- Succession Gap: Many older owners lack formal succession
plans, even as younger generations prepare to take over.
- Economic & Operational Stress: Owners are feeling
stress over the economy, inflation, funding issues, and daily tasks
—despite recent growth.
- AI Adoption Rising: Over half are using or planning to
use Gen AI, though many feel overwhelmed by tech demands.
U.S. Bank released its third Small Business Perspective survey
report today, revealing how owners across the country are
responding to an environment defined by rapid change. The
nationwide survey of 1,000 small business owners explored how they
are navigating challenges ranging from economic stressors to the
rise of generative AI, all while remaining focused on long-term
growth, succession planning, and leaving a lasting legacy.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20250611019480/en/
Top 5 use cases small business owners
have for Gen AI.
“This year’s survey makes it clear that small business owners
are committed to future-proofing their businesses in response to
today’s economic climate and rapid technological change,” said
Shruti Patel, U.S. Bank’s Chief Product Officer for Business
Banking. “From embracing generative AI to responding to shifting
economic conditions like tariffs and thinking proactively about
succession, owners are serious about the future of their
businesses. There is a real opportunity – and responsibility – for
financial institutions to show up as strategic partners in helping
small businesses navigate what’s next.”
Handing the Reins to the Next Generation
With more than half of U.S. small business owners now over age
55, succession planning is becoming increasingly urgent. While many
owners are not yet ready to step away – with only 54% having
created a succession plan – new generations are preparing to take
their place: more than one-third (36%) of Gen Z and Millennial
owners say they plan to acquire a business from a retiring
owner.
The report reveals a striking gap between intention and action.
While 85% of surveyed participants say they originally became an
owner to create something they could pass on, and 84% wanted to
create generational wealth for their family, only 54% have a formal
succession plan in place.
A growing number of owners (62%) have seen their retirement
timelines accelerate in the past five years. But for many,
navigating succession is a challenge:
- 62% find the process overwhelming
- 56% worry they won’t get a reasonable price for their business
when it’s time to sell
- 53% lack the proper resources or guidance to plan for the
future of their business
Owners with strong business performance were more likely to have
a succession plan in place: 64% of those with a plan reported
significant growth over the past year, compared to 50% of those
without a plan.
Nearly 4 in 10 small business owners (37%) say they plan to sell
their business in the next 12 months, suggesting how quickly
transitions of ownership may be approaching for some businesses.
However, retiring business owners are not the only ones looking to
sell, with a higher number of Gen Z and Millennial owners (41%)
than Boomers and Gen X (33%) saying they plan to sell their
business.
While the small business landscape has changed dramatically over
the years, the motivations that originally inspired owners still
drive them today. Most remain deeply committed to their work: 86%
want to continue running their business as long as possible, and
87% are hopeful they’ll leave behind a positive legacy when they
eventually step away.
Economic Pressures are Influencing How Owners Operate
The need for small business owners to make long-term plans is
reinforced by the day-to-day worries they are facing. Respondents
reported their top macroeconomic stressors as:
- The economic environment (98%)
- Inflation or increased costs of materials / supplies (92%)
- Competition (92%)
- The ability of consumers to maintain their spending (86%)
- Fraud or cybersecurity threats (85%)
- Obtaining enough funding to support my business (84%)
Among other stressors small business owners cited, 4 out of 5
(81%) owners felt at least somewhat stressed about tariffs.
Despite these stressors, 96% of owners reported their business
as currently successful and 88% saw growth in the past year. To
manage pressures and position their businesses for the future, many
owners are prioritizing key steps in the year ahead, including
focusing on revenue (48%), ensuring enough staff (33%), improving
company efficiency and cost-effectiveness (32%), and reacting to
the general economic landscape such as inflation and recession risk
(29%).
To get a pulse check on the most current sentiment, U.S. Bank
conducted a follow-up survey of 500 small business leaders during
the month of May. While stress levels on the economic environment
were similarly high, two-thirds (66%) said the country’s economy is
moving in the right direction, with only 18% saying it’s going in
the wrong direction. This sentiment was even stronger among younger
business leaders (Gen Z and Millennial), with 74% saying it was
moving in the right direction, vs. 52% of leaders from older
generations (Gen X and Boomer).
Despite this optimism, a majority (58%) of the leaders expressed
at least some concern that tariffs may impact their business
operations, and 57% expect their input costs to go up as a result
of tariffs with most expecting a cost increase between 1-10%. At
the same time, leaders were slightly more likely to anticipate a
positive rather than negative impact from tariffs across several
business factors – including cost of goods, customer demand, margin
profitability, capital investments, and labor/HR – but these
expectations were generally modest, with most leaders expressing a
neutral or only slightly positive outlook on the potential effects
of tariffs.
Small Business Owners are Turning to Gen AI and Digital Tools
to Stay Competitive
As small business owners look to create long-term success for
their businesses, they are embracing generative AI (Gen AI) and
digital tools. Nearly 6 in 10 (57%) are currently using or plan to
implement Gen AI solutions in the next year. Among those using it,
the top applications include content creation (44%), data analysis
and information gathering (41%), and marketing and sales strategies
(39%).
The majority of owners using Gen AI have found that adoption
doesn’t require a massive investment. Nearly 7 in 10 (68%) Gen AI
users report spending less than $50 a month on it, and nearly 1 in
5 (18%) are using free tools or subscriptions. These tools allow
users to spend more time on the personal connection they have with
their customers (88%).
Still, the rise of AI is not without tension. Over 8 in 10 (81%)
report keeping up with technological advancements such as Gen AI is
stressful, and 56% worry their business (or products / services)
will be replaced by Gen AI or automation.
Beyond AI, digital tools are seen as essential now more than
ever. The number of owners who view digital tools as very important
or essential jumped a striking 15 percentage points from last year
(87% in 2025 vs. 72% in 2024). At the same time, 63% say they’re
overwhelmed by the number of tools needed to run their business and
82% say consolidating them is a priority.
Looking at payment methods, nearly half (48%) of owners still
report cash as a primary method of in-person payment. However,
newer methods of payment are catching up with 42% reporting
tap-to-pay as a primary method.
Despite Challenges, Most Owners Would Do It Again
Even amid today’s business challenges, most small business
owners remain grounded in their original purpose that inspired them
to become entrepreneurs. When asked why they launched their
business, 90% say they wanted to be their own boss, 88% cited a
desire to control their financial future, and 86% wanted their
passions to be part of their work.
Legacy has also played a defining role. More than two-thirds
(67%) of owners come from a family of entrepreneurs, and 62% took
over a relative’s business to carry on their family legacy. For Gen
Z and Millennial entrepreneurs, however, the path to ownership has
often been shaped by necessity. More than half (52%) of younger
owners say they became business owners because they couldn’t find a
job elsewhere, compared to 44% of Gen X and Boomer owners.
When asked if they’d do it all over again, 80% of owners say
they’d still start their business today. This confidence is
particularly notable given challenges they see in today’s
environment. Almost 8 in 10 (79%) say there is greater market
competition today than when they started and 70% say that securing
funding and capital is more difficult now.
For an in-depth look at insights from U.S. small business
owners, please read the full 2025 U.S. Bank Small Business
Perspective report.
Methodology
20-minute survey among 1,000 U.S. small business owners with
annual revenue of $25 million or less and between two and 99
employees. Fielding for this study was conducted from March 14,
2025 – April 4, 2025, and the margin of error is ±3.1% for the U.S.
owners.
Pulse Survey Methodology
10-minute survey conducted online by Morning Consult from May 8
to May 23, 2025, among a national sample of 500 small business
leaders. Respondents were decision makers (Director, VP, or
C-level) at companies with annual revenues of $25 million or less
and between 2 and 99 employees. The margin of error is ±4
percentage points.
About U.S. Bank
U.S. Bancorp, with approximately 70,000 employees and $676
billion in assets as of March 31, 2025, is the parent company of
U.S. Bank National Association. Headquartered in Minneapolis, the
company serves millions of customers locally, nationally and
globally through a diversified mix of businesses including consumer
banking, business banking, commercial banking, institutional
banking, payments and wealth management. U.S. Bancorp has been
recognized for its approach to digital innovation, community
partnerships and customer service, including being named one of the
2025 World’s Most Ethical Companies and one of Fortune’s most
admired superregional banks. Learn more at usbank.com/about.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250611019480/en/
Media Contacts:
Rick Rothacker, U.S. Bank Public Affairs & Communications
richard.rothacker@usbank.com
Anna Christensen, U.S. Bank Public Affairs & Communications
anna.christensen@usbank.com
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