Peer mentoring and generative AI together create a transformative strategy that can revolutionize how organizations adopt and utilize AI. By leveraging the power of personal connections and shared expertise, peer mentoring accelerates learning, fosters collaboration, and fuels innovation.
In today’s fast-paced business environment, where the mastery of Gen AI tools can mean the difference between staying competitive and falling behind, this approach is nothing short of essential.
The Human Element of Embracing Gen AI
Generative AI tools promise efficiency, creativity, and transformative possibilities, but for many employees, navigating these tools can feel daunting. That’s where peer mentoring steps in, offering a bridge between uncertainty and confidence. When employees learn directly from colleagues who have already mastered Gen AI, they gain not just technical know-how but also context-specific insights tailored to their unique roles.
Imagine being guided through a new tool by someone who understands the nuances of your workload, rather than sitting through a generic training webinar. Peer mentors personalize the learning process, demonstrating how peer mentoring and generative AI collaborate in real-world scenarios. This one-on-one guidance makes Gen AI tools more accessible and, importantly, more relatable, while managing risks.
Empowering Early Adopters as Mentors to Embrace Gen AI
Organizations often underestimate the goldmine of talent within their own ranks. Early adopters of Gen AI—those employees who have enthusiastically embraced these tools to enhance tasks like coding, content creation, and data analysis—are an invaluable resource. Peer mentoring programs tap into this resource, positioning these employees as mentors who guide their colleagues toward Gen AI proficiency.
Take, for example, one of my clients, a mid-sized professional services company whose leadership I helped recognize its Gen AI-savvy employees as catalysts for broader adoption. These early adopters, once scattered across departments, were brought together under a structured program focused on peer mentoring and generative AI. Their mission? To mentor colleagues eager to learn Gen AI tools but unsure where to start. This deliberate approach ensured the company didn’t just rely on scattered pockets of expertise but actively spread that knowledge across teams.
Building Bridges Through Tailored Learning for Embracing Gen AI
The beauty of peer mentoring lies in its flexibility and relevance. Unlike traditional training methods, which often feel detached from day-to-day responsibilities, peer mentoring sessions are tailored to the specific needs of mentees. For example, an employee in marketing might focus on content creation and effective Gen AI prompting, while a colleague in engineering could delve into coding automation.
This tailored approach was a hallmark of the aforementioned professional service company’s program. Mentors shared the practical tips and tricks they had discovered, demonstrated advanced techniques, and even helped troubleshoot challenges mentees encountered. Group workshops further amplified this knowledge-sharing, allowing mentors to showcase their expertise to a broader audience while building confidence among mentees.
A Win-Win for Mentors and Mentees
Peer mentoring doesn’t just benefit those learning Gen AI; it’s equally rewarding for the mentors. Early adopters gain recognition for their expertise, which boosts their professional visibility and enhances their pride in their contributions. Mentors also develop their leadership and communication skills, positioning themselves as thought leaders within the organization.
Meanwhile, mentees experience an equally significant transformation. Armed with hands-on guidance and personalized support, they become more confident in their abilities to leverage Gen AI tools effectively. This confidence translates into tangible improvements in productivity and innovation, as employees feel empowered to experiment, iterate, and innovate.
The Ripple Effect on Workplace Culture
The impact of peer mentoring extends far beyond individual skill development — it transforms organizational culture. Over the course of a 12-month peer mentoring initiative, the professional service company observed a noticeable shift: employees not only became more proficient with Gen AI tools but also more eager to share their newfound knowledge with others.
This knowledge-sharing created a ripple effect, fostering a culture of collaboration and continuous learning. Employees across departments connected over shared experiences, strengthening professional relationships and breaking down silos. The workplace evolved into a vibrant hub of innovation, with employees actively seeking out new ways to integrate Gen AI into their workflows.
Real Results for Embracing Gen AI: Productivity, Quality, and Innovation
The results of the peer mentoring program were undeniable. Productivity soared as employees streamlined their workflows with Gen AI tools, completing tasks more efficiently and with greater accuracy. The quality of work improved as employees applied advanced Gen AI techniques to tasks like content creation, data analysis, and client outreach. And perhaps most significantly, the organization’s culture shifted toward one of enthusiasm for learning and innovation.
Metrics underscored the program’s success. Teams using Gen AI reported significant time savings of over 25%, while cross-departmental collaborations increased by 30%. Employees consistently rated the program as one of the most impactful initiatives for their professional growth, with many noting that it demystified Gen AI and made it feel approachable.
Why Peer Mentoring Is the Future of Embracing Gen AI
As businesses navigate the rapid evolution of Gen AI, traditional training methods are proving insufficient. Peer mentoring provides a dynamic and scalable solution that not only accelerates learning but also strengthens the fabric of workplace relationships. By harnessing the expertise of early adopters and fostering a culture of collaboration, organizations can ensure that their employees are not just users of Gen AI tools but pioneers of innovation.
In an era where technology often feels impersonal, peer mentoring injects a much-needed human touch into the learning process. And for organizations ready to embrace peer mentoring and generative AI, it can be one of the most potent strategies they have for long-term success.
The information and opinions presented are the author’s own and not those of Vistage Worldwide, Inc.
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.
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.
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.
In Part III of our series, we turn our attention to AI.
It was only three years ago that ChatGPT captured our imagination with its ability to generate text, images, and even video on demand.
Over the past year, I’ve led conversations with more than 500 Vistage members about how they’re using AI. Some have woven these tools into daily routines, while others are just tinkering. That’s not surprising — most of the business world is still figuring out how to put AI to use.
As of today, only about 3% of ChatGPT users pay for the premium version, even though that is what unlocks its most powerful features. In 2024, venture capital investors poured $124 billion into AI overall, but only $1 billion into “agentic AI” — the type of technology that can plan and execute complex, multistep tasks independently. The imbalance shows where attention is focused: quick wins in LLMs versus the deeper potential of power tools such as autonomous agents.
Herein lies the opportunity to leapfrog the competition with real investment in AI.
However, the talent to deploy agentic AI is scarce and expensive. Job postings for agentic AI roles grew 986% between 2023 and 2024, a sign that demand far outstrips supply. Small and medium-sized businesses (SMBs) that wait too long risk being left behind. This creates an opportunity for those willing to act now.
Member Adoption of AI
Moore’s Law assumed that computing power would double every 18-24 months. With AI, the pace is even more exponential. The “inference cost” (the cost of running models at scale) is falling nearly 10x per year. If there were ever a moment for first-mover advantage, it is now.
To harness the transformative power of AI, leaders must adopt a new mindset. Some people go to work each day to complete tasks, and others go to work to teach AI to do their tasks for them.
Expected Change in AI Investment
Source: Salesforce
Take the example of a small retailer. An entry-level solution might be installing a chatbot to answer basic customer questions and reduce call volume. Helpful, but hardly groundbreaking.
Now, imagine a more transformative approach. An agent could process a return, issue a credit, notify the factory of a defect, and automatically generate a report on product quality trends — all without human intervention. This is the promise of agentic AI: systems that independently plan and execute multistep tasks. They act as force multipliers — not just cutting costs, but flipping business models upside down.
Reported Impact of AI Investment
Source: Salesforce
Why AI is Different
At first glance, AI might look like just another in a long line of technologies — algorithms, automation, and so on. But the difference is fundamental. In the past, automation reflected the developer’s ability to predict what a user might do and code a response. Inevitably, developers failed to anticipate the long tail of exceptions, leaving customers frustrated and employees scrambling to fix what the system couldn’t handle.
LLMs change that dynamic. They can reason through problems they’ve never seen before, filling in gaps with logic instead of hard-coded rules. Unlike traditional software, they can take human-like steps — searching a database, filling out a form, or drafting an email — without the need for complex integrations. Most importantly, they don’t need code to improve. LLMs can be coached with natural language prompts, making them far more accessible to non-technical teams.
For SMBs, that’s the breakthrough. AI is no longer locked behind IT departments or million-dollar budgets. With the right mindset and a willingness to experiment, smaller firms can now deploy tools that once required armies of coders — reshaping how they serve customers, manage operations, and grow.
Top Use Cases for AI Agents
Source: QUTECH
AI Tools You Can Use Today
With thousands of tools emerging, AI can feel overwhelming. But here’s the good news. Whatever your business challenge, “there’s an AI for that.” LLMs and related AI platforms are rapidly specializing. Tools like NotebookLM and Perplexity (particularly strong for drafting complex documents) are emerging as serious challengers to ChatGPT. Yet ChatGPT remains the market leader, with each new release introducing game-changing capabilities — from Sora, its groundbreaking video generation engine, to Agent Mode, which seamlessly embeds autonomous agents directly into the user interface.
Above are just a few examples — new tools emerge constantly. When evaluating AI tools, ensure they have good reviews, robust security (especially if you’ll input proprietary data), and integration options with your existing software. Start with free trials or freemium versions to get quick wins, and double down on the tools that prove their ROI.
From RAGs to Riches
It’s estimated that knowledge workers spend 25% of their time looking for information.
For SMBs, Retrieval-Augmented Generation (RAG) technology will be a game-changer. Imagine a construction CEO asking: “What was the referral source and profitability of our last five industrial projects?” Answering that today would require someone to dig into the financial system, cross-check the CRM, pull reports from Power BI, and reconcile details in the project management software. With a RAG-enabled assistant, all that information could be surfaced in seconds as a clear, consolidated answer complete with citations from the underlying systems.
Instead of relying only on what a large language model was trained on, RAG allows the system to pull in real-time, company-specific data — financial records, project files, CRM entries, or even dashboards — before generating a response. The result: answers that are both intelligent and grounded in your own organization’s data.
We’re seeing early versions of RAG embedded into mainstream tools such as Microsoft 365 Copilot and other enterprise AI assistants. However, an AI system is only as good as the data it has access to. That means businesses should begin now by organizing, digitizing, and cleaning up internal knowledge. Garbage in still means garbage out.
Global Competition for AI
AI isn’t just a business trend; it’s a geopolitical and economic race. For perspective, the United States currently leads in AI investment and innovation by a considerable margin. In 2023, the U.S. attracted about $66 billion in private AI investment, compared to around $9.5 billion for the entire EU and UK combined.
Over 73% of advanced AI models (like large language models) are being developed in the U.S., versus about 15% in China. American tech giants (and a vibrant startup scene in San Francisco) have given the U.S. a strong hand, but the gap is narrowing. China has declared its aim to become the global AI leader by 2030 and is investing heavily to get there. Back in 2017, Chinese investors briefly surpassed the U.S. in AI startup funding, and today China produces cutting-edge research and homegrown AI models at a rapid clip. The Chinese government’s strategic plans involve integrating AI across “90% of industries” by 2030.
Meanwhile, European countries are emphasizing regulation and ethical frameworks in an effort known as sovereign AI. The EU’s forthcoming AI Act will impose strict rules on AI systems, aiming to ensure safety and transparency.
The “AI arms race” is driving major cloud providers (Amazon, Microsoft, Google, and Salesforce) to roll out more solutions tailored to smaller businesses. Think AI-powered CRMs, intelligent supply chain tools and more.
AI and Mobility
Few industries are being as visibly transformed by AI as transportation and mobility. Self-driving cars, once a moonshot, are now a practical reality in several cities. Elon Musk is betting the farm on autonomy. A recent trial I had of Tesla’s fully autonomous technology was extremely impressive. Tesla’s release of FSD v14 (Full Self-Driving Supervised) features robotaxi-grade autonomy optimized for the latest hardware.
Alphabet’s Waymo robo-taxis have logged over 100 million fully autonomous miles on public roads (doubling their total in just six months). By mid-2025, Waymo provided over 10 million driverless rides to paying passengers without a human driver, an achievement that underscores how rapidly the technology is maturing. Waymo and Tesla (and others like Zoox and Mobileye) are in a fierce race to deploy Level 4 autonomous vehicles that can drive with no human intervention in certain conditions.
AI and Health
AI is reshaping healthcare from diagnostics to daily operations. In medical imaging, AI now outperforms experts in key areas: one tool was twice as accurate as radiologists in stroke CT scans, while another detected 64% of epilepsy lesions doctors missed. The FDA has approved over 340 AI tools for conditions from strokes to cancer. Adoption is accelerating: two-thirds of physicians used AI in 2024, up from 38% the year before. For SMBs, AI boosts accuracy, reduces admin burdens, and delivers a strong ROI — about $3.20 for every $1 spent, often paying back within 14-18 months.
If you are not savvy in AI, it’s time to jump on the bandwagon. Make sure your leadership team embeds AI and transformation into your strategic plan. Your future competitiveness may depend on it.
As 2026 rapidly approaches, many business leaders are starting their strategic planning process. Setting a strategy is the most difficult and important part of a CEO’s job.
While there are many different ways to create an annual strategic plan, effective plans include a few common elements. They reflect what worked and did not work well in the previous year, and the opportunities for the following year.
They are actionable, measurable, and concise enough for the team to frequently review them to ensure alignment. Strategic plans are not meant to just sit on the shelf until they get dusted off the following year during the next strategic planning process.
Annual strategic planning provides the opportunity to identify the end goal, define the metrics that will measure success, and outline the actions required to achieve these objectives. The end result provides a plan that unifies the team around the goals and drives results.
Successful strategic plans usually answer the following questions:
Identifying the end goal: What are we trying to accomplish?
The most comprehensive strategic planning processes include a deep review of the previous year. This involves listening to the team about what specifically worked and what did not. Hearing from employees at all levels allows a leader to understand challenges and opportunities from those who are closest to customers, with the benefit of various perspectives.
Amid a busy year, incorporating these deep reviews provides a crucial opportunity to press pause and analyze what needs to change for the following year to be more successful.
Encouraging and implementing an open and collaborative process helps identify precise and relevant goals. After seeking input across the organization, CEOs gain the necessary perspective to set the direction. Great leaders balance their team’s feedback with their own judgment to ensure the goals for the following year are challenging yet achievable.
While setting goals is an important first step, just writing them down will not bring them to life. To ensure that goals are being followed through with execution, each team aligns its individual plans to the company’s goals once they are established.
Effective CEOs dedicate time and effort to ensuring different departmental goals don’t unintentionally conflict with one another. To set the company up for success, a critical step in any strategic plan is ensuring that appropriate resources are invested toward realizing the goals.
Key Performance Indicators: What will we measure?
A well-designed strategic plan focuses on 3 to 5 key performance indicators (KPIs) that have the most significant impact on the business. These metrics are priorities that require continuous tracking to ensure accountability and keep the strategy on course.
Regularly tracking metrics with the team creates complete transparency. Having a real-time pulse on performance also allows the team to make timely and proactive changes.
When teams lack measurable metrics for success — or utilize metrics with inconsistent definitions across departments — performance can be compromised. Transparency encourages accountability, helps set precise and actionable objectives for the future, and ensures continuous improvement within the organization.
Setting the Strategy: How Will We Execute?
An effective strategic plan spells out the specific actions needed to achieve the goals. Organizations all too often create strategic plans that are overly complex, making them difficult to manage. This complexity can lead to the plan being neglected or abandoned midyear, ultimately leaving the goals unfulfilled.
On the other hand, a concise strategic plan can easily be reiterated throughout the year, ensuring it’s consistently top of mind for employees as they approach their daily work. This helps employees focus on what’s most important year-round — not just for the first weeks after the strategy is set. Great strategic plans are also flexible by design and allow companies to adapt as unexpected challenges or opportunities arise.
When leaders feel like they have a good strategy, but aren’t hitting their goals, it can be helpful to seek out diverse perspectives. Hearing from CEO peers who can poke holes or offer new insights helps to refine the strategy, ensuring it remains dynamic and effective. Those outside the company can offer a fresh, unbiased perspective and share candid feedback that isn’t always possible from internal stakeholders.
Each company’s mission, vision, and purpose offer its long-term strategic plan, helping leaders decide what path to take when critical questions arise.
A thoughtful annual strategic plan offers leaders a near-term, practical way to cascade that strategy through every level of their organization. Focusing on goals, metrics, and execution provides clarity across teams and strengthens an organization’s ability to turn long-term goals into tangible results. When preparing for 2026 and all the unknowns the future inevitably holds, a thorough strategic plan is critical to driving meaningful outcomes for any business.
Today’s business landscape is noisy. Nonstop headlines compete for attention, and social media amplifies everyone’s opinions in a complex environment. On the surface, it can sometimes seem that the loudest, most charismatic, and commanding personalities rise to the top.
Throughout my career, I’ve had the chance to get to know a wide range of CEOs — and many of them are charismatic. But that has not been the difference-maker in their leadership. Instead, some of the best leaders listen deeply, ask thoughtful questions, and act with humility.
This “quiet leadership” is not passive or hands-off; it is deliberate, curious, and grounded in purposeful action that drives real change. Rather than focusing on ego or spectacle, quiet leadership is about leading with intention, earning trust through consistency, and putting the success of the team and the organization first.
Why Quiet Leadership Wins in the AI Era
As the role of artificial intelligence grows in our lives, human qualities like empathy, humility, and curiosity become even more valuable. Technology can generate ideas and reinforce existing thinking, but it cannot replace authentic human connection. Quiet leaders understand this instinctively: They build credibility through genuine relationships, not algorithms. These leaders share a common set of principles and practices that guide how they work and show up for their teams:
1. Humility
Respect grows when leaders admit their limitations, take responsibility for mistakes, and remain grounded. Employees appreciate leaders who share when they don’t have all the answers and ask others to contribute to solutions. This kind of openness increases their credibility and influence.
2. Authenticity
The adage that actions speak louder than words is most true when it comes to leadership. Teams are quick to spot when leaders are performing a role rather than acting from conviction. When leaders remain true to their values, they build trust.
3. Curiosity
The best leaders treat all conversations as learning opportunities. A curious leader doesn’t jump to conclusions or cut discussions short. They ask thoughtful questions and listen actively, signaling to their teams that their input matters. This kind of curiosity encourages innovation and creates space for better ideas to surface.
4. Empowerment
Rather than seeking credit, CEOs who practice quiet leadership can focus on building organizations that thrive beyond any one individual. They delegate, ensuring that their team can take real ownership of projects and celebrate success together. In doing so, they create resilience and teams that can succeed regardless of who is in charge.
5. Recognition
Celebration isn’t only reserved for annual awards or milestone achievements. Effective leaders consistently acknowledge team wins and weave appreciation into everyday interactions. Small, genuine recognition builds morale and signals that everyone’s contributions matter.
6. Hands-on Mindset
Leaders who engage in the day-to-day work of the business gain credibility and insight. Whether it’s walking the production floor or sitting on customer service calls, this engagement deepens the understanding of the business, the customer experience, and the challenges team members face.
7. Transparency
Honest communication, even when difficult, builds trust. Those who use quiet leadership don’t sugarcoat realities or spin narratives to protect their image. Instead, they choose clarity, which helps employees feel respected.
8. Respect for All Levels of Work
From interns to executives, great leaders treat people with equal consideration. Some of the best insights I’ve heard come from those on the front lines of the business. Effective leaders recognize that ideas can come from anywhere and make a point of seeking feedback from employees at all levels.
9. Peer Advisory
When leaders surround themselves with trusted peers and mentors, they gain outside perspectives. Hearing diverse perspectives from peers helps leaders to challenge their assumptions, strengthen decision-making and safeguard against insular thinking.
Long-Term Thinking
Rather than measuring success by short-term accolades, quiet leadership enables CEOs to focus on building systems and processes that create a company that endures. They care about leaving an organization stronger than they found it, ensuring sustainability well beyond their tenure.
Quiet Leadership in Practice
Early in my career, I was in a meeting with another CEO who has influenced me to this day. During a half-day negotiation session, I expected a CEO-to-CEO showdown. Instead, he spent most of the meeting listening, asking questions, and deferring to his team. By the end of the day, it was clear the respect and trust he inspired came from lifting others, not proving he was the smartest in the room.
I see the same pattern among many Vistage members: humble leaders who earn respect by rolling up their sleeves, sometimes literally. One CEO of a roofing company I know climbed onto rooftops with her team from day one to understand the business firsthand.
While it may not grab the headlines, quiet leadership builds organizations that perform at their best for years to come. Those leaders who listen, empower, and put people first leave the most meaningful impact. They are the ones who elevate businesses, communities, and everyone around them.
Entrepreneurs are builders and shapers of ideas, companies, jobs. And to keep building — to keep the entrepreneurial dream alive — they need to create value.
Value creation means forging a healthy, scalable business, one that can grow sustainably and ultimately attract a favorable buyer if that’s the goal. The best way to reach this sought-after stage is to use the Value Creation Formula.
This formula is a blueprint for building a turbocharged growth engine. And great news: each of its dimensions can apply to the unique needs of companies across industries.
Following the Formula
The Value Creation Formula is about viewing your business through an investor’s eyes. Even if you’re not seeking investment, taking a buyer’s perspective is worthwhile because they have a keen sense for a company’s future profitability.
At Class VI, we’ve learned a thing or two from sealing M&A deals totaling over $4 billion. Chief among the lessons is that investors tend to consider four key components as indicators of a company’s health, resilience, and worth:
A credible growth story. It’s not enough to believe in yourself and your company; you need to present unimpeachable data showing how much the business has grown and indicating good odds of future success.
A capable team. A competent executive team with strong leadership and communication skills can take charge of areas like finance, operations, and technology, freeing up the CEO to focus on strategy and vision.
Operational excellence. You need the daily grind of your business to run efficiently. Depending on your industry, this could mean well-oiled production facilities, automated workflows, or established cybersecurity measures. Most businesses should have data-driven decision-making and documented KPIs for each role.
Strong financials. Businesses need revenue, and they must understand where the revenue comes from. Scaling a company requires the kind of increased cash flow and transparency that only effective financial management can bring.
There are many risks in each of these areas that can slow progress and reduce profitability, which is why risk reduction is such an important part of building a healthy business. Common risks include overreliance on the owner for decision-making and relationship management, tying a large percentage of revenue to a small number of customers, and weak financial controls.
Some of our data points to the positive impact of advanced preparation that uses the Value Creation Formula. Across the 77 transactions we completed between 2012 and 2024, 87% of companies that had first pursued intentional, strategic preparation centered on the four Formula elements secured a higher purchase price than predicted estimates from a third-party valuation tool.
What does it mean for you?
The Value Creation Formula’s power lies in its wide applicability — we’ve seen positive results with everything from SaaS firms to pet food suppliers to manufacturers. It’s just a matter of applying fixes to the circumstances of a particular business.
Below are a few ways that firms in various industries might take this approach to increasing growth.
Enhance team and operations with a dynamite CTO
In manufacturing and CPG, every efficiency gain can mean more units produced at less cost. Technology often provides solutions to efficiency problems that can’t be solved any other way.
A capable chief technology officer can support broader business goals by fostering innovative R&D and implementing policies for quick and cost-effective acquisition of tech. The downstream effects of filling this C-suite chair might include upscaled operations and increased profitability.
Improve financials, operations, and growth story by tracking metrics
To know whether you’re operating at peak efficiency, you need to measure the right indicators against a set of established benchmarks.
For example, SaaS leaders should ensure their companies track annual and monthly recurring revenue, churn rates, and the ratio between customer lifetime value and acquisition cost. These metrics can help chart operational effectiveness and financial health over time, which are key threads of a business’s growth story.
Data gathering and analysis are areas where technology can vastly improve both inputs and outputs — and investors love to see clean, credible data.
Strengthen financial controls
All companies can benefit from improved financial controls that reduce waste and decrease the chance of fraud. Important measures include monthly bank reconciliations, regular reviews of customer and vendor lists, and randomized audits of inventory and equipment at asset-heavy businesses.
Robust financial controls ensure that you get (and keep) what you pay for, and they reassure potential investors that you run a tight ship and quickly plug any leaks.
Warming up the growth engine
I encourage you to look at your own business through the Value Creation Formula lens. Are there gaps in the leadership team you could fill to ease some burden at the top? Are there any steps in the production or development processes that feel like they take too long? Have you thought about telling your company’s story in terms designed to appeal to an investor?
You’ve built a revenue-generating business from the ground up. Now consider how you might turbocharge its growth and value!
Investment advisory services offered through Class VI Family Office, LLC, a Registered Investment Adviser with the U.S Securities and Exchange Commission. Class VI Partners offers investment banking and private securities transactions through its affiliate, Class VI Securities, LLC. Securities offered through Class VI Securities, LLC, a registered broker/dealer and member of FINRA / SIPC. Class VI Pathfinder, LLC provides general business consulting to privately held businesses. Collectively, these entities are referred to herein as “Class VI”.
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In Part II of our series, we focus on Technology Trends facing small and midsize businesses (SMBs) in 2026 and beyond. While AI touches every part of technology, we will cover it more extensively in our AI Special Report (Part III of this series).
Technology is increasingly central to business strategy and execution. Yet 46% of business leaders are “frustrated” by the limitations of their company’s technology. Under growing scrutiny, IT leaders are expected to deliver deeper impact across their organizations.
IT departments must manage complex choices and trade-offs that support competitive advantage. Technologists are expected to deliver value to every department, enabling everything from email support to advanced AI solutions.
This puts stress on small and medium-sized businesses (SMBs) who do not have the financial wherewithal to fund expansive IT departments and lofty budgets. The undercurrent within this narrative is that AI adoption is exploding, and SMB owners and CEOs must bring new skill sets to bear in IT and throughout their organizations if they are going to take advantage of emerging technologies.
This shocking McKinsey graphic illustrates the sudden shift in interest and investment, away from emerging technologies such as quantum computing and immersive technologies and toward AI.
Source: McKinsey Technology Trends Outlook 2025
SMB Tech Spending: Benchmarks and Priorities
Small and medium-sized business (SMB) technology budgets are on the rise. Roughly three-quarters of SMBs report spending more on IT this year. While the average spend will be 5% higher, the top 25th percentile will spend roughly 20% more, creating a set of haves and have-nots.
This reflects a recognition that digital tools are essential for growth and competitiveness. Where is this money going? Many companies are adopting a hybrid IT strategy, maintaining some on-premise systems but also shifting a significant portion of spend to cloud services. Within these budgets, cybersecurity stands out as a top priority and growing cost. Cyber defense is often outsourced, and roughly equals internal IT labor spend.
Percentage of IT Spend
Source: Spiceworks Ziff Davis – State of IT
Many SMBs are investing in both AI and cloud-based software (from CRM to ERP) to streamline operations. Many tech leaders are looking to leverage AI tools within their existing technology stack. This is a paradox of AI (to be covered more extensively in our Special AI report). It requires more accurate data, but also makes systems easier to integrate. 75% of companies that implement AI report higher spend on data management this year.
SMBs generally favor cost-effective, easily compatible solutions — technologies that integrate smoothly with existing systems. Yet this often requires specialized talent ranging from Python developers to data scientists and at compensation levels higher than many SMBs were historically willing to spend.
IT Spend % of Revenue by Industry
Source: Spiceworks Ziff Davis – State of IT
Cyber Defense
How much should you spend on cybersecurity? There’s no universal answer. On average, companies dedicate about 11% of their IT budgets, but investment depends on the value of the data a company is trying to protect. A bank holding sensitive financial records invests far more than a construction company managing project files.
Blockchain tokenization is emerging as a powerful tool for transparency and data integrity. By creating immutable, verifiable records, blockchain reduces fraud and tampering risks. It’s already transforming finance and health care, where secure information exchange is paramount. For leaders, the takeaway is clear: cybersecurity must be a strategic investment. Spending wisely now protects your operations, reputation, and growth in the future.
The Emergence of Digital Twins
Digital twins are quickly becoming one of the most powerful tools driving innovation. A digital twin is essentially a virtual replica of a product, process, or system that allows companies to test, refine, and optimize — before making costly real-world decisions. For example, manufacturers use digital twins to model assembly lines, running thousands of simulations to predict bottlenecks and ensure product quality. In health care, digital twins of organs are used to test treatment outcomes without risk to patients.
The beauty of the approach is speed and precision. Instead of waiting weeks for prototypes, companies can instantly model “what if” scenarios, from changing supply chain routes to testing new car designs for safety. Gartner predicts that by 2030, digital twins will be central to more than 70% of product development cycles.
Autonomous Vehicles Entering Fleet Operations
Self-driving technology is advancing fast, with commercial fleets expected to see Level 3 autonomy by 2026-27 and Level 4 trucks on highways by 2028-30. For SMBs, the most immediate applications are practical and should demonstrate immediate ROI:
Last-Mile Delivery – Restaurants and retailers are piloting Avs for local drop-offs, cutting labor costs and doubling as rolling ads.
Warehouse Handling – Autonomous forklifts and tuggers reduce accidents and labor needs while scaling throughput.
Simulation Tools – Affordable software lets SMBs test AV routes virtually, reducing mistakes and speeding launches.
Geo-Fenced Shuttles – Resorts, hospitals, and campuses deploy shuttles in controlled areas, easing driver shortages.
Public Service Contracts – Early adoption in sanitation, security, or landscaping fleets helps SMBs compete for municipal work.
Overall, AVs give smaller businesses a path to efficiency, branding, and growth without massive labor expansion. Note: We will cover driverless automobiles in the AI Special Report.
Smarter Equipment & Automation in B2B
SMBs in construction, manufacturing, and logistics are adopting smarter equipment to counter labor shortages and boost productivity. Robotics, IoT sensors, and AI now power many operations. Construction machinery features GPS-guided and autonomous controls, while robots handle repetitive tasks like welding or bricklaying, improving speed and safety. In manufacturing, Industrial IoT enables predictive maintenance: sensors monitor performance, and AI predicts service needs, reducing downtime. Electric models of forklifts and excavators are also gaining ground, offering lower fuel and maintenance costs with zero emissions. Once reserved for large enterprises, these technologies now let SMBs “do more with less.”
Data Privacy & Compliance
As technology advances, so does scrutiny from regulators and customers. New state and federal data privacy rules are reshaping how companies collect, store, and use information. In 2025 alone, more than a dozen U.S. states implemented GDPR-style laws, while proposed federal bills could standardize compliance nationwide. For SMBs, this creates both risk and opportunity. On one hand, compliance costs feel burdensome — managing consent systems, data retention and audit trails. On the flip side, building strong data governance can differentiate a brand, especially as larger customers demand more compliance and cyber-protection. SMB leaders should view privacy not as a “checkbox,” but as part of their value proposition.
Cloud & Edge Computing
Markets were rocked when Oracle’s enterprise value went up by $100 billion in a single day, reinforcing the importance of cloud technologies. Cloud infrastructure is now one of the largest SMB tech investments.
The surge of AI adoption has accelerated demand well beyond data centers and chips, pushing firms to expand entire cloud stacks. For SMBs, cloud offers flexibility — scaling resources up or down without major upfront costs. Yet expenses can escalate quickly if not managed carefully. Companies are increasingly using multiple providers for redundancy and negotiating usage-based contracts. For SMB leaders, mastering cloud use is essential to unlocking AI-driven productivity and maintaining competitiveness.
While cloud dominates the conversation, edge computing is quietly reshaping how businesses handle data. By processing information closer to where it’s generated — whether that’s a factory floor, delivery truck, or retail store — SMBs can reduce latency, cut bandwidth costs, and boost resilience when connectivity falters. For example, a construction company can run real-time safety analytics on-site without waiting for cloud servers; a retailer can manage in-store personalization even if the internet drops. Analysts expect global edge spending to surpass $300 billion by 2026.
Ultra-Connectivity
Starlink, with over 6,000 low-Earth orbit satellites, is transforming commercial connectivity by delivering high-speed internet to remote sites where fiber or cellular coverage doesn’t reach. Companies across construction, logistics, and manufacturing now use it for real-time data, video, and redundancy to keep operations running anywhere on the planet.
Advances in 5G, emerging 6G, Wi-Fi 6 and 7, and satellite networks are transforming digital infrastructure. These systems deliver faster speeds, lower latency, and broader coverage, creating new opportunities for SMBs. Logistics firms use connected sensors to track shipments in real time; manufacturers deploy robotics guided by ultra-reliable wireless; health care organizations explore remote diagnostics. The promise of 6G — speeds 100x faster than 5G — could power AI and IoT at scale. Yet the challenge lies in infrastructure costs and ensuring compatibility. For SMBs, the shift toward “always-on” ultra-connectivity is no longer optional; it’s a baseline for efficiency, innovation, and long-term competitiveness. Connectivity will accelerate other technologies.
AR & VR Technologies
Virtual reality hasn’t lived up to the hype. Yet progress in haptics is reinvigorating the field, making experiences more immersive. SMBs are exploring practical use cases: construction overlays for job sites, retail showrooms where customers “try” products virtually, or health care applications in training and therapy. For SMB leaders, the approach should be cautious experimentation: pilot small, evaluate ROI, and be ready to scale once the ecosystem matures. The payoff could be significant.
In Conclusion
Heading into 2026, technology will continue to level the playing field for smaller companies — but also raise the stakes. SMB leaders should keep a strategic eye on tech developments and be ready to adopt strategies that will strengthen competitive advantage. But to do so will require building technology teams that can keep pace with the rate of change.
“Only time will tell” is a time-honored truth. No strategy instantly comes to life at its announcement; it takes time for the initiatives to take hold and begin to have an impact. Leaders have a vision and extol the greatness of things to come, promising a brighter tomorrow, given time. However, it requires patience to see that vision come into reality, especially in uncertain times.
CEO Confidence Rises, Remains Below Last Year
The Q3 2025 Vistage CEO Confidence Index remains ‘in neutral’ as CEOs await a pivot to prosperity or a retreat into recession. The Index rose by 4.7 points to reach 81.9, but despite the gain, this level of confidence has not yet broken the low of 2024. While slightly above the 12-quarter average of 80.2, confidence remains well below the 97.8 average of the 2010s.
Each of the six components that comprise the Vistage CEO Index experienced a slight increase from the previous quarter. Backward-looking views of the economy improved, but forward-looking expectations barely rose. Anticipated revenue and profits ticked up as well, slightly above the 3-year average. Investments and hiring followed suit with minor increases.
While there is good news in the fact that the proportion of CEOs planning to increase headcount in the year ahead grew 6 points from last quarter to reach 48%, 13% plan for reduced headcount in the next 12 months. This represents three consecutive quarters where the proportion of CEOs expecting headcount to decrease has been in double digits, exceeded only by Q2 2020, which marked the depth of pandemic uncertainty and the Great Recession.
“Recent CEO sentiment points to a more subdued expansion ahead,” said Lauren Saidel-Baker, CFA and economist at ITR Economics. While the survey closed before the Federal Reserve meeting, Saidel Baker notes that while “the Federal Reserve enacted a 25-basis-point rate cut in September, conflicting statements from Fed officials have added to overall uncertainty.”
Subtle Shifts in CEOs’ Top Challenges
While the challenges that CEOs face have mainly remained the same, the perspective and priorities they place on these shifts are influenced by new data, changing perspectives, and the passage of time.
Economic and policy uncertainty continues to be the top challenge for CEOs, unchanged from last quarter; however, their attention has shifted. In Q2, CEOs voiced concerns about tariffs, unpredictable federal policies, geopolitical tensions, and interest rates. Three months later, their focus has shifted to a broader set of worries about the economy, policy swings, and customer caution. There is a greater focus on general economic instability rather than specific tariffs. The top challenges referenced included slowing sales, customer hesitation, and reduced demand, suggesting a softening marketplace.
Hiring and retention has replaced tariffs and trade as the #2 issue for CEOs, marking another shift. Last quarter, labor issues were #3, but upward pressure on labor concerns and challenges has pushed hiring and retention to where it now stands, nearly at the top.
Businesses struggle to recruit both skilled labor, such as technicians and engineers, and leadership talent, while wage inflation and high turnover exacerbate the issue. Immigration contributes to this challenge for small and midsize businesses in certain sectors.
Tariffs & Trade Policy slipped to #3. The on-again/off-again tariffs uncertainty, supply chain impacts, and resulting pricing swings continue to weigh on CEOs. The ongoing discussion of trade wars, global uncertainty, and geopolitical instability, accompanied by frequent shifts in U.S. trade policy, has led to disrupted supply chains, increased input costs, and delayed capital projects.
Rising costs and inflation remain a persistent issue as materials, wages, and interest rates all shift in bad directions. While the proportion of CEOs expecting increased revenues in the year ahead ticked up, the top 5 challenges, including softening/delayed customer demand, are also on the rise. While more may expect increased revenues, the rate of revenue growth may be slower due to customer hesitation.
Tangible Tariff Impacts
Tariffs have quickly gone from headlines in Q1 to bottom lines in Q3. The initial whipsaw of changes to tariffs has now somewhat stabilized, allowing the 35% of CEOs who say they are directly impacted by tariffs to adapt. Another 36% say they are indirectly impacted, with just 5% experiencing a positive impact.
Tariffs are beginning to take their bite out of SMBs. The most significant impact is on costs: 62% report that tariffs have increased their costs, and correspondingly, 46% have experienced decreased profitability as a result. Among the negative impacts are declines in customer demand, reported by 37% of CEOs, and declines in revenue, reported by 33%. While tariffs generate a revenue windfall for the government, they come at the cost of reduced margins and profitability for businesses.
CEOs are not standing still. Tariffs are impacting them on several fronts and reshaping their operations. Indeed, 43% of CEOs have already increased prices, and 51% plan to raise prices in the next 3 months. Of those raising prices, half plan increases of 4% to 10%, while 15% will increase prices by more than 10%. Other actions as a result of tariffs include:
23% have decreased capital expenditures.
16% report a reduction in hiring.
15% have decreased marketing.
The costs of critical materials, including steel, aluminum, copper, wood, and electronics, have increased by anywhere from 10% to 50%. Some suppliers are using tariffs as an excuse to further increase prices. Part of those increases is passed to customers through surcharges or higher bids.
The bigger headache is uncertainty. Tariff rules and rates are constantly changing, making budgeting, quoting, and long-term planning challenging. Projects get delayed, capital spending is frozen, and clients hesitate to commit when nobody knows what their costs will look like next quarter. Customers postpone purchases or cancel plans, especially in construction, manufacturing, and export-oriented markets, as they absorb the impact of tariffs.
Some leaders have made supply-chain shifts, sourcing more materials domestically or relocating production to lower-tariff countries like Mexico and Australia, even though these options often come at a higher cost. Domestic producers can gain an edge by taking advantage of others’ rising costs, improving margins, and price competitiveness. The tariffs are not temporary. They will continue to make planning a day-to-day function instead of confidently investing in growth. In this environment, strategic planning becomes even more critical.
Immigration Impacts Select Industries
Another policy that can have a profound impact on small and midsize businesses is immigration. While 70% of CEOs report no direct operational impact from recent immigration policy changes, a small but significant minority of CEOs (15%) have experienced indirect but tangible effects.
For those managing the impacts, a recurring theme is heightened fear and anxiety among employees, even those fully documented or naturalized. CEOs report that staff members are worried about their families, avoid public gatherings, or feel targeted because of their appearance or language, which in turn lowers morale and productivity.
Industries dependent on immigrant labor — particularly construction, agriculture, manufacturing, and hospitality — face the most significant pressure. These employers note fewer applicants, rising wages, and the loss of skilled and unskilled workers due to visa delays or the revocation of Temporary Protected Status. High-skill sectors, including technology, also report difficulty attracting global talent as visa processing slows and international candidates perceive the United States as less welcoming.
These challenges ripple outward, increasing subcontractor costs, delaying projects, and straining customer service. While most companies remain unaffected for now, those confronting labor shortages and employee unease highlight the broader economic stakes of immigration policy.
Just 10% of CEOs report trouble with Visa and Trusted Person Status (TPS) complications, which are causing delays, loss of existing talent and creating difficulty attracting global talent. The newly announced changes to the H1B visas will affect those already in the United States, but replacing them or adding foreign expertise to current workforces will be expensive.
Stabilizing the Workforce
One factor that impacts all small and midsize businesses is the workforce model they have adopted since the pandemic. The transition from the pre-COVID Monday-Friday/9 to 5 (MF95) office to the workplace of today is now complete. The workplace of small to midsize businesses has become mostly stable over time, with a modest increase in those who are entirely in the office compared to Q2 2022.
With today’s economic uncertainty, rising inflation, and taxing tariffs, among other factors, CEOs have little appetite for changing the makeup of their workforce by disrupting their workplace. Any change would break the now-established workplace status quo, impacting the employee’s workplace experience. At the end of last year, 75% of CEOs anticipated no change in their workplace model. While 20% planned to make changes, the majority were adjusting their in-office requirement from 3 to 4 days.
The dynamics of the workplace have a direct impact on how workers feel about their job and their level of engagement. Flexibility has emerged as the new requirement for the workplace. In the MF95 world, the physical workplace and the tools, machines, devices, and technology used defined their experience, as attendance was required. Now, flexibility has become the third leg of the workplace, with hybrid and fully remote roles accepted.
The physical workplace, combined with the worker’s boss and the culture, creates a Venn diagram of the employee experience. CEOs have control of each of those attributes. The experience they create for their workforce impacts both retention and recruitment, as workers have had options. Engagement of workers will be critical to retention.
To drive engagement, CEOs shared different best practices. Just over half use retention rates, a lagging indicator. While most measure engagement through managers, over 6 in 10 leverage engagement surveys. As Katina Holliday, founder and CEO of Carson, California-based Helping Hands, Inc., shares, their employee engagement priorities include “different types of recognition, increasing bonuses for employee of the month, and incorporating a leadership training program.”
CEOs are waiting for the time when new policies regarding trade, tariffs, taxes, and immigration will fully take effect. Forecasts of future growth offset predictions of impending doom, and yet only time will tell. That’s why CEOs remain in a waiting mode to see if they need to become more conservative in their expectations of unfavorable outcomes or become more aggressive as opportunities unfold. One certainty is that the clock will always keep ticking, constantly pushing the economy to a pivot point where words, promises, and predictions are replaced by reality.
The Q3 2025 Vistage CEO Confidence Index survey was conducted between September 2 and 16, 2025, and captured input from 1,349 leaders who are active Vistage members of Chief Executive and Small Business groups in the United States.
In Part I of our series, we focus on social and workforce trends facing Vistage members in 2026 and beyond. Use this series to consider external forces for your strategic planning process, so your team can make fact-based decisions.
Headed into 2026, business leaders face an ever-shifting social landscape. COVID-19 wasn’t just a one-time event; its impact led to several structural changes to our society.
Patterns have changed, from where we live to how we work and what we consume. Below, we dive into the key trends likely to shape 2026 and beyond — from a stubborn employee engagement slump to frugal consumers and fluid brand loyalties, with an eye on how each might factor into corporate strategy.
After two years of red-hot hiring and musical chairs in the job market, employment is cooling. In the first jobs report since the firing of Bureau of Labor Statistics Commissioner Erika McEntarfer, the U.S. economy added only 75,000 jobs in August, well below what economists expected. Then the BLS shocked markets with a 911,000-downward revision for the period ending in March.
Unemployment rose to 4.3%, up from 50-year lows in 2022. Job openings have gradually declined, and continuing jobless claims (people on unemployment benefits) hit their highest level since late 2021 this June.
There is a “no-hire, no-fire” stalemate that puts both employers and their workers in an awkward position. Managers are having to fight for headcount as the C-suite looks for ways to drive productivity via AI. And unhappy employees may stay longer than they would otherwise.
Talent acquisition may get easier as more candidates stay on the market longer, but top talent is still hard to snag (and even harder to keep).
Less Satisfied Employees
Employee engagement remains depressed. Gallup reports U.S. workplace engagement rose slightly to 32 this year, only a point higher than the 10-year low in 2024. Two-thirds of employees are “not engaged” or checked out on the job. Younger workers are especially detached, with Gen Z engagement sliding five points in a year.
Employee Engagement
Source: Gallup
For management teams, stalled engagement isn’t only a threat to retention; it’s a drain on productivity. Disengaged employees tend to do the bare minimum, and some 17% are “actively disengaged” (i.e., spreading the misery). Small and mid-sized businesses (SMBs) must double down on engagement strategies: clear role expectations, recognition, growth opportunities, and yes, competent managers (Gallup attributes about 70% of engagement variance to managers).
Wages vs. Inflation: Only Half Keeping Up
Source: Indeed Wage Tracker
Wages are barely keeping pace with inflation. Federal data illustrates this paycheck tug-of-war vividly: only 57% of U.S. workers saw their pay outrun inflation as of June 2025, albeit up from a dismal 44% at 2022’s inflation peak. In other words, nearly half of workers are still losing buying power or just breaking even amid a higher cost of living.
Employers must remain vigilant. Expect ongoing pressure for pay raises or cost-of-living adjustments—employees know when their “real” earnings are flat. The latest ADP Pay Insights revealed median pay was up 4.4% for job-stayers, which shows progress, but any inflation resurgence (still a possibility) could quickly erode those gains.
Wage Inflation By Mobility Type
Source: ADP Pay Insights
Second, uneven wages can impact morale and turnover: workers whose pay doesn’t keep up may jump to higher-paying roles (the job-changer pay premium was 7%). Consider building various wage vs. inflation scenarios into your 2026 budgeting.
The employment market has reached a fragile equilibrium: any recession shock in 2026 could push up layoffs, whereas a growth surge could tighten hiring overnight.
An Aging Society with a Shrinking Workforce
The lack of population growth is a global crisis.
The U.S. added about 70 million people from 1995 to 2024, but in the next 30 years it’s projected to add only 23 million — roughly a third of the previous rate. The U.S. population will grow by only 0.5% in 2025.
Why? Plunging birth rates and lower immigration. The total fertility rate hit a historic low of 1.6 (children per woman) in 2020 (far below the 2.1 replacement level) and isn’t expected to bounce back. At the same time, immigration has been volatile, and in recent years even net-negative — a startling first since the 1960s.
Percentage of U.S. Population Over 65
Source: U.S. Census Bureau
Coupled with slow growth is the graying of America. By 2030, one in five Americans will be age 65+. That’s all baby boomers crossing traditional retirement age. We’re headed for a society with more grandparents than grandchildren, and that has profound workforce implications.
As the population pyramid inverts, the old-age dependency ratio (65+ per 100 working-age) is rising sharply. In 2025, there are about 37 seniors per 100 working-age people; by 2055, it’ll be 46 per 100. In plain terms, fewer workers will support more retirees. Labor force growth is already stagnating: the U.S. labor participation rate, which was 61.7% in 2020, is projected to dip to 60.4% by 2030. Even where older individuals are working longer (the 75+ workforce is set to nearly double by 2030), it won’t fully offset the wave of boomers exiting prime working years.
Shifting Consumerism: Where We Go, and What We Do There
The income gap is only widening, which is perpetuating a split in consumerism. According to Moody’s, the top 10% of wage earners now represent 50% of consumer spending.
And particularly among the less affluent, the pandemic shifted behavior forever — we have become homebodies.
In the U.S., remote work has freed up an extra 3 hours of free time per week on average, much of which people promptly reinvest in themselves at home. Habits like online shopping are deeply ingrained: over 90% of U.S. consumers reported shopping at an online-only retailer in the past month, and grocery delivery, meal kits, and at-home fitness are now mainstream (roughly 40% of Americans used a grocery delivery service in a given week in 2025).
E-commerce in 2025 is being reshaped by the convergence of social video, in-platform shopping, and subscription fatigue. Shoppers increasingly discover products not through traditional search or ads, but through short-form video and creator content.
This has fueled the surge in social commerce, projected to exceed $90 billion in U.S. sales this year, as platforms like TikTok, Instagram, and YouTube double down on integrated checkout. At the same time, consumers are pushing back against the growing number of subscriptions. From streaming to retail memberships, fatigue has set in, with buyers preferring bundled services or flexible pay-as-you-go models. For SMBs, this means opportunity and risk: look for ways to meet customers where they already are (scrolling social feeds) while designing offers that feel frictionless and value-driven.
Consumers are back to being frugal again. Facing high living costs and lingering economic uncertainty, households tightened their belts in 2025. A late 2024 Harris Poll found 83% of Americans say saving money is a bigger priority now than in past years, and 81% specifically are prioritizing saving on food. A whopping 89% of consumers believe cooking at home is cheaper and healthier than dining out or takeout, which is driving what they consume.
This everyday frugality goes beyond food. People are hunting for deals on utilities, cutting subscription services, and postponing big-ticket purchases.
Consumers today are pinching pennies on Monday, and splurging on “must-haves” by Friday. Welcome to the era of “smart discretion,” where people exercise thrift in some areas so they can indulge in others that matter to them. And yet, many are not willing to give up all their luxuries; more than one-third of consumers have intentionally traded down in one category so they can splurge in another.
So, what are people splurging on? Two noticeable areas: premium experiences/brands, and wellness. Pent-up travel demand, “functional” luxury (like high-end home office gear or gourmet coffee that makes WFH brighter), and personal wellness have seen resilient spending. For example, health and wellness products are booming — U.S. sales in that sector rose 6.4% year-over-year by early 2024 despite inflation, as consumers invest in supplements, fitness gear, and mental health apps.
In a world still catching up with Zoom fatigue, 2025 travel habits are shifting: we’re traveling more, but differently.Leisure trips are back, with 53% of Americans taking vacations this summer, up from 48% in 2024, making this one of the most travel-heavy seasons since the pandemic.
Here’s the nuance: business travel is inching toward recovery — global spend is climbing toward $1.64 trillion in 2025, up about 11% from 2024.
Mental Health and Why Young Men Are Struggling to Cope
Lower employee engagement correlates with a mental health decline in the post-COVID era. In the aftermath of the election, two things became clear: many people struggled with their mental health, and the most disenfranchised group was men 18-34.
Many young men feel left behind as economic, social, and cultural shifts reshape traditional pathways to success. Rising housing and education costs, coupled with stagnant wages, have eroded confidence in upward mobility. Declining participation in the labor force, especially in manufacturing and trade sectors, has left some without a clear career path. Social expectations are also shifting — norms around masculinity are contested, leaving many uncertain about their sense of self. This mix of economic strain, cultural flux, and diminished institutions creates a sense of exclusion among many young men.
Not-So-Affordable Housing
Meanwhile, affordable housing remains unaffordable. The U.S. has still not recovered from the liquidity crisis of 2008. In the period from May 2019 to May 2025, the average U.S. home price spiked by over 50%, as many markets played catch-up to inflated markets such as California. Those who didn’t already own a home before COVID have a lessening ability to buy one.
Population Growth vs. Housing Starts
Source: Federal Reserve Bank
In July 2025, U.S. home prices rose 1.2% year-over-year, with the median sale price at about $443,019. Meanwhile, Zillow reports that from October 2017 to October 2024, rents in metro areas climbed 49%, significantly outpacing wage growth in many places. Asking rents in August 2025 averaged $1,790 per month — 2.6% higher than a year earlier — marking the largest annual rent increase since late 2022.
On the homeowner side, median gross rent (rent + utilities) increased 2.7% from $1,448 in 2023 to $1,487 in 2024 (inflation-adjusted), per Census data. Home price/rent ratios have also climbed roughly 20% since Q1 2020, highlighting that homes have become much more expensive relative to what people pay in rent.
In Conclusion
The workforce landscape heading into 2026 is fragile. Engagement is stalled, affordability pressures linger, and some employees feel left behind. Consumers are cautious yet selective in where they splurge, creating unpredictable demand. For SMBs, success will hinge on adaptability — investing in people, tracking shifts closely, and staying nimble enough to pivot in a world of change.
The Labour government continues to signal that difficult decisions are ahead. With borrowing costs at a twenty-seven-year high and sluggish growth weighing on the economy, speculation is mounting around tax hikes and National Insurance adjustments.
The results of Vistage’s UK SME Confidence Index Q3 2025 have been released. And they reveal a challenging, mixed outlook for business leaders navigating the months ahead.
Confidence has slipped to 88 points, down from 89.5 in Q2 and well below the 107.1 recorded in Q3, 2024. Read on for this report’s highlights and a link to download the free report in full.
Key findings at a glance
Gloomy economic outlook: A striking 61% of CEOs believe economic conditions in the UK and Ireland have worsened compared with this time last year, up 13% from Q2. While fewer than 1 in 10 expect any improvement in the coming 12 months.
Budget pessimism: Confidence in the upcoming Autumn Budget to support business growth is notably low, with just over three in four (76%) expressing minimal to no confidence.
Revenue resilience: More than half of business leaders (57%) anticipate an increase in their firm’s sales revenues in the next year, even as customer demand shows signs of weakening.
The profitability pinch: While optimism for revenue growth remains, 22% of leaders anticipate a decline in profitability, as firms juggle rising costs with softening demand.
Bracing for the Autumn Budget
As the Autumn Budget approaches, small and medium-sized business leaders across the UK are preparing to make tough decisions. And few are optimistic about what government policy will deliver.
A striking 76% of leaders have little to no confidence that the Autumn Budget will support business growth.
Among their top wishes are cuts to business taxes, cited by 58% of respondents. Other asks include infrastructure investment, regulatory relief, and targeted incentives.
These highlight the gap between what businesses feel they need and what they expect the government will deliver.
Hiring trends: Investing in people
Despite headwinds, 37% of business leaders plan to expand their workforce in the coming year, with many focusing on employee engagement, hybrid work, and career development to retain and motivate teams.
