2025 Small Business Trends: Succession, AI Adoption & Economic Outlook

U.S. Bank has unveiled the findings of its third Small Business Perspective survey, offering insights into how entrepreneurs nationwide are adapting to a fast-evolving business landscape. Drawing responses from 1,000 small business owners, the report highlights how leaders are managing economic uncertainty, embracing generative AI, and preparing for long-term growth and succession.

“Small business owners are clearly focused on making their operations resilient in light of current economic pressures and technological advancements,” said Shruti Patel, Chief Product Officer for Business Banking at U.S. Bank. “Whether it’s integrating generative AI or planning for leadership transitions, business owners are thinking strategically about what lies ahead. This creates a real need—and opportunity—for financial institutions to serve as trusted advisors during these transformative times.”

Passing the Torch: Succession Planning on the Rise
With over half of America’s small business owners now aged 55 and older, succession planning has become a critical concern. Yet, despite many expressing long-term intentions to build a legacy, just 54% have a formal succession plan. Interestingly, 36% of Gen Z and Millennial entrepreneurs are planning to take over a retiring owner’s business.

There is a noticeable gap between aspiration and action. While 85% of respondents said they started their businesses with the goal of passing them down, and 84% aimed to build generational wealth, only just over half have taken concrete steps to secure their business’s future.

The pressure is increasing: 62% of owners say their retirement plans have accelerated over the past five years. But for many, succession remains daunting:

Succession planning appears to correlate with performance: 64% of those who have a plan reported notable growth in the last year, compared to only 50% among those without one. Meanwhile, 37% of owners anticipate selling their businesses in the next 12 months—a figure driven not just by retirees, but also by 41% of younger owners, compared to 33% of Gen X and Boomers.

Still, the motivations that launched these ventures remain strong. A large majority—86%—want to keep running their businesses as long as they can, and 87% are hopeful about leaving a meaningful legacy.

Economic Headwinds Drive Strategic Shifts
The pressure to think long-term is underscored by significant day-to-day challenges. Top concerns include:

Additionally, 81% of respondents reported some level of stress related to tariffs.

Despite these concerns, 96% of owners said their businesses are currently performing well, with 88% reporting growth in the past year. In response to these pressures, business owners are prioritizing actions such as:

A follow-up pulse survey of 500 small business leaders conducted in May 2025 revealed a cautiously optimistic sentiment: 66% felt the U.S. economy was headed in the right direction, with only 18% believing otherwise. This optimism was more pronounced among younger leaders, with 74% of Gen Z and Millennials expressing a positive outlook, compared to just 52% of Gen X and Boomers.

However, concerns about tariffs persist. A majority (58%) were at least somewhat worried about the potential business impact, and 57% expected input costs to rise—most by 1–10%. While many leaders expected only a slight improvement in business factors like customer demand, profit margins, and capital investment due to tariffs, the overall sentiment remained neutral to slightly positive.

Gen AI and Digital Tools Gain Momentum
To ensure future competitiveness, many small business owners are turning to generative AI and other digital technologies. Nearly 57% are either currently using or planning to adopt Gen AI tools within the next year. Among those already using it, popular applications include:

Cost hasn’t been a major barrier: 68% of AI users spend under $50 a month, and 18% use only free tools. These solutions are helping owners dedicate more time to building personal relationships with their customers—something 88% of users value.

However, AI integration isn’t without its challenges. A significant 81% of owners find it stressful to keep up with tech advancements, and 56% worry their products or services could eventually be replaced by AI or automation.

Beyond AI, digital tools are becoming essential. The number of owners who consider them “very important” or “essential” has risen sharply—from 72% in 2024 to 87% in 2025. Yet, 63% feel overwhelmed by the volume of tools required, and 82% are prioritizing efforts to streamline and consolidate them.

When it comes to payment preferences, nearly half (48%) of business owners still rely on cash for in-person transactions, while 42% say tap-to-pay options have become a primary method.

Entrepreneurial Spirit Remains Strong
Despite today’s headwinds, small business owners remain grounded in their original reasons for launching their businesses. According to the survey:

Legacy remains a strong motivator. About 67% of owners come from entrepreneurial families, and 62% took over a relative’s business. Interestingly, for younger generations, necessity has often been the driving force: 52% of Gen Z and Millennial owners said they launched a business because they couldn’t find a job, compared to 44% of older generations.

When asked if they’d do it all again, 80% said yes—an impressive figure given that 79% believe competition is tougher today and 70% say access to capital has become more challenging.

About the Research

For more insights and data, refer to the complete 2025 U.S. Bank Small Business Perspective report.