Inflation, rising operating costs, and economic uncertainty continue to challenge small business owners. Yet despite those pressures, many entrepreneurs aren’t simply hunkering down—they’re adapting. They’re reviewing expenses, renegotiating supplier contracts, strengthening cash flow, and making more strategic decisions about growth.
A recent WSFS Bank survey found that while economic concerns remain high, 92% of small businesses report meeting or exceeding expectations, and two-thirds are optimistic about growth over the next year.
Other key findings:
- Businesses are cutting costs to withstand economic conditions, with 51% reducing non-essential spending, 31% switching to lower-cost suppliers, and 27% renegotiating contracts with vendors
- Inflation uncertainty remains a large concern, with 52% citing rising inflation as a core driver of decreased performance
- Despite uncertainty, 52% anticipate increased revenue over the next year
I spoke with Candice Caruso, SVP and Chief Business Banking Officer at WSFS Bank, about the survey, and what separates the businesses that are thriving from those that are struggling, why optimism remains strong, and the financial strategies owners should be focusing on as they prepare for the future.
Rieva Lesonsky: Your survey found that 92% of small businesses are meeting or exceeding expectations despite inflation and economic uncertainty. What’s helping them stay resilient right now?
Candice Caruso: Small business owners are naturally adaptable, willing to take chances, and are comfortable with risk. The WSFS Bank Small Business Survey reinforces the idea that business owners’ resilience stems from their willingness to adapt and make strategic decisions as conditions change, rather than sitting back and waiting for conditions to improve. We’re seeing businesses take a measured approach to managing expenses, evaluating vendors, and planning for future growth. Over the past several years, many have dealt with economic uncertainty and inflation concerns, which better prepares and informs their responses during unpredictable times.
Lesonsky: More than half of respondents say they’re reducing non-essential spending. What are small businesses cutting back on—and what are they refusing to cut despite the pressure?
Caruso: Many businesses are taking a closer look at discretionary spending and evaluating where they can operate more efficiently. It’s less about simply cutting costs and more about intentional allocation of resources.
What they’re generally reluctant to cut are areas that directly affect customers, employees, and long-term growth. Business owners understand that maintaining service levels, preserving key talent, and investing in the future remain important, even when budgets are tight.
Lesonsky: One finding that stood out to me is that many businesses are switching suppliers and renegotiating contracts. Are small businesses becoming more disciplined operators because of the economic environment?
Caruso: The economic environment has encouraged many owners to become more proactive and strategic in how they manage their businesses. However, regardless of the environment, many owners are constantly thinking of ways to optimize operations and improve experiences across the board.
Rather than accepting rising costs, they’re reviewing supplier relationships, evaluating contracts, and finding opportunities to improve efficiency. We’re seeing a shift from reactive decision-making to more active financial management.
Lesonsky: Inflation remains a major concern, but two-thirds of respondents are optimistic about growth over the next year. Why do you think optimism remains so strong?
Caruso: Many business owners are naturally optimistic. They have the confidence and courage to open their own businesses, and many have successfully navigated inflation, supply chain disruptions, labor challenges, and shifting consumer behavior before. Many owners are able to adjust when necessary. Despite ongoing uncertainty, they’re feeling increasingly prepared.
Optimism remains strong because business owners have more tools, experience, and strategies in place than they might have in the past. Also, a majority (92%) report that their businesses were meeting or exceeding expectations, further supporting the effectiveness of the new strategies and operations in place.
Lesonsky: Are small business owners making different decisions today than they were a year or two ago when inflation first began climbing?
Caruso: Business owners are becoming increasingly more strategic and forward-looking. A few years ago, many decisions were focused on responding to immediate challenges. Today, businesses are spending more time planning ahead, evaluating risk, and building flexibility into their operations.
There’s a greater emphasis on maintaining strong cash flow, understanding cost structures, and creating plans to be prepared for a range of economic outcomes.
Lesonsky: What separates the businesses that are adapting successfully from those that are struggling?
Caruso: The businesses adapting most successfully tend to be the ones that remain flexible and are willing to reassess how they operate. These businesses closely monitor their finances, make adjustments when necessary, and seek advice from lenders and partners. They understand their cash flow, maintain visibility into their costs, and make decisions with both short-term stability and long-term growth in mind.
Having a clear picture of finances and both current and future business needs is crucial in adapting to different conditions. A line of sight on cash flow and planning processes that account for the full year can help businesses adapt more successfully.
Lesonsky: How are business banking needs changing in this environment? What are owners asking for most frequently?
Caruso: As economic conditions grow more complex, owners want partners who can help them evaluate options and make informed decisions that align with their needs and goals. From day-to-day planning to long-term positioning, we serve as trusted advisors by understanding the business, providing tailored advice, and building a deeper working relationship.
Lesonsky: Are you seeing more business owners focus on cash flow management and liquidity than growth at all costs?
Caruso: Growth certainly remains important and a priority for owners, but I also see a greater emphasis on maintaining financial flexibility. Many are focused on ensuring they have the liquidity, capital, and resources necessary to navigate uncertainty while still positioning themselves for future opportunities. It’s a more balanced approach than simply pursuing growth at any cost.
Lesonsky: What mistakes do small business owners make when trying to cut costs during periods of uncertainty?
Caruso: Cost management is important, but it’s crucial to protect areas that support growth and long-term success. The goal should be to improve efficiency, not just reduce spending. Owners should always keep in mind that the economy is cyclical. Before implementing a direct cost-cutting strategy, try to build a long-term plan that accounts for the next economic cycle.
Lesonsky: If you’re advising a small business owner today, what are the top three financial metrics they should be watching most closely?
Caruso: First, keeping track of preserving and strengthening cash flow is especially important. Owners should ensure they have access to flexible credit options. Second, profitability and revenue growth are areas to watch, but owners need to understand whether that growth is translating into sustainable financial performance. Finally, having access to capital and maintaining sufficient financial flexibility can make a significant difference when unexpected challenges or opportunities arise.
Lesonsky: Many economists continue to debate where inflation, interest rates, and consumer spending are headed. What are small business owners telling you they’re most concerned about as they look toward 2027?
Caruso: While inflation and rising operating costs remain top concerns, business owners are increasingly expressing broader concerns about economic uncertainty. There’s a focus on how changes in consumer behavior, labor costs, and tariffs could also impact business down the line.
At the same time, there’s a growing focus on how technology, including AI, may reshape operations and how to navigate uncertainty. While business owners focus on managing immediate challenges, they also place a strong emphasis on strategically positioning their companies for long-term success.
Rieva Lesonsky is the founder of Small Business Currents, a content company focusing on small businesses and entrepreneurship. You can find her on Twitter @Rieva, Bluesky @Rieva.bsky.social, and LinkedIn. Or email her at Rieva@SmallBusinessCurrents.com.
Photo courtesy Getty Images for Unsplash+
