Small Businesses Face Economic Challenges Ahead of the Holidays

Small business owners across the United States are expressing growing concern as they approach the holiday season, following a year marked by slow sales and rising operational costs. Melissa Fabian, owner of Simply Nourished Market & Mercantile in Mason City, Iowa, reported a significant downturn in customer traffic, with a national survey from Main Street America indicating that 45% of nearly 1,300 small business owners experienced a drop in net profit this fall. In Iowa, this figure rose to 56%, particularly affecting businesses in rural areas, where over 60% of respondents were in the retail and food sectors.

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The economic landscape has contributed to this decline, with many consumers hesitant to spend due to uncertainty regarding their financial futures. Tessa Conroy, an economic development specialist at the University of Wisconsin-Madison, noted that consumers are cutting back on non-essential purchases as they grapple with rising costs in food, housing, and healthcare. This cautious spending behavior has been exacerbated by increased competition from e-commerce giants like Amazon, which has altered shopping habits significantly since the pandemic.

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In response to these challenges, small businesses are adapting their strategies. Carrie Poe, a consultant with America’s Small Business Development Center, highlighted that some businesses are adjusting their hours, participating in pop-up markets, or enhancing their online presence to attract customers. Additionally, Renee Wiatt, a researcher with the North Central Regional Center for Rural Development, emphasized the importance of niche markets and subscription-based models for generating revenue.

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The struggles of small businesses extend beyond individual owners; they have broader implications for local economies. According to the American Independent Business Alliance, locally-owned businesses contribute more than three times as much money per dollar to their local economy compared to corporate chains. With small businesses in rural counties accounting for half of local employment, their decline could have significant ripple effects on community support and engagement.

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Looking ahead, Fabian expressed cautious optimism for 2026, acknowledging the need to tighten spending and inventory management. Woods Prael, owner of Gunzil and Bowser Children’s Books in Warrensburg, Missouri, echoed this sentiment, stating that his sales have consistently been 15-22% lower than the previous year. He emphasized the importance of December sales, typically a critical month for revenue.

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The Main Street America survey reflects a broader sentiment among small business owners, with many attributing their struggles to economic instability, including inflation and tariffs. Fabian noted the impact of rising transportation costs and tariffs on imports, which have forced her to adjust pricing. As small businesses brace for the holiday season, the collective uncertainty underscores the need for community support and engagement to ensure their survival.

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• “We’ve definitely seen a downturn in customers walking through our door,” — Melissa Fabian, Owner, Simply Nourished Market & Mercantile

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• “Pretty much from February on up to now, consistently, every month, I have been anywhere from 15-22% lower [in sales] than I was the year before,” — Woods Prael, Owner, Gunzil and Bowser Children’s Books

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• “The downside here is that when we see them struggling, we should also be thinking about how that impacts the community at large.” — Tessa Conroy, Economic Development Specialist, University of Wisconsin-Madison

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• “I am very optimistic about 2026. That doesn’t mean that I’m not going to tighten the bootstraps,” — Melissa Fabian, Owner, Simply Nourished Market & Mercantile

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