Small business owners are heading into the final months of 2026 with growing confidence in their companies — and they’re increasingly willing to invest in technology to help them grow.
According to Citizens’ Q4 2026 Business Pulse survey, 54% of small business owners expect revenue to increase over the next three months, the highest level recorded this year. And 30% plan to increase technology spending, including AI, up from 23% in the previous quarter.
But here’s where the findings get particularly interesting: Businesses using AI regularly across multiple functions are more likely to plan to hire employees, even as many reduce spending on outside services such as marketing, bookkeeping, and data analysis.
So, is AI helping small businesses grow rather than simply replace workers? And what should owners consider before adding more AI tools to their budgets?
I talked to Mark Valentino, president of Business Banking at Citizens, about what the survey reveals, how AI is changing small business spending decisions, and where owners should focus their technology investments.
Small Business Confidence Is Rising
Rieva Lesonsky: The survey shows small business revenue optimism at its highest point this year, with 54% expecting revenue to increase over the next three months. What’s driving that increased confidence as businesses head into Q4?
Mark Valentino: Owners are still seeing opportunities to grow even while dealing with higher costs and ongoing uncertainty. They’re spending more on technology, investing in marketing and sales, and in many cases continuing to hire. Those aren’t decisions owners make when they’re holding back.
This is confidence grounded in action. Business owners are staying focused on the parts of the business they can control and making targeted investments where they believe demand and growth opportunities exist. The survey found 54% expect revenue growth over the next three months, the highest level we’ve seen this year, which is especially powerful heading into the holiday shopping and travel season.
AI Is Becoming a Regular Business Expense
Lesonsky: 30% of small businesses plan to increase technology spending, including AI, up from 23% last quarter. Are you seeing AI move from something owners are experimenting with to something they’re actually budgeting for as a regular business expense?
Valentino: Yes. For many businesses, AI is moving beyond experimentation and becoming part of the operating budget.
Owners are increasingly evaluating AI the same way they would any other business investment. They want to know whether it can save time, improve decision-making, help generate revenue, or make existing employees more productive. When those benefits become clear, the conversation shifts from trying a tool to efficiently incorporating it into everyday business practices.
The increase in planned technology spending suggests more owners are looking at AI as a practical business tool rather than a future concept, and 30% plan to increase technology spending this quarter, up from 23% last quarter.
Lesonsky: One of the most interesting findings is that frequent AI users aren’t cutting employees. In fact, they’re more likely to be hiring. What does that tell you about how small businesses are actually using AI?
Valentino: Many owners are using AI to expand capacity, counter to the widespread fear that it will lead to headcount reduction.
The businesses using AI most extensively are often applying it to administrative work, reporting, forecasting, marketing, and other time-consuming tasks. That can free employees to focus on customer relationships, sales, operations, and other higher-value work that still depends on people.
The data challenges the assumption that AI adoption automatically leads to fewer jobs. In our survey, the heaviest AI users were more likely to expect revenue growth and add full-time employees than the overall market. The pattern we’re seeing is AI and workforce growth occurring together.
Why AI Is Changing Spending on Outside Services
Lesonsky: At the same time, 94% of businesses using AI regularly across multiple functions say they’ve reduced or eliminated spending on at least one outside service. Why do you think outside vendors are being affected before employees?
Valentino: Many of the early AI applications overlap with tasks that businesses have historically outsourced.
Marketing, certain bookkeeping functions, basic analysis, and routine administrative work are areas where AI can often help owners and employees handle more work internally. That makes it easier to reduce reliance on some outside providers without changing staffing levels.
Employees bring judgment, customer knowledge, industry expertise, and relationship management. Those capabilities are much harder to replace. That’s one reason we’re seeing outside service spending change more quickly than hiring plans. The survey found businesses were most likely to use AI to reduce spending on marketing, bookkeeping, and data analysis services.
Lesonsky: Does that suggest the initial financial payoff from AI for small businesses may come less from reducing payroll and more from bringing work in-house that they previously outsourced?
Valentino: For many businesses, that’s where some of the earliest measurable benefits pop up.
The survey suggests owners are finding opportunities to complete certain projects internally that previously required outside support. That can create cost savings while allowing existing employees to stay focused on the business’ priorities.
What’s important is that the data does not point to broad workforce reductions. The more common story is owners using AI to help teams operate more efficiently while continuing to invest in growth.
Lesonsky: The heaviest AI users are also considerably more optimistic about revenue and hiring. The survey shows a correlation, not causation. What do you think distinguishes these businesses? Are growing companies more likely to embrace AI, or is AI helping them grow?
Valentino: The businesses making the biggest AI investments tend to be growth-oriented. They’re often looking for ways to become more efficient, improve decision-making, strengthen marketing efforts, and create capacity for future growth.
I’ve noticed that technology is helping some companies identify opportunities and operate more effectively. As a tech-savvy next generation (Gen Z) joins the workforce and increasingly turns to small businesses for their careers, the latter is even more prevalent.
How Small Businesses Can Get More Value From AI
Lesonsky: You’ve said AI can help a small business “compete like a much bigger company.” Where are you seeing that happen most effectively? What can a small company realistically do today that previously would have required more employees or outside expertise?
Valentino: A small business can now produce marketing content, analyze information, forecast cash flow, automate routine tasks, and generate customer communications far more quickly than before. Many of those activities traditionally required specialized staff or outside support.
That doesn’t eliminate the need for expertise, but it does give smaller organizations tools that help them move faster and operate with capabilities that were once difficult to access without larger budgets or teams. From a practical standpoint, the businesses in our survey are reporting benefits ranging from improved decision-making and forecasting to stronger marketing performance and greater productivity.
Lesonsky: For a business owner who has experimented with AI but hasn’t gone much beyond that, where should they go next? How should they decide which functions are worth investing in, and how should they measure whether that investment is paying off?
Valentino: Look at activities that consume significant time, create bottlenecks, or require repetitive manual effort. If AI can help improve those processes, it’s easier to evaluate the outcome.
Owners who can connect technology spending to measurable business outcomes are in a much better position to determine where additional investment makes sense.
Lesonsky: We’re seeing several surveys showing increased small business confidence even as owners continue to face high costs and economic uncertainty. How do you reconcile those two things? Are business owners becoming more confident in their own companies without necessarily becoming more confident in the broader economy?
Valentino: I think those are two different questions in the minds of many business owners.
An owner can acknowledge that inflation, labor costs, tariffs, or broader economic uncertainty remain real concerns while still feeling positive about their own company’s prospects. Confidence in the economy and confidence in your own business are related, but they’re not the same thing.
What we’re seeing is many owners making a distinction between external conditions and their ability to respond. They’re adjusting pricing, adopting technology, managing expenses carefully, and investing where they see opportunities. Confidence is about knowing you can adapt and make snap decisions even when conditions remain challenging.
My Takeaway
The most interesting finding in Citizens’ survey isn’t simply that small businesses are spending more on AI. It’s that the companies using it most extensively are also more likely to be hiring.
That doesn’t mean AI is creating those jobs. As Valentino points out, growth-oriented businesses may simply be more inclined to embrace new technology. But it does challenge the idea that adopting AI inevitably means replacing employees.
For small business owners, the lesson is to start with a business problem, not a technology purchase. Identify where your team is spending too much time, where outside services are getting expensive, or where better information could improve decisions. Then determine whether AI can deliver measurable results.
The goal shouldn’t be to use more AI. It should be to build a stronger business.
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.
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