Increasing Costs Sour Small Business Outlook [WSJ/Vistage Oct 2025]

In the past month, a series of events has stalled small business confidence, leading the WSJ/Vistage Small Business CEO Confidence Index to dip to 85.8 in October.  

While the decrease in interest rates provided a bright spot, it was dampened by the government shutdown, new tariffs on China, and the ongoing impact of higher costs. 

Skyrocketing Insurance Costs Significantly Impact Profitability

Despite the opportunity that lower interest rates offer, profitability expectations declined 4 points from last month. While rising wages and tariffs-related costs have made headlines, a significant burden for small businesses is the impact of rising insurance costs. The most significant increases have come in health insurance, with over half of small business leaders reporting increases of more than 10%. This will also have a significant impact on employees.

To accommodate offering employee health insurance, many small businesses are exploring self-insurance models, even reducing benefits, or passing the cost on to employees. There is interest in solutions like pooled risk models, shared resources for negotiation, or advocacy for policy reform.

“Health premiums are skyrocketing, coverage is decreasing, payors are prioritizing their financial health over patients. With rising costs, patients are struggling to even cover their copays, often forgoing their care,” shares Ray Wolf, CEO of Televero Health, Inc., In Largo Vista, Texas. “It is not a sustainable situation for everyday Americans.”  

“Health insurance is a joke — we pay so much as an employer for major medical for our employees,” adds Nina Dittmar, CEO of Roadready Transfer Service in Wausau, Wisconsin. “It’s not sustainable for employers or employees.”

In North Carolina, the NC Chamber has long recognized this need for small businesses. After legislation was passed enabling a pooled risk model, Carolina HealthWorks was created. Vistage member Gary Salamido, President and CEO of the NC Chamber, says this new health care opportunity is designed to improve access, stability, and affordability for small- and midsize-employers, delivered through local Chambers of Commerce. Salamido says the goal is to provide predictability and “security for personal health,” while supporting business growth.

Interest Rate Reduction is a Bright Spot for Small Businesses

While 70% of small business leaders report interest rate cuts will affect them, it will take more than September’s 25 basis points cut to make an impact. Just 9% report that a quarter of a percentage point would have an impact. Small businesses will be keeping an eye out for subsequent cuts, but as Taylor St. Germain from ITR Economics shared with CEOs in Kansas City last week, waiting for them might not yield the ROI that acting now would.

Whether direct or indirect, the interest rate cut enables small business leaders to refinance debt and can also boost customer demand.

“We have $1.8 million in long-term acquisition debt that is on a variable rate,” says Michael LeBlanc, CEO of CCi Voice in Redding, Connecticut. “Interest rate cuts are recognized at the end of each quarter as a reduction in what we pay, directly improving our cash flow!”

“A cumulative rate cut of 1.00% from where rates were at the beginning of the year is the likely inflection point at which real estate development projects begin moving again,” adds William Duff, Founder and Managing Principal in San Francisco, California.

The question is how long it will take to realize the impacts, and what reductions are needed to have an impact. Those related to real estate, investments, and capital expenditure (CapEx) projects will move forward.

October Highlights

The October 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, conducted between October 6 and 13, 2025, collected data from 339 respondents with annual revenues ranging from $1 million to $20 million.

• Current Economy: 43% of small businesses believe the U.S. economy has worsened, and 22% say it is better than a year ago, which is basically unchanged from September.
• Future Economy: Looking ahead, business leaders remain equally divided, with 30% expecting improvement, 31% anticipating little change, and 35% expecting worsening conditions. A fairly steady outlook, compared to recent months, suggests that cautious optimism is holding its ground.
• Revenue Projections: Optimism eased slightly in October, with 58% of small business leaders expecting revenue growth in the year ahead, down 2 points from September. Meanwhile, 15% now anticipate lower revenues, up four points from last month, reflecting a modest cooling in growth expectations.
• Profitability Projections: Expectations for stronger profits eased in October, with 44% of small business leaders anticipating higher profitability, down four points from September. Meanwhile, 23% expect profits to decline, up from 19% last month, signaling renewed caution amid ongoing cost pressures.
• Fixed Investment Plans: Investment expectations held steady in October, with 32% of small businesses planning to increase capital spending in the year ahead, a one-point decline from September, but consistent with the mid-30% range seen throughout 2025. Meanwhile, 15% expect to scale back, and 51% plan to maintain current spending levels, reflecting continued caution in long-term investment.
• Workforce Expansion Plans: After rising sharply in September, hiring expectations dipped modestly in October. 48% of small business leaders plan to add employees in the next year, down slightly from last month but above summer lows. Meanwhile, 10% expect to reduce staff, a rate that has changed little throughout 2025.

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

The November 2025 WSJ/Vistage Small Business CEO Confidence Index will be calculated based on responses to the WSJ/Vistage Small Business CEO survey, conducted from November 3-10, 2025.

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