Detroit City Wire

The MetLife & U.S. Chamber of Commerce Q2 2025 Small Business Index has shown a slight increase, reaching 65.2 from the previous quarter's 62.3. This rise suggests some optimism among small businesses regarding their health and cash flow, yet economic uncertainty remains prevalent.

The index is still below its levels from the last three quarters of 2024, mainly due to a sharp decline in Q1 2025. Although inflation concerns have decreased to 48% from the previous quarter's 58%, a significant number of small businesses (70%) report that rising prices continue to impact their operations. Additionally, 60% have raised prices over the past year because of inflation. More small businesses (40%, up from 33% last quarter) are spending increased time on licensing, compliance, or other government requirements.

"Small businesses are cautiously navigating a complex economic landscape," said Tom Sullivan, Senior Vice President of Small Business Policy at the U.S. Chamber of Commerce. "While they are confident in their business operations—especially at the local level—when it comes to long-term planning there is some hesitation as inflation concerns linger, and new trade policies create economic uncertainty."

The survey conducted between April 16 and May 5, 2025, indicates that while expectations for staff increases have risen (42%, up from 37%), revenue growth expectations have softened with only 65% anticipating increases compared to last year's 73%.

Key findings highlight growing uncertainty:

- Supply Chain Disruptions: Nearly half (47%) of small businesses have altered supply chains recently, with 30% unable to meet customer demand due to these disruptions.

- Workforce Issues: Employee retention has become a more significant challenge for small business owners (16%, up from 11%). Concerns about supply chain issues also rose slightly (17%, up from 13%).

- Generational Differences: Baby Boomer-owned service sector businesses report lower confidence in national and local economies compared to Gen-Z and Millennial owners.

Colton McCurley, CEO of National Flooring & Supply Inc., noted his clients' increasing cost-consciousness but highlighted efforts like cost controls and vendor renegotiations that have improved profitability despite declining demand.

Regarding employee benefits, this quarter's survey reveals struggles with complexity and costs:

- Importance Recognized: A vast majority (93%) acknowledge benefits' importance for employee care and morale.

- Health Insurance Dominates: It remains the most common benefit offered by small businesses.

- Barriers Exist: Limited budgets (40%) and rising costs (37%) pose significant challenges; only 11% report no barriers.

Bradd Chignoli emphasized the need for outside help in navigating benefits complexities: "Partners such as benefits brokers and insurers are excellent resources... By working with knowledgeable experts, small business owners can focus on their top priority: growing their business."