Small business owners remain 'cautiously optimistic' heading into 2026 amid rising costs, labor challenges

Many small business owners are betting on growth in the year ahead, even as inflation, labor shortages and economic uncertainty continue to pressure operations, a new survey finds. About 80% of small business owners say they are confident in their outlook, and about 79% expect revenue growth in 2026, according to Comerica Bank’s Small Business Pulse Index released Dec. 9. Those expecting growth project an average revenue increase of 7.9%. "It is evident that challenges are still weighing heavily on them, but they remain cautiously optimistic about what’s ahead in 2026," Larry Franco, executive vice president and national director of retail and small business banking at Comerica Bank, told FOX Business. HOUSE REPUBLICANS MOVE TO REPEAL PROPOSED BIDEN-ERA HEAT-SAFETY RULE, CITING BURDENS ON SMALL BUSINESSES To offset rising costs, small businesses are increasingly turning to technology, including artificial intelligence (AI), to boost efficiency and manage costs, according to Franco. "We are seeing smaller businesses leverage productivity tools and are likely to outperform peers who don’t," he said. However, hiring remains more mixed. Labor shortages and rising expenses are making some business owners "hesitant" to expand their workforce, Franco said. "As a result, I believe job growth among small businesses will be moderate in 2026," he said. Inflation and rising costs remain the top concern among business owners, but concerns about labor availability, broader economic uncertainty and growing "decision fatigue" are also weighing on confidence, according to Franco. "There is a sense among the small business owners we visit with on a regular basis that they are stuck in a defensive mode rather than having the ability to focus on building and growing their business," he said. Cash flow remains a key focus heading into the new year, according to Franco.