How Very Small Businesses Are Navigating the Economy in 2026

The Upwork Research Institute recently surveyed business leaders at small businesses (VSB) with less than 10 employees in the U.S. to learn more about how they’re approaching hiring, artificial intelligence (AI), and continually changing macroeconomic factors.

• VSBs report high satisfaction with performance outcomes—even in the face of inflation, skill gaps, and supply chain issues. 
• A big key to VSB satisfaction is the way these leaders leverage freelancers. VSBs use external talent sources to access freelancers with specialized skills, then scale freelancers’ work up and down as needed. 78% of VSB leaders report great experiences working with freelancers. 
• As we enter the future of work and explore new macro environments, adopting flexible talent models will be key to ensuring the continued resilience of VSBs.

What’s working well for VSBs in 2025?

While each VSB may be small, collectively, these businesses make up a large swath of the companies operating in the U.S. today. According to the Pew Research Center, 79% of small businesses have no more than nine employees. Across the board, leaders at these VSBs are tackling difficult economic headwinds through employee retention, skill sourcing, and more—and even outperforming their counterparts at large enterprises in some areas.

VSB leaders expressed the highest level of satisfaction with their ability to retain employees and satisfy customers. These business owners are actually more satisfied with their ability to retain employees than larger companies are, with 41% of VSBs reporting satisfaction in this area … vs. only 31% of enterprise leaders.

How confident are VSB decision-makers in today’s market?

The leaders at VSB companies are optimistic, reporting a more positive take on the current market than their competitors at companies with a larger head count.

Many of these same VSB leaders carry this optimism forward into the future, too, with 49% reporting high confidence in their company’s ability to adapt to economic shifts.

What challenges are VSBs facing right now?

Unsurprisingly, the biggest issue faced by VSBs in early 2025 was inflation—followed closely by skill issues.

VSBs are also experiencing difficulty with some of the same economic factors as small to medium size businesses (SMBs) with 10-1,000 employees and large enterprises with more than 1,000 employees. 

What factors improve a VSB leader’s confidence in resilience?

There’s a reason why some VSB leaders are more confident in their ability to navigate change: freelancers.

The most confident leaders, regardless of company size, are more likely to use and trust freelancers who can bring specific skills to a business. These leaders are able to respond to macroeconomic shifts, scaling their work with freelancers up and down as needed.

Our research indicates that confident, resilient leaders may also have: 

• A clear leadership vision and strategy
• Access to the right tools and technologies
• Flexibility in work arrangements
• An ability to attract top talent in today’s labor market
• A willingness to delegate tasks to AI agents

How are VSBs working with freelancers?

VSB leaders, in particular, tend to have a great experience working with freelancers—78% reported a positive engagement.

There are a variety of reasons why a VSB may hire a freelancer. Our respondents reported working with freelance talent in order to:

• Scale their team up and down
• Gain access to specialized skills
• Take advantage of cost efficiencies
• Fill temporary gaps in the workforce
• Hire more quickly

Where VSBs have room to grow

VSB decision-makers are less comfortable with emerging trends in work—including AI and flexible or hybrid work models—than the leaders at large companies.

Improving confidence in this area can help VSBs gain a stronger competitive edge moving into the second half of this year. Solutions like Upwork Business Plus, which blends do-it-yourself freelance sourcing with AI tools and on-demand support, can help leaders at small businesses become more comfortable with new ways of work.

What’s in store for VSBs?

Many VSB leaders plan to continue to hire freelancers in the future, along with full-time employees (FTEs). More than 40%, though, plan to keep their hiring volume low in the immediate future.

How VSBs can continue to scale in the face of economic uncertainty

VSB leaders’ willingness to hire freelancers shows their confidence in the value of this work model, even when facing challenges due to today’s macroeconomic uncertainty. Freelancers are the perfect way to bring new skills into a small organization—whether that’s firming up strategy through a consultation, expanding a marketing team with AI video experts, or hiring a trainer who can introduce new technologies to a team.

Visit the Upwork Research Institute to learn more about the ways businesses are navigating change in 2025—and how the world’s most innovative leaders get more great work done with freelancers.

Methodology 

The Upwork Research Institute distributed a survey to 500 U.S. business leaders to understand their sentiment on macroeconomic factors, hiring intentions and AI. Business and professional services, health care, manufacturing (including computer manufacturing), retail and tech industries were included. Survey respondents include C-suite leaders (28%), video presidents (25%), senior directors (20%), and directors (27%). Twelve percent of respondents work at companies with less than 10 employees (VSB), 47% work at companies with 10-1,000 employees (SMB), and 41% work at companies with more than 1,000 employees (enterprise). Data for Q1 was collected between mid-January and mid-February 2025.