in Canada. Our Business Expectations Index moved into positive territory for the first time in a year, hitting 101.8 in Q2 2024, driven by a brighter outlook for sales. Encouragingly, businesses are still looking to hire in the coming quarter, as the labour market comes into better balance between supply and demand. Looking across the country, Atlantic Canada and Quebec are leading business optimism, with Halifax topping our city rankings. Conversely, Central Canada is lagging behind in Saskatchewan, Manitoba and Ontario, with cities such as Toronto and Regina struggling. Most industries have an improving outlook for the coming quarter, led by finance and insurance, while agriculture and information and culture are contracting. By size, micro firms (with 1 to 4 employees) are finally stabilizing after years of significant challenges throughout the pandemic; larger firms remain more optimistic. Business obstacles are generally improving, but cost-related pressures remain widespread. And despite slowing inflation, the share of companies expecting to raise prices remains historically elevated --- which if sustained, could slow future interest rate cuts. Labor challenges ticked up this quarter, especially for firms facing tight market conditions in accommodation and food services, construction and healthcare. Such labour issues are still leading to longer work hours and slower business growth. Finally, as we look ahead to a summer that could bring several disruptive labour disputes across the country (e.g., for the rail network, ports and at the border), impacted firms are unfortunately expecting supply chain obstacles to worsen in the near term. For those interested in diving into the numbers, our latest Business Expectations Index allows users to gauge sentiment trends for over 70 business concepts. You can explore our results by geography (including for Canada’s 20 largest cities), industry, ownership, firm size, age, trade status and more. Launch our interactive Survey Insights Generator to customize results and download our data to use in your analysis and outputs: https://lnkd.in/eq_rq5Kr We will be back next quarter to see if these improvements will be sustained, or if these baby steps of progress may ultimately reverse.

Confidence Recedes: What CEOs Need to Know Now The reversal of post-election optimism continues. After a sharp rise in small business confidence late last year, expectations have cooled significantly. The latest WSJ/Vistage Small Business CEO Confidence Index shows a third consecutive monthly decline, dropping 9.4 points in March to 85.4. Since December, the index has fallen a steep 26.5 points—returning to levels not seen since summer 2024. The biggest shift? Sentiment around the U.S. economy. 📉 42% of small business leaders now believe economic conditions have worsened compared to a year ago—a 20-point increase in just one month. 📉 43% expect things to get worse in the year ahead, up 11 points since February. This isn’t just a dip in mood. It reflects growing concerns over policy uncertainty, particularly tariffs and trade. In March, 64% of small businesses reported they expect negative impacts from changing trade and tariff policies—up from 54% the month before. Only 8% expect any positive benefit. Even revenue and profit expectations are trending downward: Just 59% expect increased revenues over the next 12 months, down from 64% in February. Only 47% project higher profitability, a 6-point drop from the previous month. Fixed investment plans are flat, and workforce expansion remains cautious. Uncertainty has clearly become the dominant challenge for CEOs—driven by shifting regulations, delays in customer decisions, and a volatile policy environment. Talent continues to be a close second, along with increasing concerns over cash flow and access to capital. Yet amid this uncertainty, one constant remains: the need to invest in people. Whether it’s leadership development, employee engagement, or future talent strategy, forward-looking companies are focusing on building capacity—regardless of the economic outlook. Key takeaway for CEOs: Now is the time to lean into clarity, community, and culture. Waiting for perfect conditions is not a strategy. What matters most is how leaders respond—decisively, with focus, and with a clear commitment to what and who drives the business forward. #marktaylorNYC #VistageNYC

Small businesses, the backbone of the U.S. economy, are currently grappling with a confluence of challenges. Market volatility, shifting tariff policies, rising operational costs, and tightening credit conditions have created an environment of uncertainty. These challenges are particularly acute for businesses owned by veterans, minorities, and women, as echoed by members of the Georgia Minority Supplier Development Council and the Atlanta Black Chamber of Commerce. Tariffs and Trade Tensions The implementation of the Trump administration's "Liberation Day" tariffs has had a significant impact on small businesses. While some firms have attempted to pivot their supply chains through onshoring or mergers and acquisitions, many lack the resources to adapt swiftly. According to a report by the Detroit Regional Chamber, 44% of small business owners anticipate reduced revenues due to tariffs, and 68% expect trade uncertainty to persist through April, with 42% foreseeing it lasting through December. Declining Business Sentiment The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index declined by 1.6 points in April 2025 to 95.8, marking the second consecutive month below the 51-year average of 98. This decline reflects growing concerns among small business owners about the economic outlook, hiring challenges, and revenue prospects. Financial Strains and Loan Delinquencies Financial pressures are increasing. In April 2025, $2.31 billion in loans entered delinquency, with 52.6% secured by office loans. This trend underscores the vulnerability of small businesses to economic fluctuations and the challenges they face in meeting financial obligations amid declining revenues and rising costs. Consumer Confidence and Spending Consumer sentiment has also taken a hit. The University of Michigan's consumer sentiment index fell to 52.2 in April, an 8% decrease from March, marking the lowest level since May 2020. This decline in consumer confidence can lead to reduced spending, which in turn further impacts small businesses that rely on consumer demand. The current economic landscape presents significant challenges for small businesses. Tariffs, declining consumer confidence, and financial strains are converging to create a precarious situation. To navigate these headwinds, small businesses may need to explore strategies such as diversifying supply chains, seeking financial counseling, and advocating for supportive policies. Collaboration among business owners, industry groups, and policymakers will be crucial in developing solutions that sustain and strengthen the small business sector during these uncertain times.

The NFIB August survey just came out this morning and it was not exactly inspiring. This is what the earnings picture looks like for smaller businesses in the US, or at least how they are reporting feeling about them. I think it is slightly lower than what we saw at the depths of the pandemic, which is just stunning. Outside of the GFC, small businesses have never felt worse about earnings at any time since this was first tabulated back in the 1980s. We like to look at this one to get a sense of earnings for the Russell 2000 and S&P 600 Small-Cap Index, but it is also helpful for gauging employment. Indeed, the first reflex for any company when earnings/revenues are under pressure is to cut costs, so this is pretty consistent with the most recent layoff announcement data. One more piece of the puzzle to ponder. Happy Tuesday. FT

Next in a series on the geographic divide between SMEs doing well in urban and suburban areas and the underperformance of many SMEs in rural areas in the United States today. This utilizes previously referenced PYMNTS data published today online. 1.    Revenue Declines Show Geographic Split: Despite an overall decline in the share of SMBs reporting decreased revenue from 22% in June 2022 to 17% in January, an urban-rural divide persisted. Rural SMBs were twice as likely as those in big cities to report declining revenues, with 30% facing decreases compared to 15% in urban areas. This trend extended to growth, as rural SMBs were also less likely to have reported growing revenues over the past three years. One potential explanation for this trend is a post-pandemic shift of workers from home to city offices, impacting local patronage. 2. Urban SMBs Drive Overall Survival Optimism: The general sentiment among SMBs regarding their two-year survival prospects improved, with the share of businesses deeming survival “slightly or not likely at all” falling from nearly 7% in July 2022 to 5% in January 2025. However, this overall trend was predominantly driven by big-city SMBs, where the share of those unlikely to survive declined from 5% in November 2024 to 4% in January. Conversely, all other SMB groups — including those in small cities, small towns and rural areas — reported a reduced likelihood of survival. Rural SMBs specifically saw their share of pessimistic outlooks double from 5% in October to more than 10% in January. However, even with this increase, 90% of rural SMBs still expressed confidence in their two-year survival, indicating a high baseline of optimism across the sector. Economic Conditions Top Concern for Survival Doubters: For SMBs, regardless of their location, the primary reason for concern about their long-term survival centered on poor economic conditions, cited by 46% to 51% of worried businesses. This consistently ranked as the leading factor across various industries, including construction, consumer services, retail, professional services and hospitality. Other factors contributing to pessimism included increasing competition, which was a top concern for 43% of SMBs in small cities, along with rising material or equipment costs, difficulties in securing financing, and escalating staffing costs, such as salaries, benefits and payroll taxes. Beyond these core findings, the report delved into further nuances within the SMB landscape. It revealed that certain industries, like hotels and restaurants, exhibited more volatile revenue trends, being more likely to report increases and decreases, possibly due to elastic consumer demand for leisure activities. Selected text is © PYMNTS, 2025. All Rights Reserved. Graphic is © Mark S. Mandula, CLO BCR Learning, 2025. All Rights Reserved.

Finally, there’s a positive shift happening for small businesses in Aotearoa. Our latest Xero Small Business Insights show the strongest small business sales growth in three years, with sales up 9.8% year‑on‑year in December and 4.8% across the December quarter - well above recent trends and long‑term averages. After several challenging years, this result feels significant. It’s the clearest signal yet momentum could be starting to return for many small businesses. Lower interest rates are beginning to ease pressure on households and businesses, confidence is slowly rebuilding, and we’re seeing that translate into real sales growth. While the recovery isn’t evenly felt across all sectors, the overall picture is encouraging. Professional services, manufacturing and retail are showing solid gains, and regional economies - particularly across the South Island - are leading the way. I really hope this marks a turning point for the small business economy—not a return to “business as usual,” but a move towards steadier growth. Small businesses are the backbone of our economy, and seeing this level of improvement after such a tough period is something worth celebrating! Here’s to continued momentum in 2026. Find out more here: https://lnkd.in/eHHnfZgW #SmallBusiness #XeroSmallBusinessInsights 

📉 US Sentiment Data Signals Growing Economic Anxiety Latest indicators show a clear shift in mood across US consumers and businesses. The post-election optimism is quickly fading, replaced by rising uncertainty: 🔹 Consumer Sentiment Index has dropped sharply in early 2025, falling from above 70 to around 60, reflecting growing concerns among households 🔹 Long-term Inflation Expectations have surged to 4.0% — the highest level since 1993 — indicating that inflation fears are becoming more entrenched 🔹 Small-Business Optimism Index showed a brief uptick post-election but is now pulling back, currently hovering near 100 🔹 Homebuilder Sentiment remains depressed, stuck below 40, a far cry from pre-2022 levels near 80, as high rates and affordability pressures persist These soft data points highlight a disconnect between policy narratives and on-the-ground sentiment. Businesses and consumers are feeling the weight of persistent inflation, tighter financial conditions, and economic uncertainty. Graph source: Bloomberg

Economic uncertainty is hitting small and middle-market businesses hard - but their optimism might surprise you. Just watched a fascinating webinar from my alma mater UCLA Anderson School of Management with Columbia Business School on policy and economic volatility for small and mid-sized businesses. Here are the key insights that every business owner needs to understand: 🔍 The Labor Market Reality • Job growth has dramatically slowed from 232,000 to just 29,000 (3-month average) • When job growth turns negative, historically we're either in or near recession • Small businesses are pulling back on hiring plans - only 13% expect to increase staff 💰 Inflation & Pricing Pressures • Nearly half of small business owners are "extremely concerned" about cost increases • 58% plan to raise prices to customers (well above historical average) • 36% expect to increase prices by at least 5% (up 16 points from spring) • Tariffs are a major driver - the effective tariff rate has jumped from 2.5% to 10% ⏳ The Wait-and-See Approach • Uncertainty around tariffs, regulations, and policy shifts is causing businesses to pause • Capital expenditures, hiring, and inventory decisions are all being delayed • Most businesses raise prices within 1-3 months after new tariffs take effect What struck me most was the disconnect between economic indicators and the sentiment of business owners. Despite all these headwinds, many small business owners remain surprisingly optimistic about their futures. Why? Perhaps it's because they've weathered tough times before (COVID, financial crisis) and emerged stronger. Or maybe it's simply that entrepreneurship requires inherent optimism. For small business owners navigating this environment, three priorities emerge: 1. Manage cash reserves carefully (23% expect lower cash next year) 2. Plan for continued inflation pressure (core PCE expected to hit 3.3% in early 2026) 3. Be strategic about borrowing (rates on longer-term debt remain elevated) What's your experience? Are you seeing these trends in your business? #SmallBusiness #EconomicOutlook #Inflation #BusinessStrategy #UCLAAnderson