Small businesses have higher expectations for economic growth in 2025 than last year, specifically with hopes of lower inflation and more consumer spending. The NFIB Small Business Optimism Index rose by 3.4 points in December to 105.1 points, marking the highest reading since October 2018. A recent survey of 1,500 small business owners by NEXT Insurance found that 73% are optimistic about the future despite today’s economy being one of the most complex challenges small business owners in the U.S. have ever faced. As we look to the first half of 2025, many small businesses remain confident in their ability to navigate what’s ahead, with some focusing on growth opportunities.
Small businesses are bullish on AI adoption for improved outcomes
AI is a huge contributor to small business owner optimism. A recent survey by the U.S. Chamber of Commerce reports that 84% of small businesses using AI believe the technology will fuel future growth, and 82% of respondents already using AI agree that it has helped increase the efficiency of business operations. Yet the same report mentions that only 23% of small businesses have adopted AI. While this is still a significant number of adopters —there are over 33 million small businesses in the U.S.—there is still plenty of room for further AI integration.
AI tools are becoming trusted resources in tackling time-consuming tasks and improving productivity. Virtual assistants, for instance, automate scheduling and managing devices, freeing time for business owners to invest in new opportunities. Chatbots handle customer inquiries around the clock, enhancing operational efficiency and enabling business owners to avoid hiring more staff—a key benefit in a labor market impacted by baby boomer retirements and recruitment difficulties. Intelligent document processing also simplifies tasks like invoice management and shipping, reducing administrative work and minimizing the risk of errors.
Beyond improving daily operations, AI tools empower small business owners to make more informed decisions. Automated data analysis for visual reports now provides insights into business operations, offering a practical way for smaller businesses to better understand their performance. With these reports generated automatically, owners can quickly spot trends and adjust business strategies. These advancements allow small businesses to operate more efficiently, enabling them to tackle the ongoing challenges of productivity and labor shortages with greater confidence and resilience.
The sectors promising growth in 2025
While AI offers tools to help small businesses improve productivity and outcomes, the overarching complexity of today’s economic landscape remains. During the second half of 2024, 17% of small businesses increased prices and 15% reduced operating costs because of rising costs. The challenges brought on by today’s economy impact each small business uniquely, and sectors like retail and hospitality face increased uncertainty with fluctuating consumer spending and labor shortages. On the other hand, some small businesses are experiencing more growth opportunities.
Small businesses in the cybersecurity and healthcare industries see strong demand and are positioned for growth, which is showcased through hiring needs. In healthcare, positions like nurse practitioners are expected to grow by 46% through 2033, driven by the need for replacements. Similarly, cybersecurity sees a 33% projected growth in job opportunities as businesses prioritize data protection and security. Both small business industries have substantial potential, driven by the need to replace workers who either transition to different occupations or exit the workforce through retirement. As small businesses in these sectors expand, they directly contribute to economic stability and job creation, boosting confidence in the 2025 economy and positioning themselves as vital drivers of future growth.
The renewable energy industry is also one of the fastest-growing small business sectors, evolving rapidly due to the strong demand for clean energy solutions. Wind turbine technicians are projected to see 60% growth by 2033. Similarly, solar panel installers anticipate 48% growth—the number of solar workers is projected to increase from 500,000 to 1.5 million by 2035. Small business owners in these sectors are positioning themselves to take advantage of this growth, contributing to job creation and the broader economic optimism for 2025.
The Road Ahead
Looking at the rest of the year and beyond, small business owners are finding ways to adapt and capitalize on growth opportunities. Around 14% plan to expand their products or services, while 8% prepare to open second locations. And although inflation continues to weigh on their operations, many are finding ways to manage, with 12% increasing prices and 11% taking steps to cut costs. These actions reflect a broader confidence that small businesses can handle the challenges ahead and position themselves for success in the coming year.
Tong Zhang is a Data Scientist at NEXT Insurance
Small business stock image by Monkey Business Images/Shutterstock
