73% of small business owners optimistic about 2025 economy

The NEXT economic survey reveals a complex view of the economy. 57% of respondents state the economy is weaker than it was a year ago. This mood highlights ongoing challenges such as inflation, unemployment, and unpredictable market conditions that affect businesses nationwide.

At the same time, the data shows diverse perspectives about the viability of their small business among owners. While 27% are not optimistic at all about the future of their business, about 3/4 of entrepreneurs report they are very optimistic (23%), optimistic (26%), or cautiously optimistic (25%) about their business's viability in the coming year.

NEXT saw similar upward thinking about business owners' expected profits in the first six months of 2024.

NEXT's survey highlights several challenges that may be shaping a business's outlook for the future. Rising costs have forced 17% of businesses to increase prices in the last six months. Another 15% reduced operating costs.

Some industries, such as technology and health care, have shown resilience due to the demand for innovation and essential services. But others, such as retail and hospitality, are more vulnerable to fluctuating consumer spending and labor shortages.

For example, an Intuit holiday shopping report reveals that 23% of consumers are reducing their holiday spending due to the rising costs of essentials like groceries and gas. This holiday season, consumers plan to spend an average of $294 at small businesses, compared to last year's $485—a 40% decrease.

While NEXT data found that 12% of respondents closed all or part of their business, these closures were outweighed by growth. 10% say they've expanded their products or services, and another 7% opened a second location for their business.

Despite difficulties, many business owners are holding steady: 17% expect no major changes in the next six months.

And as planning for the first half of 2025 planning begins, business owners are thinking about growth.

Some entrepreneurs will focus on expansion, with 14% planning to launch new products or services and 8% preparing to open second locations. These proactive efforts indicate confidence in the economy and market potential.

Cost management will also play an important part, with 12% of businesses increasing prices to offset rising expenses and 11% expecting to cut costs in the coming months.

However, not all businesses are as confident in their resilience; 12% are concerned about possible closure due to persistent financial difficulties.

Opportunities for Small Business Growth

Regardless of the economic climate, businesses can focus on innovation strategies to propel them forward, such as adopting emerging AI technologies, diversifying products and services, and protecting their investment with business insurance to help mitigate the risks of growing a business.

Small businesses can weather economic challenges long-term if they stay flexible and prepare for the unexpected to build a solid foundation for success.