Small Businesses Show Cautious Optimism Amid Rising Costs and Slow AI Adoption, Survey Finds
A new survey reveals small business owners are prioritizing cost management over AI adoption while expressing mixed views on political and economic policies affecting their operations.
The August 2025 Main Street Business Survey, conducted by the Freedom Economy Index, indicates that only half of small business owners have begun exploring artificial intelligence applications, with rising costs remaining their primary concern amid persistent inflation. The survey highlights a cautious shift toward growth investments despite ongoing economic challenges.
According to the findings, 25% of respondents identified rising costs as their top concern, followed by declining consumer demand at 22%. Access to affordable capital was cited by 12% of business owners as their main challenge. Michael Seifert, CEO of PublicSquare, noted that small businesses are emerging from a difficult economic period and seeking regulatory stability rather than government assistance.
AI adoption remains limited, with 45% of businesses not using the technology at all. Among adopters, 32% reported using AI primarily for marketing and advertising, while smaller percentages utilized it for business operations (9.2%), customer engagement (7.9%), financial management (3.6%), and workforce management (2%). Notably, 26.6% of AI users said the technology has reduced their staffing needs, suggesting potential labor market impacts as adoption increases.
The survey also revealed mixed opinions on political matters, with 91% of business owners agreeing that the federal budget needs balancing but only 34% supporting opposition to raising the debt ceiling. By a three-to-one margin, respondents viewed plans for a new third political party as potentially harmful to America's economic future. The Department of Government Efficiency received positive ratings, with 38.3% describing its performance as excellent and 37.6% as good.
Andrew Crapuchettes, CEO of RedBalloon.work, observed that business owners are making cautious growth investments compared to a year ago, though high costs and policy uncertainty continue to slow decision-making. The newly launched State of Main Street Index debuted at 57 on a 100-point scale, indicating positive momentum with scores above 50 signaling optimism. Krystal Parker, President of the U.S. Christian Chamber of Commerce, added that consumer spending constraints due to high prices could slow economic recovery for all businesses.
The Freedom Economy Index survey, now in its fourth year, represents a collaboration between PublicSquare, RedBalloon.work, and the U.S. Christian Chamber of Commerce. View the full results of the August Freedom Economy Survey here.