Small Business Outlook in 2026

Starting a business often begins with conviction. But over time, that conviction must contend with operational complexity, rising costs, and evolving market conditions. Our survey data reveals how founders’ original motivations compare with their current business health and confidence.

What Motivated Founders To Take the Leap

For many entrepreneurs, independence remains the defining spark.

• 40% say their primary motivation for starting a business was the desire to be their own boss.
• 39% cite financial need.
• 35% point to pursuing a passion.
• 35% wanted greater flexibility.

While financial pressures and personal interests played major roles, autonomy narrowly ranked highest, indicating that people continue to value self-direction and control over the work they do. 

That desired independence, however, also requires founders to shoulder full responsibility for the challenges ahead, growth, compliance, and long-term viability.

The Challenges Founders Expected

Before opening their doors, founders anticipated clear hurdles:

• 49% expected difficulty in finding customers.
• 34% anticipated challenges with marketing and building visibility.
• 28% worried about standing out against competitors.
• 21% expected difficulty understanding taxes and bookkeeping.

Revenue generation was the most anticipated challenge, underscoring the importance of customer acquisition to business owners. At the same time, administrative readiness proved to be a meaningful concern, highlighting the dual pressures of growth and compliance that founders expected to face. 

27% felt unprepared to handle administrative and legal requirements at launch. Among those who felt least prepared:

• 53% cite handling taxes and bookkeeping.
• 26% cite choosing the right business structure, such as an LLC or operating as a sole proprietorship.
• 23% cite understanding business licensing.
• 15% cite creating legal documents and contracts.

These findings suggest that independence may ignite the decision to start a business, but sustained success ultimately hinges on how effectively founders manage the operational and compliance demands that follow. While founders plan for customer acquisition, many underestimate the time and expertise required to manage compliance and administrative workloads. Access to qualified business attorneys can help founders navigate entity selection, licensing requirements, and contract development with greater clarity.

Nearly half of respondents, 48%, say running a business is harder than they first expected. Only 14% say it’s easier. The gap between expectation and experience appears closely tied to operational demands beyond core business functions.

Business Health Today Is Stable, But Under Pressure

When asked to describe their current business health:

• 50% say their business is “stable.”
• 36% say they are “struggling” but not at risk of closing.
• 9% describe their business as “thriving.”

Stability is the norm, but strong, widespread growth is less common. Industry differences are notable. 

In healthcare and pharmaceuticals, 65% describe their business as stable, and only 21% say they are struggling. That relative steadiness may reflect consistent demand and structured regulatory environments within that sector.

Confidence has also shifted over time, both in the short- and long-term:

• 43% are more confident that their business will still be open in a year than they were this time last year.
• 13% are less confident that their business will still be open in a year.
• 43% are confident that their business will still be operating 5 years from now.
• 16% are not confident in their 5 year outlook.

Short-term confidence appears to be improving for many, even as long-term uncertainty remains for a meaningful segment of founders, suggesting that maintaining stability—not acceleration—characterizes the outlook among those surveyed.

Rising Costs and Difficult Decisions

Cost pressures are a defining theme across responses.

• 53% report that operating costs have increased over the past year.
• Just 8% report decreases.

The largest spending increases include:

• 43% cite materials.
• 26% cite technology.
• 23% cite marketing.

In consulting and professional services, 45% say technology and software represent their largest increase in spending. That trend reflects continued investment in digital infrastructure and tools, even amid cost concerns.

To offset higher expenses:

• 44% have raised prices, and an additional 17% have not yet raised prices but plan to.
• 22% say rising costs have made them consider closing their business in the past year.

Taken together, the findings suggest rising costs are compressing margins and forcing many founders to prioritize financial stability over growth investment. While price adjustments are a common response, they carry risk in competitive markets. The fact that more than one in five founders have considered closing underscores how sustained cost inflation can strain even established businesses.

Funding Confidence Heading Into 2026

Access to capital remains uncertain for many entrepreneurs.

• 30% are not confident in their ability to secure funding in 2026 if needed.
• 39% are confident in their ability to secure funding.

With cost increases and competitive pressures shaping the operating environment, access to funding may play a decisive role in which businesses expand, stabilize, or scale back in the coming year.

Many founders often begin their journey motivated by independence and opportunity. But, over time, administrative demands, rising costs, and compliance responsibilities reshape that experience. 

Next, we’ll examine how artificial intelligence is influencing these dynamics and shaping entrepreneurs’ outlook for 2026.

Technology, Priorities, and the Business Outlook in 2026