Small businesses are heading into 2026 with solid revenue expectations but uneven footing. Bank of America’s latest survey shows rising optimism, tempered by persistent supply chain strain, labor shortages, and the cost pressures that continue to shape everyday operations.
Confidence Holds But Only if Supply Chains Steady
Bank of America’s 2025 Business Owner Report shows that revenue expectations among small and medium-sized businesses remain surprisingly firm heading into 2026, with 74% of respondents anticipating growth and nearly 60% planning to expand. Owners are betting on a more predictable business environment, and many say their confidence would rise further if global trade conditions stabilize. According to the survey, two in five SMBs would feel more secure if supply chains strengthened, while 53% say steadier tariff policy would meaningfully support planning decisions.
Despite the upbeat tone, underlying vulnerabilities persist. Inflation remains a drag on purchasing and investment decisions, more than half of respondents say cooling price pressures would ease their outlook, while borrowing costs continue to challenge cash-flow management. Publicly available labor market data reinforces this sentiment: across 2025, job openings in sectors ranging from transportation to retail remained above historical averages, adding cost and complexity for employers who already face difficulty filling key operational roles.
Labor Shortages, Cost Pressures, and the Push Into AI
Workforce constraints remain a defining pressure point for SMBs. Sixty-one percent of owners report operating disruptions stemming from tight labor supply, leaving many to work longer hours or raise wages to attract candidates. Only 1% plan job cuts in the year ahead, while 43% expect to expand hiring, an indicator that demand for skilled labor will stay elevated even if broader economic indicators soften.
The report also highlights how quickly AI has moved from experimental to mainstream within small business operations. More than three-quarters of SMBs now deploy AI tools, most commonly for marketing, content generation, customer service, and inventory tasks. According to the BofA Institute, payments to tech and AI service providers rose 8% year-over-year, signaling broader adoption of digital tools designed to offset labor shortages and improve workflow efficiency. This aligns with wider market patterns: recent data shows that SMB software spending has been one of the few technology categories to grow steadily through 2025, particularly in automation and analytics.
Supply Chain Friction Remains a Dominant Risk
Geopolitical volatility and shifting trade rules continue to weigh heavily on sourcing. Seventy-five percent of business owners report supply chain challenges, and more than half have raised prices to offset disruption. Nearly one-third face direct sourcing difficulties, underscoring how persistent backlogs, transportation volatility, and shifting regulatory requirements still shape everyday operations.
Inflation remains another stubborn headwind. With 88% of respondents citing inflation-related problems, many are reassessing budgets and tightening cash-flow discipline ahead of 2026. Yet even with these pressures, expansion plans remain intact: 47% aim to grow their customer base, 39% plan to broaden their product mix, and 35% are exploring new marketing channels to capture demand in a slowly stabilizing market.
Where Disruptions Are Now Emerging
One dynamic worth watching in 2026 is the shift in where supply chain pressure originates. Recent industry data shows a growing share of delays now emerging from second- and third-tier suppliers, particularly in categories such as components, specialty materials, and packaging, areas where SMBs often have limited visibility. As large buyers formalize deeper supplier mapping and risk-scoring programs, smaller firms may find that partnering with logistics providers or platforms offering upstream transparency becomes a practical way to insulate operations. It is these less-visible fault lines in the supply base, rather than headline economic indicators, that increasingly determine how reliably smaller businesses can execute growth plans.
