The Q1 2025 MetLife and U.S. Chamber of Commerce Small Business Index (SBI) showed a noticeable dip in confidence among small business owners, driven by increased concerns around revenue and persistent inflation.
The overall Index score fell to 62.3 this quarter, down from 69.1 in Q4 2024. While owners are still optimistic about areas like hiring and investment, there’s growing anxiety around financial stability, which means businesses may take a more cautious approach heading into Q2.
Here are some key findings from the latest survey.
Revenue concerns have reached a new high
More than one-third (35%) of small business owners cited revenue as their top concern this quarter — a 10-point increase from Q4 2024 and the highest percentage since the SBI began tracking this data point in 2021. Inflation is still the most pressing issue for today’s owners: Nearly 60% cited it as a “major challenge” this past quarter.
“Confidence is being shaken as small businesses increasingly worry about their revenue while at the same time confronting the possibility that tariffs will raise costs for them and their employees,” said Tom Sullivan, Vice President of Small Business Policy at the U.S. Chamber of Commerce, in a statement.
[Read more: Small Business Tariff Update: What to Know Now]
Despite these growing concerns, businesses still have overall confidence in the economy.
“The prospect of tax and regulatory relief may be buoying optimism amid uncertainty,” Sullivan added.
More than one-third (35%) of small business owners cited revenue as their top concern this quarter — a 10-point increase from Q4 2024 and the highest percentage since the SBI began tracking this data point in 2021.
Small businesses are less financially confident
In addition to future revenue concerns, small businesses showed less confidence in their current financial situations.
In Q4 2024, 72% of SBI respondents said they were comfortable with their cash flow, which has dropped to 63% in Q1 2025. Confidence in overall business health has also dropped slightly, from 67% in Q4 to 63% in Q1.
[Read more: Cash Flow: What It Is, Why It Matters, and How to Maintain It]
Business owners like Michelle Mekky, Founder and President of Mekky Media, say they are “not comfortable” due to confusion about the local economy.
“We saw sales holding before the election and then it picked back up, but things have started to slow a bit with customers holding back on spending,” Mekky said in an interview with the U.S. Chamber of Commerce.
The small business hiring outlook remains strong for 2025
Only 20% of businesses reported increasing their staff over the past year, but they have big plans for the remainder of 2025 and beyond. Nearly 40% of owners expect to add staff over the next year, and in the manufacturing sector, that percentage is 56%.
This quarter’s SBI also explored what small businesses are looking for in entry-level hires. Sixty-seven percent said they’d be more likely to hire someone with previous leadership experience, and almost half (49%) are more likely to hire a candidate with artficial intelligence-related training or certifications.
Overall, most small businesses feel their entry-level employees are prepared. Nearly 3 in 5 (57%) reported that their recent hires were ready for the job compared to just 20% who said they were not. The majority of small business owners (94%) also believe trade schools and technical colleges prepare students well for the workforce, more so than four-year colleges (72%).
For businesses to make good on these hiring plans, they’ll need a strong recruitment and retention strategy. According to Bradd Chignoli, Executive Vice President and Head of Regional Business and Workforce Engagement at MetLife, demonstrating employee care is the key to improving employee holistic health and business outcomes.
“Small business owners who prioritize benefit experiences and culture … can effectively build high-trust, high-performing workplaces,” Chignoli said in a statement.
See the full results of this quarter’s Small Business Index here.
[Read more: Employee Care: 5 Engagement Tactics for Growing Successful Teams]
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