Cutting costs to move forward: SoFi State of Small business 2026 survey

How are America's small businesses faring? In SoFi's State of Small Business survey, 86% of small business owners report their business has grown or remained stable over the past 12 months, and 88% say they're optimistic about success in 2026.

At the same time, survey respondents are keenly aware of this year's unusually strong economic headwinds. Two-thirds of them say high costs are the biggest external factors affecting their operations. By far the largest share (47% of all participants) identify inflation and the rising costs of goods, while another 20% point to high interest rates that limit access to capital.

As a result, business owners know they need to do more with less. More than two out of five respondents (42%) say this year's top priority is reducing costs to improve profit margins.

Meanwhile, money isn't the only resource in short supply. The challenge that business owners cite most often (26%) is "finding enough time in the day to get it all done."

Read on for a status report from the perspective of American small business owners, based on a SoFi survey of 515 owners conducted in April 2026, as they persevere and move ahead.

Key Points

• More than 8 in 10 (86%) small business owners report their companies have grown or stayed stable, with an even larger percentage (88%) feeling optimistic about 2026.
• High costs remain the top external pressure, with 47% of owners pointing to inflation and rising prices on goods and 20% citing high interest rates.
• Reducing costs to improve profit margins tops the priority list for 42% of small business owners.
• Cash reserves are a concern, as 55% of owners report having only three months' worth of funds or less on hand to weather disruptions.
• Compensation is the main issue in hiring and retaining staff, with 53% of owners citing competitive pay and strong benefits packages as their biggest hurdles.

Business Owners Still Optimistic, As Most Companies Stay Put or Grow

The cliché about entrepreneurs and bootstraps endures for a reason. Small business owners embody persistence, even amid economic upheaval and inflationary policies.

In general, 2025 was a decent year for survey respondents. Roughly 45% of participants say their businesses have been stable over the past year, while 41% report growth. Relatedly, about 70% of those business owners (vs. 64% overall) feel "very" or "extremely" optimistic about the year ahead.

Real estate was the only sector in which a majority of firms (60%) grew in the past 12 months.

Biggest Obstacles to Growth: Economic Uncertainty and Rising Costs

Regardless of past performance, 37% of all respondents say economic uncertainty is the biggest obstacle to expanding their businesses. Significant minorities report concern about rising costs (22%) and unmanageable workloads (20%) as well.

According to business owners, rising costs are the No. 1 constraint within certain industries: construction, real estate, and personal services (such as salons and cleaning companies).

Higher costs are no surprise given the persistence of inflation, identified by almost half of survey respondents (47%) as the biggest external influence on their current business operations. It's by far the top issue for companies in almost every sector. Almost three in five construction business owners (59%) identify inflation as their top consideration, as do half (50%) of manufacturers and 50% of personal services company owners. Only among real estate business owners is inflation surpassed by another cost problem: high interest rates and access to capital.

For context, consumer price inflation was 2.7% in 2025, when survey data was collected. Analysis by the Dallas Fed estimates that the 2026 Iran war's disruption of global oil markets could increase inflation in 2026 by 0.2 to 1.8 percentage points.

Behind the Scenes, a Widespread Cash Crunch

Optimism notwithstanding, most respondents' cash reserves are lacking.

The conventional wisdom is that, like individuals, businesses should set aside enough cash to pay their expenses for three to six months. Our survey found that only about one in four (24%) respondents have sufficient reserves for that.

Instead, most (55%) report having enough cash on hand to last for three months or less. More than one-third (37%) have one to three months' worth of cash, but nearly 1 in 5 (18%) have less than they'd need for 30 days.

Of the ten industries represented in the survey, the companies most likely to meet the six-month standard are those in the finance/insurance sector. In that group:

• More than one-third (37%) have enough reserves to cover half a year.
• Almost half (46%) are debt-free.

Most Have Debt Under Control

One-third of business owners report their companies are debt-free; of that subset, more than one-third (34%) have a cash reserve covering more than six months' worth of expenses.

Almost half of the respondents (47%) describe their debt level as manageable. Only 16% of this group have enough cash to run for half a year or more without income, while 30% could hold out for three to six months.

Most Owners Supplement Business Revenues With Personal Funds

Despite decent debt management and having at least some money in the bank, most business owners are not strict about separating business funds from personal resources.

More than three-quarters of owners (78%) report they sometimes use personal savings or credit cards to pay for business needs. About half of them (47%, representing 37% of all respondents) provide a few personal cash infusions per year, While 1 in 5 respondents overall (20%) use this approach every month.

The Biggest Competitive Threat? Depends on the Industry

In 2026, a host of competitive threats looms from all directions.

Overall, respondents are evenly split on which one is most menacing:

• Changing consumer preferences: 25%
• Local competitors: 23%
• Big-box stores and national corporations: 22%
• E-commerce: 22%
• Other: 7%

But responses diverge widely when sorted by industry. For example, retail store owners (42%) are most likely to identify e-commerce as their top threat, but no more than 29% of respondents in any other sector consider it their biggest risk. Similarly, changing consumer preferences are the biggest source of pressure for 60% of real estate business owners, while in other industries, no more than 40% of owners say this.

Business Basics Remain at the Forefront

While strategizing about these and other big-picture issues, business owners also worry about the fundamentals of owning and running a business day to day.

As identified by almost half of respondents (48%), the main structural challenges they face this year are:

• Finding enough time in the day to get everything done: 26%
• Setting prices high enough to cover costs without driving away customers: 22%

In addition, more than one-quarter of survey respondents (26%) say that the problem of finding new customers keeps them up at night. Almost as many (24%) wrestle with how they'll keep their products and services relevant as the world changes. For almost one in five (19%), economic anxiety - specifically, fears of a recession and its effect on their business - overshadows all other worries.

Hiring Challenges Center on Compensation

As the saying goes, good help is hard to find. For almost 16% of business owners, hiring qualified people is their toughest challenge. The same share of respondents say that difficulty finding talent is the external factor that most affects their operations.

The biggest hurdle in hiring and retaining employees is compensation, according to more than half of small business owners (53%). For almost one-third overall (31%), competitive pay is the biggest sticking point, while about one in five (22%) cite the need to provide robust benefits packages.

The Road Ahead: How to Succeed in 2026

With economic conditions as they are, many business owners are hunkering down. The largest share of respondents (42%) is focusing on reducing costs to squeeze more profit out of their existing operations. These cost-cutters outnumber the business owners who will seek growth via a bigger presence online and off (20%) or new products and services (19%).

The Takeaway

Perilous economic conditions have presented small business owners with many financial obstacles this year. It's a tribute to their hard work and grit that almost all of them express optimism about their business prospects, even as they confirm the difficulties posed by inflation, still-high interest rates, and the rising costs of goods. Many are leaning toward cost-cutting as their best bet for boosting profits in 2026, a self-reliant approach that can give business owners more control during turbulent times.

This story was produced by SoFi and reviewed and distributed by Stacker.

Copyright 2026 Stacker Media, LLC

This story was originally published June 26, 2026 at 5:00 AM.