Small business owners feeling pressure from economy, succession gaps and AI stress

A growing number of US small business owners are grappling with economic uncertainty, tech transitions and succession concerns, according to the latest Small Business Perspective survey released by US Bank.

The national survey of 1,000 small business owners – supplemented by a follow-up poll in May – found that many are experiencing stress related to inflation, tariffs, and funding shortfalls, even as the majority report recent business growth.

The US Bank report also highlighted a broadening gap between owners’ succession intentions and actual planning, particularly among older entrepreneurs.

More than half of small business owners are now age 55 or older, putting them within a decade of traditional retirement, yet only 54 percent have a formal succession plan in place.

Meanwhile, three-fifths (62 percent) say their retirement timeline has accelerated in the past five years, and 37 percent plan to sell their business within the next 12 months.

Despite strong motivation to leave behind a legacy – 85 percent said they became owners to create something they could pass on – many say they lack the tools or clarity to move forward. Fifty-three percent of respondents reported not having the resources or guidance to plan for succession, while 56 percent worry they won’t get a fair price when it’s time to sell.

"There is a real opportunity – and responsibility – for financial institutions to show up as strategic partners in helping small businesses navigate what’s next," said Shruti Patel, chief product officer for business banking at US Bank, in a statement outlining the findings.

Younger entrepreneurs appear increasingly ready to step in, with 36 percent of Gen Z and Millennial respondents saying they plan to acquire a business from a retiring owner – outpacing the sale intentions of Gen X and Boomer owners.

The report also found nearly unanimous concern about broader economic conditions among all respondents (98%), with inflation and rising costs (92%), competition (92%), and questions around how much consumers can keep spending (86%) among the top stressors.

On a related note, the bank's May follow-up poll also showed 58% of business leaders having at least some concern that tariffs may weigh on their business operations, with 57% expecting input costs to rise as a result.

Nevertheless, 88 percent reported business growth over the past year. And in response to these pressures, 48 percent of owners are prioritizing revenue growth in the coming year, while others are focused on staffing (33 percent) and improving operational efficiency (32 percent).

Generative AI and digital tools are also gaining traction among small business leaders, with 57 percent already using or planning to adopt AI in the next year. Most users are applying the tools for content creation, marketing and data analysis – and often at low cost.

The path to AI implementation is not all smooth sailing, as 81 percent said keeping up with technological change is a source of stress, and 56 percent worry about being replaced by AI or automation.

"From embracing generative AI to thinking proactively about succession, owners are serious about the future of their businesses," Patel said.

Despite the challenges, optimism remains high: 80 percent of owners say they would start their business again today if given the choice to begin again, and 87 percent are hopeful they’ll leave behind a positive legacy.