Small businesses continue to power the U.S. economy, but shifting market forces, policy changes, and rapid technological advances are reshaping the landscape. Here are some of the top challenges and opportunities facing today’s small businesses and how to navigate them.
Top small business challenges in 2025 and beyond
Small business owners are currently facing several challenges that could hinder growth and make it difficult to plan ahead with confidence.
Inflation and tariffs
According to the Q3 2025 Small Business Index, inflation remains the top concern for 46% of small businesses. Many are raising prices (55%) or adjusting supply chains (36%) to offset higher costs, even as short-term confidence in cash flow has improved.
Tariffs are compounding those pressures. The Trump administration’s tariff policies have increased costs for businesses and consumers throughout 2025. Recent rulings extended tariff timelines into fall 2025, though additional reviews are expected by year’s end.
On the flip side, the One Big Beautiful Bill (OBBB)’s tax provisions may help offset those rising costs. These include several deductions from the 2017 Tax Cuts and Jobs Act that have been made permanent, including the 20% qualified business income (QBI) deduction for pass-through entities and 100% bonus depreciation for new capital investments. The OBBB also increased the cap for the SALT (state and local tax deduction) from $10,000 to $40,000 — a change that’s poised to benefit small business owners, particularly those with incomes under $500,000.
[Read more: American Made? How to Market Your Made in USA Products]
Hiring and skills gaps
Hiring qualified talent continues to be a significant challenge for business owners. NFIB’s April 2025 jobs report found that 34% of small business owners had unfilled job openings, and nearly half (47%) said they couldn’t find qualified applicants. The shortages vary by industry, with higher rates seen in the construction, transportation, manufacturing, and wholesale industries.
This aligns with broader findings from WGU Labs, which reported that 87% of companies worldwide face a skills gap. Many workers without traditional degrees are stuck in low-paying jobs without opportunities for advancement. For small businesses, the persistent skills gap not only limits growth but also increases competition for qualified employees, making recruitment and retention increasingly difficult.
Regulatory and policy uncertainty
Policy changes and unclear regulations add another layer of risk for small businesses. In particular, technology rules are top of mind: 65% of small business owners fear new AI and data privacy regulations could harm their operations. Many worry that limits on analytics or targeted ads could restrict their ability to reach customers and grow.
Labor availability could also change due to shifting immigration policies. Shortages could worsen in industries like hospitality, agriculture, and construction, where millions of workers could lose valid work authorization and leave small businesses scrambling for staff.
According to the Q3 2025 Small Business Index, inflation remains the top concern for 46% of small businesses.
Key opportunities for small businesses right now
Despite these obstacles, small businesses are feeling confident and optimistic, according to a recent U.S. Chamber Small Business Snapshot. Here are some powerful opportunities to adapt and grow your business through the end of 2025 and beyond.
Leveraging artificial intelligence
An August 2025 Chamber Technology Engagement Center (C_TEC) report found that nearly all (96%) small business owners plan to adopt emerging technologies in the near future, including artificial intelligence (AI). The use of generative AI has more than doubled since 2023, with applications in marketing, customer service, inventory management, and even construction bids.
Rather than replacing workers, AI is supporting the capabilities of human teams, allowing small firms to cut costs, improve efficiency, and compete on scale. For many, it’s both a tool for streamlining operations and a pathway to sustainable growth.
[Read more: 6 Ways Small Businesses Are Using AI to Grow and Become More Profitable]
Upskilling and retaining talent
Small businesses can address hiring challenges by developing talent from within. Upskilling programs help employees build new skills, expand career paths, and take on greater responsibilities, all while strengthening the business’s long-term resilience. Research from Gallup also shows employees value upskilling for the right reasons: 60% pursue new skills to perform better in their current roles, and when employees feel encouraged to keep learning, they are 47% less likely to be actively seeking another role.
Small businesses are especially well-positioned to upskill their teams. Close relationships with employees and operational flexibility allow them to experiment with apprenticeships, job training, and support such as flexible schedules and childcare. These investments pay off by reducing turnover, creating a stronger pipeline of future leaders, and ensuring workers are equipped to handle shifting demands.
Changing consumer trends
Consumer spending patterns are shifting in ways that reflect both economic caution and a desire for joy and connection. Many shoppers are becoming more value-conscious, gravitating toward off-price and resale retailers for the “treasure hunt” experience of finding unique items at a good price. At the same time, consumers are prioritizing experiences and wellness, from travel and entertainment to health-focused products and services.
Nostalgia and play are also shaping spending. The rise of “kidulting” has adults embracing toys, collectibles, and playful experiences as a form of self-care, while the revival of indie bookstores highlights the power of community and connection. Together, these patterns signal that businesses that lean into creativity, community, and personalization stand to capture more wallet share.
[Read more: 10 Tools and Strategies to Build a Brand Community]
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
