Boston, September 11, 2025
News Summary
As the final quarter approaches, small business confidence in profit growth is faltering. A recent survey indicates that only 49% of owners expect profits to increase, down from 55% last year. Concerns about inflation, rising costs, and demand are affecting owner sentiments, with many opting for cautious strategies rather than aggressive expansion. Hiring plans show mixed signals, with a slight increase in businesses planning larger hires for the holiday season. The overall outlook remains cautious, reflecting the challenging economic landscape.
Boston — Small business confidence has weakened as owners approach the final quarter of 2025, with fewer expecting profit growth than in the same period last year. A survey conducted in August of 1,500 business owners shows 49% now expect profits to increase, down from 55% in 2024, reflecting rising concerns about demand, inflation, policy and operating costs.
What changed most
The largest single shift in expectations is the rise in owners who foresee no change in profits by year-end: 35% in 2025 compared with 27% in 2024. At the same time, the share of owners expecting profit shortfalls fell slightly to 16% from 18% last year. These shifts point to growing caution rather than widespread pessimism, as more owners report a flat outlook instead of anticipating declines.
Survey details and top concerns
The survey of 1,500 small business owners was fielded in August and asked respondents about their year-end outlook, hiring plans and reinvestment capacity. Respondents cited inflation as a record-high concern, alongside worries about falling demand, higher costs and uncertain policy. Those economic pressures are cited as the primary reasons many owners are hesitant to pursue large-scale expansion or aggressive growth strategies heading into the holiday sales quarter.
Hiring plans and workforce trends
Hiring activity shows mixed signals: the overall proportion of businesses hiring remained largely steady, but more owners report plans to add larger numbers of employees as the holiday season approaches. Among businesses that plan to hire, 13% intend to add 10 or more workers and 12% plan to add six to ten workers—each a 3% increase from 2024. Meanwhile, plans to hire just one to five employees declined by 5%.
Reasons for not hiring remain largely unchanged. About 26% of business owners said they do not need additional staff, and 18% said they cannot afford to hire—both figures consistent with 2024. The share citing difficulty finding employees as a hiring barrier dropped to 8% from 15% the previous year.
Investment and reinvestment
More owners reported having extra income available for reinvestment, but that has produced only nominal shifts in key investment categories. The most notable change was a 3% increase
in businesses reporting investments in hiring and retraining employees. Despite some upticks, most owners remain cautious about committing capital to large projects until demand and cost pressures clarify.
Profit performance in the first half of 2025
For the first half of 2025, 22% of businesses reported exceeding profit expectations, up from 20% the previous year. The plurality of respondents, 42%, said profits met expectations, while 36% experienced worse-than-expected results, a modest improvement from 38% in 2024. Those results align with the cautious sentiment heading into the final quarter: some businesses are performing better than planned, but a substantial share still face pressure.
National trends and broader context
Nationally, trends in 2024 showed only 46% of small businesses turning a profit, with 35% operating at a loss. More firms reported revenue declines (41%) than increases (38%) in 2024, the first time that gap has widened since 2021. The current mix of rising costs and slowing demand appears to be preventing many owners from becoming overly optimistic about 2025’s final quarter.
Why this matters
The combination of higher operating costs, persistent inflation worries and uneven customer demand is reshaping small business strategies. Owners are increasingly prioritizing stability—holding off on major expansions while balancing hiring needs for seasonal demand. The result is an uptick in flat profit expectations and selective hiring that favors a larger number of hires at some businesses over smaller, incremental additions at many others.
What to watch next
Key indicators to watch in the coming months include consumer spending trends during the holiday quarter, any changes in input and labor costs, and policy developments that may affect taxes, supply chains or borrowing costs. These factors will likely determine whether the cautious sentiment among small business owners gives way to renewed investment or further restraint into 2026.
Frequently Asked Questions
What is the main finding of the August survey?
The main finding is that small business owners’ confidence in profit growth has declined: 49% expect profits to increase in the final quarter of 2025, down from 55% in 2024.
How many business owners were surveyed and when?
The survey included 1,500 business owners and was conducted in August 2025.
What are the top concerns limiting optimism?
Top concerns are record-high anxiety about inflation, slowing customer demand, rising operating costs and uncertainty over policy developments.
Are businesses hiring despite lower profit expectations?
Yes. Overall hiring levels are stable, and plans for larger hiring rounds have increased modestly, especially with the holiday quarter approaching. However, some owners still say they cannot afford to hire or do not need extra staff.
How did businesses perform in the first half of 2025?
In H1 2025, 22% exceeded profit expectations, 42% met expectations and 36% performed worse than expected.
Quick reference table: Key survey figures (2024 vs 2025)
| Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Expect profits to increase | 55% | 49% | -6 percentage points |
| Expect no change in profits | 27% | 35% | +8 percentage points |
| Expect profit shortfalls | 18% | 16% | -2 percentage points |
| Businesses hiring: plan to add 10+ workers | 10% | 13% | +3 percentage points |
| Businesses hiring: plan to add 6–10 workers | 9% | 12% | +3 percentage points |
| Difficulty finding employees (reason for not hiring) | 15% | 8% | -7 percentage points |
| H1: exceeded profit expectations | 20% | 22% | +2 percentage points |
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