Small Business Confidence Ticks Up Amid Ripple Effects [WSJ/Vistage July 2025]

Once again, a delay in tariffs yields a modest gain in small business confidence. The WSJ/Vistage Small Business CEO Confidence Index rose for the third consecutive month, reaching 86.1 in July, primarily driven by a slight increase in economic optimism. There are multiple factors at play in this increase in confidence, in part due to the one-month delay in tariffs, as well as the passage of the One Big Beautiful Bill Act (OBBBA).

Enacted on July 4, the OBBBA includes many business-friendly policies related to tax provisions. Attention now turns to implementation concerns and the guidance needed to understand the timing of different provisions.

According to Watson McLeish, Senior Vice President of Tax Policy with the U.S. Chamber of Commerce (USCC), “The bill will deliver permanent, pro-growth tax reforms designed to drive American innovation, boost investment and benefit businesses, workers and communities nationwide. He details five reforms that are particularly relevant to small businesses.

Members from Vistage are attending a briefing with policy experts from the USCC in Washington, D.C., this week to understand more about the implications of various policies on small and midsize businesses.

In addition to resources from the USCC, Chief Executive has compiled a list that helps break down business-specific provisions in the bill.

Cost Management Tactics

While a greater proportion of small businesses expect improvements in profitability, over 1 in 5 (22%) anticipate a decline in profitability in the year ahead. Ripple effects of tariffs and other rising costs, including wages, impact the prices that small businesses pay for goods and services.

Some businesses have stockpiled inventory ahead of tariffs as a way to mitigate increased costs. This strategy has a limited lifespan. As Uri Thatcher, CEO of TouchUpDirect, LLC in Chino, California, says, “As inventory works down, tariffed inventory will replace it at additional cost.”

However, following the initial announcement and subsequent delays of tariffs, sentiment about the negative impacts has eased as small businesses have had time to take steps to mitigate tariffs or have yet to be affected.

As A.J. van de Ven, President & CEO of CALSENSE in Carlsbad, California, shares that they have “diversified our supplier base, negotiated directly to mitigate tariff exposure, and aligned with federal procurement standards like Buy America.”

However, labor remains a challenge on multiple levels. Labor costs have increased, at times greater than the business’s ability to adjust pricing. As Stephen Moffitt shares, his  company, Mottco Roofing in Hutto, Texas, experienced a “14% increase in pricing with a 20% increase in our labor pricing.”

For some industries, concerns about labor availability have increased. John Orfield, Principal of Dallas-based Boka Powell, LLC, says, “Residential market contractors are losing staff… driving prices up for both commercial and residential construction.”

Immigration Policy Enforcement

While nearly two-thirds of small business leaders (65%) report no impacts from the recent acceleration of deportations, specific industries that are more reliant on immigrant workers feel the impact in various ways. “Labor pool for construction jobs is shrinking,” says Brad Lunz of The Lunz Group in Lakeland, Florida. “Fear is preventing some laborers from coming onto the job site. This is slowing the overall schedule and negatively impacting cash flow.”

Those businesses are experiencing the effects of immigration on two levels: 1) from the morale created by fear and uncertainty, and 2) the inability to keep up with demand due to loss of workforce and slower supply chains.

There are 4 implications for business leaders when it comes to potentially accelerated deportations impacting their business:

• Talent strategy: Companies in labor-intensive sectors may need to raise wages, automate processes or adjust their business models.
• Compliance readiness: Document verification, legal audits and employee communication are becoming operational priorities.
• Customer monitoring: Businesses serving construction, agriculture and hospitality should watch for signs of project delays or cost shifts.
• Advocacy and policy voice: A few respondents have engaged with trade groups. The U.S. Chamber of Commerce also has various committees that allow small business leaders to participate and ensure their voices are heard in Washington.

Policies related to trade, immigration, and other areas have both direct and indirect ripple effects on small businesses. Next month, our analysis will unpack more details on the impacts of the OBBBA on small businesses and subsequent tariff announcements.

July Highlights

The July 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 July 7 and 14, 2025, collected data from 465 respondents with annual revenues ranging from $1 million to $20 million.

• Current economy: Just over one quarter (26%) of small businesses believe the U.S. economy is worse than a year ago, a 9-point improvement over last month. 43% believe the state of the economy has worsened.
• Future economy: Small business leaders are equally divided on the future of the U.S. economy; 33% believe the economy will improve, 32% believe it will remain the same, while 31% believe it will worsen in the next 12 months.
• Revenue projections: 56% of small businesses expect increased revenues over the year ahead, which is in line with last month’s expectations. Just 15% expect decreased revenues, unchanged from last month.
• Profitability projections: Profitability expectations improved for the third month; 46% of small business leaders expect increased profits, while 22% expect that profitability will worsen over the next 12 months.
• Fixed investment plans: Just under a third (32%) of small business leaders expect to increase fixed investments in the next 12 months. Additionally, 19% plan to decrease fixed investments.
• Workforce expansion plans: While 12% of small business leaders expect their workforce to decrease in the next 12 months, 45% plan to increase personnel.

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

The August 2025 WSJ/Vistage Small Business CEO Confidence Index will be calculated from small business respondents to the August WSJ/Vistage Small Business survey, which will take place August 4-11, 2025.

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