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Tag: small business survey

  • The Economy Seems Uncertain. Here’s Why Entrepreneurs Remain Optimistic

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    Although small company workplaces likely face margin pressures from higher costs generated by import tariffs, they’re still largely upbeat, characterized by owner optimism about their business outlook. Nevertheless, recent data shows that many entrepreneurs are using the same cautious hiring strategies as bigger firms, slowing recruiting to a crawl nationwide.

    That mix of entrepreneur confidence despite lingering concerns over the broader outlook for economic growth was captured by payroll and staff management service provider Gusto. Its recent “State of Small Business 2025” report surveyed 1,148 owners of midsized and smaller companies, most of whom remained upbeat despite the impact of import tariffs, rising costs, and higher interest rates that have made borrowing prohibitively expensive. Indeed, an impressive 87 percent of respondents said their businesses met or exceeded performance expectations this year, including 51 percent of participant who said they’d fared better than anticipated.

    Still, entrepreneurs were divided in their views of the wider economy, with exactly half of respondents describing themselves as either somewhat or very pessimistic about its direction. By contrast, only 28 percent of participants said they were somewhat or very optimistic about the economy, while 21 percent were undecided.

    Small business owners were even more tightly split about the effects of tariffs. Half described import duties imposed this year as having had more negative consequences than previously existing duties did. Surprisingly, the other 50 percent of participants said the recent levies had generated no additional impacts beyond those of previous customs levies, or had even produced positive changes.

    But there was another way the tariffs colored entrepreneurs’ perceptions. Eighty-five percent of small company owners who voiced negative views of the economy said tariffs had influenced that view, while 65 percent of respondents who said their businesses had underperformed their expectations blamed import duties at least partially for that.

    “(T)he costs of tariffs are felt by many small business owners, who told us that tariffs are creating a clear drag on margins and forcing them to rethink supply chains and possibly scale back expansion plans,” the Gusto report said. “What began in 2025 as uncertainty is now manifesting at the end of the year as real economic costs.”

    In addition to tariff costs prompting some entrepreneurs to rethink growth plans, wider doubts about the economy have also led many small business owners to embrace the minimalist hiring patterns adopted by bigger companies since the first quarter of the year.

    Around 40 percent of owner-respondents who employ one person or more said they had hired no additional new staff this year. That was often described as a check on rising costs, a precaution that many entrepreneurs attributed to tariffs and inflation. Nearly 60 percent of 2025 Gusto survey participants said higher prices had had a negative effect on their businesses — compared to 49 percent last year — leading many to become wary of adding more staff and salary expenses.

    “The smallest businesses tend to keep their headcount steady over time and hire only when an employee leaves,” the Gusto report said, noting that aligned with other aspects of national employment strategies. “The low rate of hiring among those firms suggests more workers are staying put, which is consistent with broader trends in the labor market.”

    Small business owners who have been hiring said they often filled customer-facing jobs, or other work requiring human skills that artificial intelligence applications can’t replace.

    “(A)s price increases have stressed the budgets of both businesses and consumers, small businesses who can’t easily raise prices may be investing in exceptional customer service to retain and attract customers,” the Gusto report said. “Finally, customer- and client-facing roles may be more resilient to replacement by today’s AI tools, as most of their value comes from a ‘human touch’ AI can’t replicate.”

    Another concern a majority of entrepreneurs voiced are the still relatively high interest rates that make borrowing money through bank loans too expensive. As a result, nearly 60 percent of survey respondents said they turned to alternative forms of external financing this year, with owners’ drawing from personal savings or using business credit cards cited as the most frequent forms.

    Contrary to popular belief, however, those funds were often used just to keep existing business running, and not to finance expansion plans.

    “It’s a popular assumption that small businesses primarily seek financing to grow their business,” the Gusto analysis said. “However, our survey shows financing is more often used to cover everyday expenses. This year, entrepreneurs have been most likely to use external financing to cover short-term costs or buy equipment and tools. Just 16 percent of small businesses that have received external financing this year have used it to invest in long-term growth.”

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    Bruce Crumley

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  • Small Businesses, Big Ouches. These 7 Weird Workplace Injuries Stand Out

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    The frequency and costs of workplace accidents leave entrepreneurs particularly vulnerable, because they have a much bigger impact on smaller companies. The latest annual study by Denver-based Pie Insurance detailed the rate and financial impact of those mishaps to small-business owners, and listed some of the weirdest incidents in the past year.

    The main finding of the recently released Pie Insurance 2025 State of Workplace Safety Report was the high percentage of small businesses involved in workplace accidents. Its survey of 1,018 company owners found 75 percent saying they’d had to manage worker injuries over the past year, and that 50 percent of those were preventable. Nearly a third of those entrepreneurs said on-the-job incidents had cost them an average of $20,000 per employee involved, as well four workdays typically lost while an employee recovered.

    That’s all part of the $176.5 billion toll workplace accidents cost employers annually in recent years. Most larger companies suffer even higher losses from accidents than small-business owners, with their average per-injury cost rising to $43,000.

    But if expenditures for accidents in founder-owned workplaces were less than half of those suffered by larger companies, smaller businesses outdid themselves in the category of strangest mishaps reported over the last year.

    Among what Pie Insurance charitably referred to as the “most unique and unusual” of those included truly strange accidents involving employees who:

    • Refused to stop hitting golf balls in the workplace, causing another worker to be knocked out after being hit in the head by one
    • Suffered third-degree burns after sitting on “a freshly cleaned hot office chair”
    • Were knocked unconscious by a frozen fish propelled by a malfunctioning conveyor belt
    • Slipped on a pickle in the lunchroom and cracked their spine
    • Forgot to turn off the lights, leading to a blown fuse that caused burns to another employee the following day
    • Choked on a bone at a Christmas party, resulting in a trip to the emergency room
    • Stapled their hand instead of the document they were working on

    Authors of the Pie Insurance report further demonstrated their gift of comic understatement by citing incidents worthy of a workplace sitcom with the reminder that, “despite our best efforts, workplace safety can sometimes be affected by the most unexpected circumstances.”

    Nevertheless, some small-business owners who participated in the survey were apparently determined to improve their workplace safety records—even if that meant anticipating improbable, and in some cases seemingly impossible, accidents. As a result, new measures they introduced over the past year included:

    • Requiring employees to have their pupils checked before using ladders to ensure they’re not under the influence of prohibited substances
    • Instituting a “no high-heels” rule to reduce foot and ankle injuries from long hours of walking on hard floors
    • Prohibiting employees from making their own coffee to prevent burns, with only managers being allowed to operate brewing machines
    • Establishing a “no drone zone” policy after an employee’s aerial hobby became a workplace safety hazard
    • Banning chewing gum after an improperly disposed wad resulted in a worker’s injury

    And last but not least, there was the small-business owner who formally prohibited employees from swatting golf balls in the workplace, after learning the painful and costly lesson of that activity one too many times already.

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    Bruce Crumley

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  • What Your Company Can Expect As Employer Health Insurance Costs Climb in 2026

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    Open enrollment season begins November 1, and many employees are stunned by price increases in their company-provided health insurance coverage. The sticker shock many workers feel now were already a source of stress for employers, and next year’s hikes are expected to be steeper, according to a healthcare think tank’s latest report.

    The most recent alert about rising health insurance prices came from KFF, a non-profit organization that monitors the medical sector and healthcare issues. Its 27th annual survey of more than 1,800 businesses with at least 10 employees found premiums for the family plans that most workers opt for rose 6 percent this year, well over twice the 2.7 percent inflation rate during the same period. For employers, that pushed the average annual cost of those plans up to nearly $27,000, with about 23 percent of the outlays — or $6,850 —passed along to covered workers.

    Those findings were largely in line with results of a September survey by consulting firm Mercer, which pegged the rises at 6.5 percent — but only after business owners adjusted plans to pass on part of the higher costs with covered workers. Mercer also found employers expect an additional 9 percent hike in health plan prices next year, slightly lower than the 10 percent or more KFF respondents anticipated.

    “Many employers may be bracing for higher costs next year, with insurers requesting double-digit increases in the small-group and individual markets on average, possibly foreshadowing big increases in the large-group markets as well,” the KFF report said.

    The price differences between plans for small and large companies come down to volume — and leverage. Corporations with big staffs can more easily negotiate lower coverage prices with insurance providers than companies with 200 employees or less, many of which participated in the KFF survey. Consequently, most of those smaller businesses pay higher premiums.

    That means once small business owners pass along the typical 20 percent to 25 percent of those costs to staff, their employees on average wind up paying $12,000 per year for family plans, or nearly twice the national amount KFF identified. Many other entrepreneur-owned companies are denied coverage entirely, with insurers considering them too small to bother with.

    When that happens, workers usually turn to plans offered under the Affordable Care Act, which are also expected to rise even higher amid the tax and spending cuts passed in President Donald Trump’s “One Big Beautiful Bill.” As things stand, pretty much all businesses, organizations and individuals seeking health insurance are on the hook for price hikes.

    Employers told KFF that a big driver of the increases are the surging costs of prescription drugs, especially GLP‑1s medication. That’s now frequently being used for weight loss, and by a far higher number of people than any insurance companies or client businesses expected.

    But prices for virtually all aspects of healthcare — including insurance itself — have spiked as consolidation across the sector continues, concentrating pricing power as competition declines. That evolution is one reason KFF warned of even bigger shocks to both employers and workers in 2026.

    “There is a quiet alarm bell going off,” said KFF President and CEO Drew Altman in comments accompanying the survey’s results, in which coverage of semaglutide weight-loss drugs play an increasingly significant role. “With GLP-1s, increases in hospital prices, tariffs and other factors, we expect employer premiums to rise more sharply next year.”

    But there’s another reason for Altman’s alert. While businesses have managed to make changes in the past to negotiate limited increases from insurers — and shift some higher costs to employees — their margin for maneuver has now significantly narrowed. That’s especially true when it comes to skyrocketing prescription drug prices, which are almost entirely out of their control.

    As a result, many employers may have no other option than to require their staff to shoulder more of their health insurance costs, or simply stop including many expensive drugs and treatments that are pushing expenses up.

    “Employers have nothing new in their arsenal that can address most of the drivers of their cost increases,” Altman warned. “(T)hat could well result in an increase in deductibles and other forms of employee cost sharing again, a strategy that neither employers nor employees like but companies resort to in a pinch to hold down premium increases.”

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    Bruce Crumley

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