Small Business Owners Are More Confident In Their Own Companies Than In The Economy, And Two-Thirds Use AI, Gusto Survey Finds

Pessimism about the economy rose in every industry, by 9 points on average. It climbed furthest among goods-producing businesses (12 points) and owners in the West (14 points). Even so, 86% of owners say their business is meeting or exceeding the expectations they had when they started it. Among optimistic owners, 68% point to customer spending and demand as the reason.

"Small business owners are telling us two things at once. Eighty-six percent say their businesses are meeting or exceeding expectations, yet more owners than a year ago say the economy is uncertain. Higher costs and expensive borrowing make it hard to plan ahead. What keeps owners confident is that their customers are still spending. If that spending slips, their confidence may falter too." said Nich Tremper Senior Economist and Head of Gusto Insights, Gusto.

AI has become part of the workday

Sixty-seven percent of small businesses use AI tools. That includes 19% who are experimenting, 28% who use AI for at least some tasks, 15% who use it regularly across multiple functions, and 5% who say it's built into every part of the business where the technology allows. Adoption runs highest in professional services, where 27% use AI for multiple functions or across the whole business, compared with 16% in personal services and 13% in community services.

Formal rules are catching up. One in four businesses with employees (25%) now has an AI policy, up from 15% last year. Owners are most comfortable letting AI work with limited human review on communication tasks and far less comfortable handing it data analysis or direct customer questions. About 60% of AI users are comfortable with AI drafting marketing content with limited oversight, versus 27% of non-users.

Costs keep climbing, and prices follow

Fifty-nine percent of owners say changing input prices hurt their business over the past year, compared with 3% who say the effect was positive. Goods-producing businesses took the hardest hit, with 26% reporting a much more negative impact against 20% across all businesses. Forty percent say rising interest rates have hurt.

Fifty-two percent of small businesses raised their prices over the past 12 months, most often by up to 10%. Another 50% plan to raise them again next year.

Hiring is hard at every size, for different reasons

Twenty-six percent of owners tried to hire in the past year and struggled to find qualified people they could afford. Among them, 64% said candidates lacked the skills the job required. The smallest businesses were more likely to say they couldn't afford what qualified candidates wanted to be paid, while larger small businesses more often ran into scheduling conflicts.

Credit cards are doing the heavy lifting

Among small businesses that used outside financing this year, 79% relied on a business credit card, up from 69% in 2025. Sixty-three percent of those card users don't pay off their balance each month, which suggests they're using cards as longer-term financing. About a third of all small businesses (35%) used no outside financing at all.

Most owners who looked for financing found it: 85% secured everything they needed. Access tracked with outlook as well, with nearly 9 in 10 optimistic owners securing all the financing they sought, compared with nearly three-quarters of pessimistic owners.

"Small businesses continue to face high borrowing costs, and that may continue into 2027. As credit costs remain high, owners may continue to look for additional credit options like credit cards or short-term financing." said Nich Tremper, Senior Economist and Head of Gusto Insights, Gusto.

About the Survey

Gusto's Insights Group surveyed 1,731 owners and operators of U.S. businesses with fewer than 25 employees online between August 17 and September 7, 2026. Respondents were Gusto customers, and results were weighted to the national mix of industries and firm age. The margin of error is +/- 3.4 percentage points at the 95% confidence level, the margin of error may be larger for some subgroups. Differences between subgroups may not all be statistically significant.

The full report and methodology is available at: www.gusto.com/resources/gusto-insights/state-of-small-business-2026

About Gusto

Gusto takes the guesswork out of running a small business. From forming a company to paying a team to staying on top of compliance, Gusto simplifies payroll, benefits, HR, and money management so business owners can get back to the work that matters most. Founded in 2011, Gusto supports more than 500,000 small businesses from offices in San Francisco, New York, and Denver. Learn more about Gusto's mission to grow the small business economy with technology and heart at gusto.com.

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SOURCE Gusto, Inc.