Small Business Grit in Action: Adapting Through Economic Challenges

KeyBank's 2025 survey, which included 2,144 small business owners with annual revenue of $10 million or less, found that almost one in four (23%) small business owners are operating in day-to-day survival mode. Still, most owners feel they are able to continue to cautiously plan ahead (40%) or invest in long-term growth (22%), pointing to the adaptability and determination of the small business owners who are the backbones of our communities.

Business Performance Does Not Equal Readiness

Almost half (46%) of small business owners feel their performance fell short of expectations in 2025. However, this hasn't dampened their preparedness mindset. Another 46% say they are certain they could cover one month of operating expenses if an emergency arose, down only slightly from KeyBank's Fall 2024 Small Business Survey (49%).

Inflation and Rising Costs Dominate Concerns

Inflation and rising costs are the primary concern for half (50%) of small business owners. To add, a quarter (25%) of small business owners are increasing prices for customers in light of recent tariffs and rising costs. This approach is just one way small business owners are taking action in this economic moment. They are also likely to cut expenses in other areas (16%), absorb costs to stay competitive (14%), and shift their suppliers (11%), highlighting their willingness to evolve when times get tough.

Policy Uncertainty Drives Cautious Confidence

In addition to economic uncertainty, 72% of small business owners express significant concern about how changing federal legislation will impact their operations. However, there's a silver lining: 80% feel confident in their ability to make key, informed decisions amid today's economic and policy uncertainty, even if they second guess themselves sometimes. This suggests that while uncertainty exists, American small business owners have developed the mindset needed to navigate these complexities.

Business Owners Are Resilient…

Small business owners are proving that they are resilient as they consider strategic planning and making the changes they need to get through the tough moments — and even move forward.

The key to small business owners’ resilience is two-fold: taking care of themselves and leaning on their trusted support network. Nearly one third (30%) of small business owners say they feel more resilient with adequate sleep, signaling the importance of balancing well-being with business demands. Additionally, 21% of small business owners say they'd feel more secure by having regular conversations with their business bankers, proving the value of a strong, trusting, and open relationship between owners and their bankers.

…and These Tips can Help

For small business owner/operators, resilience and adaptability are crucial in today’s economic climate. Here are three key tips to help small business owners navigate these challenges and position their business for success:

1. Stay Informed and Proactive
Monitor economic trends and industry-specific challenges by staying connected with local and national business associations. Conduct regular financial reviews to identify areas for cost reduction and efficiency improvements, ensuring you are always making informed decisions.

2. Optimize Business Operations
Streamline business processes by automating tasks and outsourcing non-core activities. Diversify revenue streams through new products, services, or online sales channels. Regularly negotiate with suppliers to secure better terms and build flexible, cost-effective relationships.

3. Build a Strong Support Network
Leverage the expertise of business bankers and other financial professionals for tailored advice and solutions.  Meet with bankers and tax professionals together to work through financial planning and cash flow issues so that one hand knows what the other is doing.  Engage with the local business community through events and networking groups to build a support network that can provide resources and potential collaborations.