Small & Midsize Business Outlook: Businesses Navigate Growth Amid Economic Uncertainty
Insights from a survey of U.S. business leaders shows how small & midsize businesses are pursuing growth while managing external pressures.
Small and midsize businesses are entering the second half of 2026 with growing confidence in their own prospects, even as their optimism in the broader economy slips. In a new Citizens survey,1 75% of businesses with annual revenue of $5M or more expect revenue to grow, yet only half say they are confident in the U.S. economy. External financial pressures continue to create headwinds, but businesses are responding with disciplined planning and targeted investments. Leaders are leaning on technology, banking relationships and digital cash management tools to support growth.
Revenue optimism remains strong even as economic confidence slips.
Seventy-five percent of $5M+ businesses expect revenue growth this year. While down slightly from Q1, when 86% projected revenue growth, expectations remain strong.
Businesses in the West report the highest levels of confidence, while the Midwest reports the lowest. Thirty percent of Midwest leaders report feeling "not too confident." These differences may be attributable to industry mix and concentrated supply chain vulnerabilities.
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“Business leaders are separating what they can control from what they can’t. While uncertainty about the broader economy has grown, businesses remain confident in their own ability to execute, invest strategically and pursue growth.”
Mark Valentino
Head of Business Banking at Citizens
Rising costs/inflation and tariffs are creating a backdrop of external pressure.
Inflation and rising costs remain the top challenge, cited by nearly half of businesses. Tariffs follow at nearly 40%, with broader economic uncertainty cited by about 30% of businesses. Seasonal businesses report feeling that pressure most acutely, citing tariffs as their top challenge.
Top five business challenges:
- Managing rising costs/tariffs.
- Managing the impact of tariffs.
- Coping with uncertainty about the economy.
- Finding and integrating technology.
- Finding and keeping customers.
As businesses navigate external pressures, they are strengthening financial discipline by improving cash flow management and increasing visibility into their financial position. Slightly more businesses in Q3 than in Q1 say they are concerned about managing cash flow, and many are taking steps to better understand their cash position.
Top five actions businesses are taking to improve cash flow visibility:
- Use digital cash management tools for real-time visibility.
- Automate payments and receivables processes.
- Conduct cash flow forecasting to monitor volatility.
- Increase frequency of account reconciliation to identify issues earlier. (tied with #5)
- Work with our banker or financial advisor to model/stress test cash flow scenarios.
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"Persistent cost pressures and policy uncertainty are making financial discipline and flexibility increasingly important. Businesses that have a clear understanding of their cash position and access to the right financial tools are often better prepared to adapt as conditions change."
Steve Woods
Vice Chair and Head of Middle Market Banking, Citizens Financial Group
Business leaders show discipline on spending.
Planned spending on business products and services, an indicator of business confidence, has moderated since Q1. Fewer businesses plan on increasing their spend in key categories in Q3. The findings suggest businesses are becoming more selective in where they invest, reflecting a broader emphasis on financial discipline rather than broad spending reductions.
Hiring plans are stabilizing rather than retreating from last quarter. Half of business leaders expect to maintain current staffing levels through Q3.
Growth-oriented businesses continue to out-invest their peers.
Leaders of $5M+ businesses anticipating revenue growth through Q3 are out-investing their peers. These growth-oriented businesses are more than twice as likely as other businesses to plan increased credit use.
Citizens' most recent survey shows that business leaders are balancing optimism with financial discipline, so that they can continue to invest in growth. They are carefully managing spending, cash flow and external risks to reach ambitious business goals. Companies that can adapt while staying focused on long-term priorities may be positioned to navigate whatever comes next.
Key takeaways:
Growth focused. Q3 is a time to balance discipline and growth. Businesses remain optimistic about their own growth prospects despite declining confidence in the broader economy.
Risk aware. Inflation, tariffs and economic uncertainty continue to shape decision-making.
Financially disciplined. Businesses are emphasizing financial discipline through more selective spending and greater attention to cash flow visibility.
Strategically investing. Companies expecting growth continue to invest more heavily in technology, financial tools and strategic capabilities.
Click below to download our Q3 2026 Small & Midsize Business Outlook.
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Please note: Citizens Business Banking Products and Services are offered in the following states: Connecticut, Delaware, Florida, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, Virginia and Washington, D.C.
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Disclaimer: The information contained herein is for informational purposes only as a service to the public and is not legal advice or a substitute for legal counsel. You should do your own research and/or contact your own legal or tax advisor for assistance with questions you may have on the information contained herein.
1 Data is from an online survey of 500 principals (owner, founder, partner, CEO, president, etc.) of U.S.-based businesses with up to 1,000 employees. The survey was conducted by market research company Bredin from June 1 to June 18, 2026. Data in this report highlights respondents with $5M+ in annual revenue.