Walk down any Main Street in America and you’ll find the real engine of our economy — small businesses that create jobs, spark innovation, and anchor communities. They’re not just the backbone of the U.S. economy; they are its beating heart. Small businesses employ nearly half of America’s workforce, about 61.6 million people, and create two out of every three new private-sector jobs. They generate almost 44 percent of U.S. GDP and make up 99.9 percent of all American enterprises.
Yet in 2025, despite their unmatched role in job creation and innovation, small businesses face an increasingly uphill climb. Rising costs, a tightening labor market, complex regulations, and fragile supply chains threaten to stall the very sector most capable of propelling the nation toward sustained 3%-plus economic growth.
That’s the conclusion of the “Small Business Survey,” conducted as part of the research for my book, Rethinking Economic Growth: How Small Businesses Can Help Consistently Grow the Economy. The survey gathered insights from several hundred owners and operators across diverse industries, from manufacturing and logistics to energy, services, and agriculture. The results reveal both a warning and a roadmap for America’s economic future.
Barriers to Growth
The survey’s top-ranked barrier to growth was no surprise: the rising cost of doing business. Materials, energy, and insurance premiums have climbed sharply, eroding margins and limiting expansion. High borrowing costs, a consequence of prolonged tight monetary policy, have compounded the problem, discouraging capital investment at the very moment when small firms need to modernize equipment, adopt new technologies, and expand capacity.
As one manufacturer told us, “We’re ready to grow, but the cost of capital and compliance makes every investment a risk.” That sentiment is echoed across industries. It’s a reminder that if policymakers are serious about restoring sustainable national growth, interest-rate policy, tax stability, and regulatory policy must work for small businesses, not against them.
The second-highest barrier identified in the survey is the workforce challenge. Many small business owners struggle to find trained or certified workers, forcing them to spend their time working in the business rather than on it.
This problem runs deeper than just unfilled jobs. It’s structural. Over the past several decades, the U.S. has emphasized four-year college pathways at the expense of vocational and technical education. As Rethinking Economic Growth notes, “The dearth of technical training in favor of the societal imperative that everyone must attend college” has created a generation of workers unprepared for high-demand trades.
Building a Workforce
Small business owners, ever the problem solvers, are responding creatively. Across industries, trade associations are stepping in to fill the gap, building apprenticeship programs, reskilling initiatives, and engaging community partnerships. In Cleveland, one group even trained nonviolent offenders for factory-floor jobs, yielding both a stronger workforce and a lower recidivism rate.
These examples show that the workforce crisis is not insurmountable, but it will take deliberate collaboration between private enterprise, education systems, and government to rebuild America’s skilled-labor pipeline.
Regulation Overload
Another major finding from the survey is the growing frustration with regulatory misalignment. Three-quarters of small business owners rely on trade associations just to stay compliant with the patchwork of federal, state, and local rules. The problem isn’t regulation itself; it’s inconsistency and unpredictability.
Local ordinances often contradict state or federal standards. As Rethinking Economic Growth argues, “Regulatory issues should be handled at the state level and occasionally at the federal level. The federal government needs to mandate the preemption doctrine in all 50 states.” Without such consistency, small firms face compliance costs that can drain productivity and discourage expansion.
The irony is that these companies are not seeking deregulation—they’re asking for clarity, fairness, and stability. “Just make a decision and then leave it alone,” one respondent told us. “We’ll adapt to any rules, but we can’t operate when the rules change every few years.”
Optimistic Outlook
Despite these challenges, optimism runs deep in the small business community. Four out of five survey respondents said they actively support other local small businesses, whether through partnerships, purchasing, or shared services. That spirit of collaboration is the foundation of what Rethinking Economic Growth calls a two-pronged strategy for consistent 3%-plus growth.
The first prong is private-sector driven: strengthen collaboration and community-based support networks. Small businesses must continue to lean on their trade associations, local chambers, and each other to build ecosystems of shared success.
The second prong is public sector reform: streamline regulation, provide tax clarity, and invest in workforce development. Policymakers should establish predictable, permanent tax structures that reward reinvestment and job creation and reform agencies like the Small Business Administration to serve as genuine allies, not bureaucratic hurdles.
The lesson from this research is both urgent and hopeful: America’s path to renewed economic strength runs through its small businesses. They have proven time and again that innovation, perseverance, and collaboration can overcome adversity, but they need policymakers to meet them halfway.
If the U.S. can align its fiscal and regulatory policies with the realities of small business, invest in workforce training, and lower the cost of capital, we can unlock a new era of broad-based prosperity. The target of consistent 3% growth is not a fantasy—it’s a function of unleashing the nation’s most entrepreneurial citizens.
Small businesses don’t just sell goods and services; they sustain communities, mentor the next generation, and embody the American dream. Their success is our shared success.
As I wrote in Rethinking Economic Growth, “If we help one another, then we all win.” It’s time to build an economy that reflects that simple truth and let Main Street lead the way.
Dan Varroney is the author of Rethinking Economic Growth: How Small Businesses Can Help Consistently Grow the Economy.
Photo courtesy Mikael Blomkvist via pexels