FreshBooks 2025 State of U.S. Small Business: Confidence Holds Steady Despite Rising Costs, Tariffs, and Customer Challenge

New research shows confidence holding steady as entrepreneurs adapt their approach 

TORONTO — January 27, 2026 — U.S. small business owners are entering 2026 with an optimistic outlook, even as rising costs and customer acquisition challenges continue to shape day-to-day operations, according to the FreshBooks 2025 State of U.S. Small Business Report.

Based on a survey of approximately 750 U.S. small business owners and solo operators, the research indicates that while inflation, tariffs, and competitive pressures persist, most owners report stable financial health and are adapting how they run their businesses, including decisions around pricing, growth priorities, and time allocation. 

The findings suggest that small business owners are navigating a tougher environment with pragmatism rather than retreat, focusing on protecting margins, reclaiming time, and staying close to their customers.

Key findings from the report include:

• Customer acquisition remains the top growth challenge, with 47% of respondents saying it is harder than in previous years.
  
• Cost pressures remain elevated, as 43% of small businesses raised prices to offset rising expenses; this percentage was largely unchanged from 2024.
  
• Tariffs are hitting product-focused businesses hardest, with supply costs increasing for 30% of all respondents and 45% of businesses most reliant on imported goods.
• Time pressure is increasing, with 57% of owners reporting that time management and work-life balance became harder in 2025.
• Despite these challenges, confidence remains strong, with 76% of respondents reporting satisfaction with their current business situation, up from 73% in 2024.
  

“What stands out this year is how intentional business owners have become,” said Faye Pang, Chief Growth Officer at FreshBooks. “They are operating in a tougher environment, but they are making thoughtful decisions about pricing, customers, and how they use technology to stay organized and financially prepared. That focus is helping many businesses remain resilient, even when conditions are not easy.”

The report highlights that businesses that make or move physical goods, including manufacturing, retail, and product-based services, felt the greatest impact from tariffs and supply disruptions in 2025. Digital and service-based businesses were more insulated, but many still faced reduced customer demand.

Inflation and interest rates also continued to influence decision-making. While overall interest rate stress eased slightly compared to 2024, younger owners remain more vulnerable, with 27% of Gen Z respondents reporting increased stress tied to rising rates and 18% relying on business credit to manage costs.

Despite these pressures, business owners remain optimistic. Three-quarters of respondents said their financial health was the same or better than a year ago, and 56% reported feeling somewhat or very positive about their business finances, up from 46% in 2024. Only 5% of respondents said they plan to leave their business, signaling continued commitment to entrepreneurship.

The full FreshBooks 2025 State of U.S. Small Business Report is available at: https://www.staging.freshenv.com/hub/feature-news/state-us-small-business-report

About the FreshBooks State of U.S. Small Business Report

The FreshBooks 2025 State of U.S. Small Business Report is based on an online survey of approximately 750 U.S. small business owners and solo operators, conducted in August 2025. Respondents represented a broad range of industries, revenue levels, and business sizes. The survey examined economic sentiment, financial health, and the challenges and opportunities facing small businesses. Margin of error: ±4.4% at a 95% confidence interval.

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About FreshBooks

FreshBooks is a leader in small business management software, purpose-built to help small business owners simplify the financial complexity of running their business—from invoicing and expenses to payroll and payments—bringing together the tools they need to manage finances, save time, and stay organized. Headquartered in Canada, FreshBooks supports small business owners around the world. Follow FreshBooks on social media: LinkedIn | Instagram | Facebook | X. 

Press Contacts

FreshBooks 

Chloe Matcham, Senior Manager, Communications 

chloe.matcham@freshbooks.com