JoAnn Laing's Blog - All About Small Business

Small Businesses Are Carrying the Labor Market—Here is What the Data Actually Says

Every year, National Small Business Week brings the usual wave of appreciation posts and anecdotal success stories. Those are warranted. But they often miss the more important point: small businesses are not just culturally important; they are structurally essential to the U.S. labor market.

The latest data from ADP Research, highlighted by Chief Economist Nela Richardson, sharpens that reality in a way that should reframe how leaders, policymakers, and operators think about “Main Street.”

Let’s be precise about what is happening.

Job Creation: Not Just Resilient—Dominant

In 2025, businesses with fewer than 20 employees created more than 525,000 jobs*,more than any other segment of private-sector employers.

That is not a marginal contribution. It is the difference between growth and contraction.

Without those smallest employers, the U.S. economy would have lost approximately 110,000 private-sector jobs* last year.

Pause on that. Strip out microbusinesses, and the narrative flips from expansion to decline.

And the trend is not slowing.

From January through March 2026, these same businesses added 169,000 workers*, outpacing mid-sized and large employers, many of which are either flattening or reducing headcount.

At a time when enterprise hiring is cautious and efficiency-driven, small businesses are doing the opposite: hiring into opportunity.

Acceleration, Not Stabilization

It would be easy to interpret this as a post-pandemic normalization story. It is not.

Job creation among the smallest employers is accelerating.

• 2025 average: ~43,833 new jobs* per month
• Q1 2026 average: ~66,667 new jobs* per month

That is a meaningful inflection.

This is not recovery, it is momentum. And it suggests that demand signals at the local level (where small businesses operate most directly) are stronger than top-line macro indicators might imply.

Turnover: A Signal of Stability, Not Stagnation

One of the more underappreciated data points is turnover.

In March 2026, turnover at establishments with fewer than 50 employees fell to a record low of 3.9%*.

Historically, small businesses have struggled with retention, often losing talent to larger firms with more structured compensation and benefits.

That dynamic appears to be shifting.

Lower turnover at this scale typically signals:

• Improved employee-employer alignment
• Greater job satisfaction or flexibility
• Fewer external opportunities pulling workers away

Or more bluntly: employees are choosing to stay.

For operators, that stability compounds. Reduced churn lowers hiring costs, preserves institutional knowledge, and increases productivity continuity.

The Pay Gap Is Narrowing—Quietly but Meaningfully

Compensation has long been the structural disadvantage for smaller employers.

That gap is shrinking.

The difference in annual pay growth between the largest and smallest employers peaked at 3.8 percentage points* in May 2022. By March 2026, it had narrowed to 2.3 points*.

This does not mean small businesses are out paying large enterprises, but it does mean they are becoming more competitive, faster than many expected.

Two implications stand out:

1. Talent arbitrage is weakening. Large companies can no longer rely as heavily on compensation alone to attract talent away from smaller firms.
2. Small business models are adapting. Whether through pricing power, productivity gains, or margin discipline, these firms are finding ways to fund higher wages.

What This Actually Means

There is a tendency to view small businesses as reactive, sensitive to macro volatility, dependent on local conditions, and structurally constrained.

The data suggests something different.

Small businesses are currently:

• Leading job creation
• Improving retention
• Closing compensation gaps

In other words, they are not just participating in the labor market, they are shaping it.

And importantly, they are doing so while larger organizations are optimizing, restructuring, or pausing hiring altogether.

A Reframing for Leaders

For executives and policymakers, this should prompt a shift in emphasis.

If the smallest employers are:

• Driving net job growth
• Stabilizing their workforce
• Increasing pay competitiveness

Then they are not a secondary layer of the economy, they are a primary engine.

That has implications for:

• Workforce development strategies
• Capital access and lending frameworks
• Regulatory burden considerations
• Talent pipeline design

Ignoring that reality leads to misaligned policy and missed opportunity.

The Bottom Line

National Small Business Week, May 3-9 this year, is often framed as recognition.

It should be treated as a reminder.

The U.S. labor market, as it stands today, is being disproportionately supported by its smallest employers. Remove them, and the system does not just slow, it contracts.

That is not sentiment. That is math.

And it is worth paying attention to.

* Data from ADP research

Introduction
In today’s crowded, fast-moving business environment, getting your voice heard is more difficult and more important
than ever. Whether you are speaking to customers, employees, investors, or partners, how you communicate directly
impacts your growth, reputation, and long-term success.
Too often, small business owners assume that simply “putting information out there” is enough. It is not.
Getting heard is not about volume. It is about clarity, consistency, and relevance.

Why Your Voice Matters
Your voice is more than communication; it is your positioning in the market.
A clear and consistent voice helps you:
* Differentiate in a crowded market
* Build trust and credibility
* Align employees and partners toward common goals
* Reinforce your brand and value proposition
Without it, even strong businesses become overlooked or worse, misunderstood.

The Shift: From Volume to Resonance
There is a persistent myth that being heard requires the biggest marketing budget or the loudest megaphone.
That model is breaking down.
Customers today are not looking for more noise; instead, they are looking for alignment, authenticity, and value. They
want to understand what you stand for and why it matters to them.
For small businesses, this is an advantage. You do not need to be everywhere. You need to be clear.

Start With Clarity
Before you amplify your voice, define it.
Be explicit about:
* Your purpose (why you exist)
* Your value proposition (what you deliver and to whom)
* Your key messages (what must be consistently understood)
A simple test: if different stakeholders describe your business in different ways, your message is not yet clear.

Clarity must precede activity.
Know Your Audience—Precisely
Trying to speak to everyone is one of the fastest ways to be ignored.
Instead, narrow your focus, Here are some examples:
* Not “small businesses” → but “early-stage service firms scaling operations”
* Not “homeowners” → but “first-time, eco-conscious buyers”
The more specific your audience, the more your message resonates.

Understand Your Audience
Customers want benefits and solutions.
Employees need direction and transparency.
Investor look for strategy and growth.
Consistency Builds Trust
Many businesses dilute their voice by being inconsistent across channels.
Your website, social media, emails, presentations, and conversations should reinforce, not contradict, each other.

Consistency requires:
* Aligned messaging
* Stable tone and positioning
* Repetition of core ideas
Recognition builds trust. Trust builds traction.

Deliver Value, Not Noise
There is no shortage of content. What is scarce is useful content.
Every communication should answer:
What value does this provide to the recipient?
Leverage the Right Channels (Not All of Them)
Utilize the ones that your target audience is often on.
Be Consistent Across Channels
Use the same tone and language everywhere.
Align your message on every platform you use.
Reinforce your value proposition.
Build Authority Through Education
Position yourself as a resource, not just a seller.

Engage, Listen, and Adapt
Getting heard is not one-directional.
Use AI Strategically
AI is increasingly a practical tool for small business owners—but it should refine your voice, not replace it.
Build Credibility Over Time
Do what you say you will do.
Be accurate and open.
Do not over promise.

Common Pitfalls to Avoid
Too much noise, not enough focus.
Constantly changing your message.
Ignoring your audience’s needs.
Chasing volume over value.

Final Thought
Getting your voice heard is not a one-time effort. It is a disciplined, ongoing process.

There is a persistent myth in business that the “right” time to start a company will announce itself with flashing lights and a strong economy. History — and people — say otherwise.

This year’s Intuit QuickBooks Entrepreneurship Report tells a different story about the American mindset. One in three U.S. adults (33%) plan to start a business or side hustle in 2026 — a staggering 94% increase year-over-year. The United States now leads globally in entrepreneurial intent.

Let that settle in.

Despite ongoing economic pressure, Americans are not waiting for conditions to “improve.” They are building anyway.

Entrepreneurship is no longer viewed primarily as a risk. Increasingly, it is viewed as a necessity.

The New Survival Instinct

Periods of uncertainty have always produced builders. What is different now is the scale — and the psychology.

Nearly half (47%) of adults earned money from a side hustle in the past year. Yet only one in five formally registered their business. We are witnessing the rise of what some call the “underground” or informal economy: capable, skilled professionals monetizing expertise without infrastructure.

This signals two things:

First, the appetite to create income streams beyond traditional employment is enormous.
Second, many aspiring founders are still testing the waters — experimenting before formalizing.

There is wisdom in that.

Start small. Validate demand. Learn your market. Then build structure around what works.

The Cost Myth

Ask someone how much it takes to start a business and you’ll often hear a number that sounds like a small mortgage.

According to the QuickBooks data, 47% of Americans cite cost as the top hurdle to starting a business. On average, they estimate needing $28,000 to launch. The median actual startup cost? Just $12,000 — less than half the perceived requirement.

This gap between perception and reality matters.

In my advisory work, I see it often: talented professionals stall because they assume scale must precede proof. In truth, clarity precedes capital. A well-defined problem, a narrow target market, and a disciplined cost structure dramatically lower the barrier to entry.

Entrepreneurship has never been inexpensive — but it has become far more accessible.

Generational Urgency

Entrepreneurial intent is not evenly distributed.

Gen Z leads in intent, with 43% planning to launch. Millennials report the strongest sense of urgency, with 74% saying they feel pressure to start now.

This urgency is telling. It reflects more than ambition. It reflects an economic recalibration. Traditional employment is no longer assumed to be the safest path to security. Ownership — even partial ownership through a side venture — feels more controllable.

For experienced professionals and executives, this should prompt reflection. The next generation is not waiting for permission, credentials, or perfect timing. They are experimenting, iterating, and leveraging tools that dramatically reduce friction.

Which brings us to the most significant shift of all.

AI as the New Co-Founder

More than 60% of aspiring entrepreneurs say they plan to use AI to help launch their businesses in 2026. Among Millennials, that number rises to 75%, with planned uses spanning branding, research, and operations.

AI has quietly become the most affordable intern, analyst, and creative partner a founder can access.

What once required agencies, research teams, or junior staff can now be prototyped in days. Business plans are refined faster. Customer personas are clearer. Marketing experiments are cheaper. Operational systems are easier to design.

AI will not replace judgment, resilience, or strategic thinking. But it dramatically compresses the time between idea and execution.

For many founders, that compression is the difference between hesitation and action.

Starting With Discipline

Enthusiasm is powerful. Data-driven urgency is even more so. But discipline remains the dividing line between hobby and enterprise.

If you are considering launching a business — whether as a primary venture or a side initiative — consider three foundational questions:

1. What specific problem am I solving, and for whom?
2. What is the smallest viable version of this idea I can test?
3. What financial and operational thresholds define success for me?

Entrepreneurship born from necessity can still be strategic. In fact, it must be.

The American entrepreneurial surge is not simply about optimism. It is about agency. People want more control over income, flexibility, and trajectory. They are choosing to build rather than wait.

And perhaps that is the most important takeaway.

There may never be a perfect economic backdrop. Markets fluctuate. Conditions shift. Headlines oscillate between caution and exuberance.

But the impulse to create — to solve, to serve, to build value — persists.

The question is not whether conditions are ideal. The question is whether you are prepared to start before you feel entirely ready.

Small businesses today face intense financial pressure from multiple directions. Rising costs, unpredictable cash flow, and tighter credit standards can turn an otherwise healthy business into a constant struggle to stay afloat.

Rising costs and shrinking margins

Inflation and higher operating costs are pushing up expenses for rent, utilities, materials, and wages faster than many small businesses can safely raise prices. This squeezes profit margins and leaves little room for error. On top of that, customers may resist price increases, forcing owners to absorb costs or risk losing business.

To manage rising costs and protect margins, small businesses can:

• Review pricing regularly and make smaller, incremental increases instead of large, infrequent jumps.
• Analyze product and service profitability to phase out low-margin offerings and focus on the most profitable ones.
• Renegotiate contracts with landlords, vendors, and service providers or seek competitive bids.
• Invest in efficiency (automation, process improvements, or training) to reduce waste and labor hours.

Cash flow gaps and late payments

Many small businesses are profitable on paper but constantly short on cash. Long payment terms, late-paying customers, and mismatched timing between expenses and revenue create cash flow gaps. When cash is tight, owners may delay paying their own bills, stretch payroll, or rely heavily on personal funds.

To strengthen cash flow and reduce stress:

• Tighten credit policies: require deposits, partial prepayments, or shorter payment terms for new or high-risk customers.
• Offer small discounts for early payment and enforce late fees consistently.
• Use simple cash flow forecasting to anticipate shortfalls a few weeks or months ahead.
• Separate personal and business finances, and avoid plugging recurring gaps with personal credit cards.

Access to credit and rising interest rates

As lending standards tighten and interest rates rise, borrowing becomes more expensive and harder to obtain. Small businesses may be denied traditional bank loans or offered only high-cost credit, making it risky to finance growth, inventory, or equipment. Existing variable-rate debts can also become more burdensome as payments increase.

To navigate financing challenges more safely:

• Build and maintain strong financial records (accurate bookkeeping, up-to-date financial statements, and tax filings).
• Nurture relationships with local banks, credit unions, and community lenders before funding is urgently needed.
• Explore diverse financing options such as lines of credit, equipment financing, and government-backed programs rather than relying on a single source.
• Prioritize paying down the highest-interest debt first to free up cash and reduce risk.

Tax, compliance, and unexpected expenses

Taxes, regulatory changes, insurance premiums, and surprise expenses (equipment failure, legal issues, or sudden repairs) can strain limited budgets. Without planning, these costs can trigger a cascade of late fees, penalties, or emergency borrowing.

To reduce the impact of these financial shocks:

• Set aside a percentage of monthly revenue in separate reserve accounts for taxes and emergencies.
• Work with a qualified accountant or tax professional to optimize deductions and stay compliant.
• Review insurance coverage regularly to ensure key risks are covered without overpaying for unnecessary policies.
• Create a simple annual budget that anticipates major recurring costs and scheduled investments.

Owner burnout and underpricing

Many small business owners underpay themselves or underprice their products to win business or “be fair” to customers. Over time, this leads to burnout, resentment, and an unsustainable business model that cannot fund growth, hiring, or proper systems.

To address underpricing and owner strain:

• Benchmark prices against competitors and adjust to reflect the true value delivered, including expertise and service.
• Factor all costs into pricing: labor, overhead, materials, taxes, and a reasonable profit margin.
• Gradually shift away from unprofitable customers or projects that consistently drain time and cash.
• Build a basic compensation plan for the owner that is treated as a non-negotiable business expense.

Building financial resilience

No small business can eliminate financial pressure, but it can build resilience. Clear numbers, intentional pricing, and disciplined cash management turn guesswork into informed decisions. Over time, that stability becomes a competitive edge—allowing the business to survive downturns, invest in growth, and provide more security for the owner and employees.

Key practices that strengthen resilience include:

• Maintaining timely, accurate financial reports and reviewing them monthly.
• Keeping a modest emergency fund to cover at least one to three months of critical expenses.
• Planning ahead for big investments instead of reacting in crisis.
• Seeking advice from financial professionals, mentors, or peer groups to identify blind spots and opportunities.

With clear numbers, smart pricing, and steady cash habits, even today’s financial pressures can become a launchpad—helping your small business grow stronger, more resilient, and more profitable than ever.

Supply chain disruptions and unpredictable lead times can quietly strangle a small business. A single delayed shipment can stall production, drain cash, and damage customer trust.

Why disruptions hurt so much

Small businesses often run lean: low inventory, few backup suppliers, and limited logistics support. That efficiency becomes a weakness when ports clog, factories shut down, or carriers miss pickups.
With little bargaining power, smaller firms are usually last to get updates or priority, making planning workloads, staffing, and delivery dates a guessing game.

Ways to reduce risk

You cannot stop every disruption, but you can make them less painful by planning ahead. Focus on building options before you need them.

• Diversify key suppliers (ideally in different regions or using different routes).
• Identify “critical” items and hold slightly higher safety stock for those only.
• Negotiate realistic lead times and clear service expectations in writing.
• Share rough forecasts with suppliers so they can prepare capacity.

What to do when things slip

When a disruption hits, speed and clarity matter more than perfection. The goal is to contain the impact and preserve relationships.

• Quickly map which orders, customers, and products are affected.
• Explore partial shipments, substitutions, or temporary product tweaks.
• Inform customers early, give honest new timelines, and offer options.
• Prioritize high-value or time-sensitive orders first.

Improve after every disruption

Each disruption is data for making the next one less damaging. Treat it as a short post‑mortem, not just a fire drill.

• Ask what early warning signs were missed and how to catch them sooner.
• Adjust reorder points, safety stock, or supplier mix based on what happened.
• Document a simple “playbook” so the next disruption is handled faster.

Use simple tools for visibility

You do not need enterprise software to gain control; even basic systems help.

• Use inventory and order management tools instead of scattered spreadsheets.
• Track lead times by supplier to see who is consistently reliable.
• Choose logistics partners that provide real-time tracking and proactive updates.

When done well, supply chain resilience becomes a selling point: customers notice when you communicate clearly, keep promises more often than competitors, and recover quickly when the unexpected happens.