Business owners across the United States are addressing growing expenses with a blend of ingenuity and subdued anxiety. Tariffs, labor pressures, and inflation have combined to create a perfect storm that is especially difficult for smaller businesses that don’t have the same safeguards as larger ones. For many, handling these cost increases is strikingly similar to navigating a financial maze where every choice has unforeseen repercussions. Nevertheless, their efforts remain anchored by a sense of perseverance despite the chaos.
Hanna Scholz, president of Bike Friday in Eugene, Oregon, must perform a careful balancing act. The workforce of her company, which specializes in custom-built bicycles, has naturally decreased from twenty-four to twenty-one employees. She decided not to replace workers who left on their own volition instead of using layoffs. She clarified, “It slows the bleeding, but it’s not ideal.” Scholz’s choice is indicative of a larger pattern of cautious businesspeople who are quietly adapting to a weaker economy. Her reliance on foreign clients, particularly those from Asia, who continue to be surprisingly resilient in their spending, has increased due to a decline in domestic demand.
| Aspect | Detail |
|---|---|
| Primary Challenge | Persistent inflation, rising tariffs, and labor costs eating into profit margins |
| Common Reactions | Price increases, workforce cuts, delayed investments, and tighter operations |
| Recent Survey Data | 88% of small businesses report inflation affecting operations (Bank of America, 2025) |
| Tariff Burden | $202 billion annual tariff-related tax on U.S. small firms (U.S. Chamber of Commerce) |
| Workforce Impact | 120,000 jobs shed by small firms with fewer than 50 employees in November (ADP, 2025) |
| Reference | https://www.yahoo.com/news/small-businesses-hit-by-soaring-costs-layoffs-are-painful-and-personal-2025 |
She claimed that consumer psychology is the fundamental problem. Uncertainty causes people to put off making large purchases. Despite their beauty, bicycles are not considered necessities. Her observation is consistent with recent data from the Conference Board, which showed that consumer confidence was at its lowest point in seven months due to policy deadlock, tariffs, and worries about inflation.
Stuart Leventhal, a furniture retailer in Pomona, New York, on the other coast, is dealing with a similar squeeze at his business, Down to Earth Living. This year, he has witnessed a 10% decline in profits despite a decade of devoted employees. He has opted to take the hit personally rather than cut jobs. He stated, “We like to protect our people and we’re a good employer.” “But the expenses continue to mount.”
His issues have been made worse by the tariffs, which have increased the cost of importing materials and décor from other countries. He acknowledged, “We can’t pass it all on to customers.” We would lose them. However, we are also unable to continue taking in everything. The numbers don’t add up.
Profit margins are now extremely thin for small business owners like Leventhal, frequently only five or six percent. Many have been forced to finance payrolls using short-term loans or credit lines, which feels more like a survival tactic than a strategic one.
Lacie Carroll-Marsh is the owner of Malicious Women, a candle company in Snohomish, Washington, further north, that combines social causes with handcrafted artistry. Her once-thriving business has been negatively impacted by a number of factors, including rising domestic material costs, tariffs, and skyrocketing healthcare premiums. “There is now a 20% tariff on my candle jars from Taiwan. According to her, even soy wax from American suppliers costs 12% more. Because there are fewer workers available to harvest soybeans due to labor shortages, which are a result of tighter immigration enforcement, her supply chain strain has gotten worse.
Carroll-Marsh’s difficulties highlight this economic phase’s profoundly human aspect. Of her thirty-one employees, seventeen have already been let go, many of whom she views as family. “I’ve met their children and attended their weddings. She said, clearly moved, “These aren’t just employees—they’re a part of my life.” The emotional cost of her choices highlights the human cost of economic compression, which is something that statistics cannot fully convey.
The suffering is not limited to materials. “My monthly contribution to employee health insurance doubles from $728 to $1,400 starting next year,” she stated. “It can no longer be sustained.” Rising premiums and the expiration of pandemic-era healthcare subsidies have increased stress in small businesses, forcing even stable employers to make difficult decisions.
Nationwide, the results of recent surveys are remarkably similar. According to a Bank of America survey, the largest operational challenge for 88% of small and mid-sized businesses is inflation. 39% are actively cutting back on spending, while nearly two-thirds are raising prices. However, 74% of those companies still expect revenue growth despite rising costs—a sign of persistent optimism that feels strikingly American.
But tariffs continue to be a threat. According to the U.S. Chamber of Commerce, additional tariff-related costs for small businesses total more than $200 billion a year. This number has an impact on all vendors, warehouses, and retail locations that rely on imported goods or packaging, not just big importers. Economists caution that these circumstances can stifle innovation by requiring businesses to shift resources from expansion or research to daily survival.
Some have had to change their expectations in order to adapt, such as Gabe Hagen, the owner of a café in Arizona. Customers are still coming to his business, Brick Road Community Corporation, but they are spending less money. He stated, “They will still come in for coffee, but they aren’t purchasing the same gifts or beans as before.” “Every dollar is being used thoughtfully.”
Hagen is still optimistic that resiliency will win out. “Finding new ways to survive is what small business is all about,” he said. His remarks encapsulate a sentiment that permeates Main Street: ingenuity is the new standard of success.
The real risk, according to economists, is prolonged uncertainty rather than an abrupt collapse. According to Michigan State University economics professor Antonio Doblas-Madrid, frequent tariff changes make long-term planning difficult. He clarified, “Many manufacturers are waiting to see if tariffs become permanent before restructuring supply chains.” “It is a waiting game that incurs monthly expenses.”
Even more bluntly, John Walsh, president of the Michigan Manufacturers Association, stated: “You’re looking at idle production lines after a few months of tariff uncertainty.” For our members, that is catastrophic. Because manufacturers use a just-in-time system, they have limited space for excess production or storage, so even minor interruptions have an impact on their balance sheets.
Another significant cost factor is labor. According to Next Insurance’s 2025 report, labor shortages—more than twice as common as two years ago—and inflation rank as the top stressors for 62% of business owners. While some have resorted to automation, others are training staff members to perform a variety of tasks. These adaptation strategies are especially creative, but they also allude to the subdued desperation that lies beneath the creativity.
Not all adjustments are dire, despite the depressing numbers. Numerous companies are finding solutions that are surprisingly effective. Once considered a luxury, digital transformation is now essential. Energy-efficient equipment and cloud-based inventory systems are helping small businesses perform noticeably better without incurring corresponding cost increases. It’s a type of creativity that emerged from limitation and is incredibly good at bridging the gap between aspiration and reality.
Comerica Bank economist Bill Adams thinks that these entrepreneurs will eventually succeed due to the economy’s underlying resilience. “Main Street is bearing the adjustment, but the fundamentals are strong,” he stated. A cautious optimism permeates his observation, reflecting the perseverance of the people he portrays.
Business owners are adapting under pressure, as they have always done, in every industry. They are redefining resilience as real-time reinvention rather than just endurance. Every choice—whether to increase prices, safeguard employees, or change course—represents more than just survival. It’s a collective act of perseverance motivated by the conviction that better times will come and that these companies will be more resilient, leaner, and, most importantly, prepared.
