Small business confidence settles post-election [WSJ/Vistage Jan 2025]

After rising for 4 months, confidence among small businesses has waned slightly in the new year. The WSJ/Vistage Small Business CEO Confidence Index declined 5 points in January to 106.9. The survey was conducted before the inauguration; next month’s survey results will reveal how early decisions of the new administration are impacting economic sentiment among small businesses.

The reality of certain policies, specifically the suggested tariffs, might be dimming the initial optimism small businesses experienced after the election. Over half (54%) of small businesses believe the economy will improve in the coming year, down from 59% in December and 63% in November. When asked about the business impacts of suggested tariffs, 37% of small businesses believe they would have a negative effect, while 32% remain uncertain. A slim minority (6%) report there would be positive impacts.

“Even if we’re not directly importing, tariffs create more domestic demand, which then lengthens lead times and raises prices, at least until the supply chain normalizes again,” says Chris Borglum, President of Kay Park Recreation in Janesville, Iowa. “If 2018 is an example, then it takes about 18 to 24 months for that supply chain to normalize. It might happen faster this time.”

However, the most significant driver in this month’s decline of the WSJ/Vistage Small Business index is the 13-point decrease in those planning to expand their workforce. Indeed, 58% of small businesses plan to add personnel over the next 12 months, down from 71% last month. While this is still more positive than the first 10 months of 2024, small businesses are slightly more cautious than at the end of the year.

Workforce expansion for 2025

Whether expanding or maintaining the size of their workforce, small businesses are still mindful of the wages required to hire and retain top talent. For the coming year, 42% of CEOs have budgeted higher wage increases than last year, and 43% plan to maintain budgeted wage increases; this is an increase from last year when 29% of small businesses planned. In the equation of more employees and higher wages, CEOs must consider the impacts on profitability. Indeed, another component contributing to the decline in the Index this month is the 7-point decrease in those expecting increased profitability.

The roles that small businesses are adding to their workforce vary, with 58% reporting they are adding frontline roles, followed by 45% that plan to add professional staff who support business functions including human resources, IT and marketing. Just short of a third of small businesses plan to add new leadership, from management (20%) or executive leaders (12%).

Impact of potential immigration changes

One factor that could impact hiring and workforce expansion for small businesses is immigration. When asked about the impacts of a potential change in immigration policy, 12% of small businesses reported that it would impact hiring, and 8% reported that it would impact their existing workforce.

“Higher tariffs, protectionist measures and limited labor availability due to stricter immigration policies are likely to drive up costs and reduce productivity,” says Eirini Kalafatides, CEO and Founder of DHOME Brands in Philadelphia, Pennsylvania. “These policies could disrupt supply chains and slow economic activity, making it hard for small businesses to grow and innovate.”

However, the majority — more than two-thirds (68%) of small businesses — reported they expect no impacts from potential changes in immigration. Certainly, different markets and geographies will be impacted differently. Just 8% of small businesses reported that potential changes to immigration would impact their customer base.

Revenue growth drivers

Growth projections remain strong with over three-quarters (76%) of small businesses expecting increased revenues in the next 12 months. The foundation of these expectations is customer growth as the primary driver of revenue, according to 71% of small businesses. Other key drivers include expansion into new markets (38%) and introducing new products and services (34%). Additionally, increased productivity — which enables businesses to grow, scale and meet rising demand — will drive revenues for 37% of small businesses.

“The building and construction environment was flat in 2024, and I see some factors creating a stronger environment for development this year that should translate into more work for us,” says Dustin Wilshire, Co-CEO of Reitter Stucco and Supply in Columbus, Ohio.

Customer growth will also be driven by investments in sales and marketing. As reported in the Q4 2024 Vistage CEO Confidence Index analysis, many CEOs are hiring salespeople and developing sales-specific training programs. It’s critical for small businesses to time this aspect of talent management correctly; hiring the right people, onboarding and training them so they can reach full productivity when demand starts to increase.

Nearly half of those anticipating business acquisitions to drive growth in 2025 expect to finalize those transactions by the early part of the year. This is the time when borrowing costs will be lowest, allowing adequate time to transition before growth is expected to rise mid-year.

It takes time to acquire and transition a new business into your organization. Learn more about the process from 3 Vistage Member Excellence Award winners who shared their experience in a recent roundtable discussion exclusive to the Vistage community (login required). 

January highlights

The January WSJ/Vistage Small Business CEO Confidence Index was calculated from an online survey sent to CEOs and other key leaders who are active U.S. Vistage members. The survey collected data from 400 respondents with annual revenues of $1-20 million and was open between January 6 and 13, 2025, capturing sentiment at the beginning of the year.

• Current economy: The proportion of small businesses that report an improved economy compared to last year held at 36%, while those that feel economic conditions have worsened fell another 4 points to reach 16%.
• Future economy: The proportion of small businesses who are optimistic about the future of the U.S. economy declined for the second month to 54%, while the percentage who expect the economy to worsen increased to 14%.
• Revenue projections: Normalizing after last month’s recent peak, 76% of small businesses expect increased revenues over the year ahead.
• Profitability projections: 6 in 10 small businesses expect profitability to improve in the next 12 months, while 10% expect a decline.
• Fixed investment plans: The proportion of small businesses planning to increase fixed investments over the next 12 months fell to 39% while the proportion planning to decrease fixed investments rose to 10%.
• Workforce expansion plans: The biggest decline from last month, 58% of small businesses plan to add personnel over the next 12 months, a 13-point decrease from last month.

To explore the full January 2025 WSJ/Vistage Small Business data set, visit our data center or download the infographic.

Vistage’s February small business survey will take place February 3-10, 2025.

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