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Rising Challenges for Small-Business Owners Ahead of the Holidays

Small-business owners are grappling with a myriad of challenges as they prepare for the holiday season, according to the Fall 2025 Small Business Survey conducted by Main Street America. Factors such as escalating costs, staffing difficulties, and unpredictable sales expectations are creating an environment of uncertainty for many entrepreneurs in the lead-up to the critical holiday shopping period. (Credit: Citalliance | Dreamstime.com)

Small-Business Confidence at an All-Time Low

The recent survey reveals that small-business confidence is currently at its second-lowest level since tracking started. With data collected in October 2025, the confidence of small-business owners has risen only slightly since the Spring 2025 survey, indicating a continued state of unease. While there was an incremental increase of three-tenths of a point, this still represents a near-record low, marking the second lowest average rating across seven biannual surveys conducted over the years.

Key Findings from the Fall 2025 Survey

Responses from small-business representatives in various sectors—retail, food and beverage, professional services, personal services, and arts and entertainment—offer insight into the prevailing climate. The survey covered a wide geographic area, collecting data from 48 states, Washington, D.C., and Puerto Rico.

Businesses employing fewer than three full-time staff reported an average confidence rating of 6.8 out of 10, which is significantly lower than the 7.2 rating for those employing more than 10. Among different sectors, professional services fared somewhat better at an average of 7.9, while retail and food businesses lagged behind with an average rating of 6.8.

Insights Based on Business Age and Type

Analysis by the age of the business reveals that those established for at least a decade scored an average confidence rating of 7.2, over those startups launched in 2020 or later, which averaged 6.9. Notably, small manufacturers and makers exhibited higher confidence levels with an average rating of 7.3, contrasting with non-packaged goods businesses that only averaged 6.9.

Over the past three months, a significant percentage (38%) of businesses experienced a drop in revenue, while 45% reported declining net profits. However, it’s important to note that not all businesses faced downturns; 58% of respondents indicated either stable or increasing revenue, and nearly half (49%) reported consistent or growing net profits.

Economic Strains on Small-Business Owners

For many business owners, the economic landscape is particularly daunting. Among micro-businesses (fewer than three full-time employees), 40% suffered from declining revenue—twice the rate of their larger counterparts with more than 10 employees. Retail sector owners were hit hardest as 52% reported a decrease in net profits between August and October 2025, highlighting the sector’s vulnerability.

The survey also points to broad social and economic trends that are negatively impacting small businesses. Factors including inflation, changing consumer spending habits, rising tariffs, and even government shutdowns are contributing to heightened anxiety among small-business operators.

The Importance of Supporting Main Street Businesses

The vulnerability of these essential Main Street businesses deserves attention, as indicated by the survey results. Erin Barnes, president and CEO of Main Street America, emphasized the critical role of small businesses, stating, “Small businesses with fewer than 25 employees make up 98% of all American businesses.” During the holiday shopping season, many small businesses rely on this period for a significant portion of their annual revenue—up to 40% in some cases. Therefore, local support through shopping small and shopping locally becomes increasingly critical during these challenging times.

Demographics and Trends Among Small-Business Owners

The data reflects that nearly 72% of the businesses surveyed have fewer than three full-time employees, and 82% have fewer than 10 employees when accounting for part-time, seasonal, or temporary staff. These small business owners are actively engaged in their communities, contributing to local causes (70%), hiring locally (63%), utilizing local vendors (56%), and supporting local Main Street initiatives (53%).

A significant number of respondents (72%) are female business owners, and many rely heavily on in-person sales, with 48% not engaging in e-commerce or online sales. The retail and food industries dominate the survey, representing 62% of respondents, while other sectors like professional services (9%), personal services (7%), and arts and entertainment (6%) made up smaller percentages.

Strategies for Capturing Holiday Demand

In light of the challenges identified, the survey sought to understand how business owners plan to capture demand during the holiday shopping season. Responses can be categorized as follows:

• 40% of businesses took proactive measures by pre-ordering inventory to effectively manage expenses while maximizing their product offerings.
• 25% focused on enhancing marketing and promotional efforts to capitalize on holiday shopping opportunities.
• 10% planned to introduce new products or adopt innovative business practices for the holiday season.
• 25% indicated that they did not engage in any seasonal preparations, suggesting varied levels of impact from the holiday season.

Leveraging AI legalese decoder for Compliance and Clarity

In this complex environment, navigating legal and compliance issues can be daunting for small-business owners, particularly when it comes to contracts or regulatory requirements. AI legalese decoder is a powerful tool that can assist business owners in understanding and interpreting legal documents, ensuring they are compliant and informed. By simplifying complex legal jargon into plain language, AI legalese decoder empowers business owners to make better decisions and focus on growing their businesses during a challenging holiday season.

As small-business owners approach the holidays amidst uncertainty, leveraging tools like AI legalese decoder can provide them with the clarity and confidence needed to navigate legal complexities and take advantage of every opportunity.

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