2026 Small Business Planning Guide: Economic Outlook, Finances, Processes and Workforce Strategies

As we all wind down and are looking to take stock of 2025, small business owners are also looking forward to seeing what the coming year will look like through small business planning. In a year marked by tariffs, high interest rates, and uncertain consumer sentiment; Small business owners are hoping for some relief and stability to help them better project what the future will look like coming into the new year.

Business owners should be looking forward and sharpening those pencils to create not only a well-oiled machine, but one which the only surprise is a good one. Looking at the economies future as well as developing goals to help businesses stay competitive in 2026 and beyond.

The Economy

The economy is looking to at least become somewhat more predictable compared to recent years. Per Reuters, economists are expecting the Gross Domestic Product (GDP) growth to be about 2%, as well as an inflation projection of between 2-3%. These numbers are very consistent and are what most economist projections would consider to be a normal and stable inflation and GDP growth rate. For small businesses, this means you will be able to stop, consolidate, and take quick breather from the whirlwind of high inflation paired with a stable GDP growth in the previous few years.

Another important impact on the economy is the recent news that the Federal reserve has decreased what is known as the Federal Funds Rate by .25%. Currently in December 2025, the fed rate is in the range of 3.50-3.75%. In early 2024, the rate was 5.25-5.50%. The Federal Reserve has signaled that they are expecting one more rate cut to happen in 2026, further lowering the rate by at least .25%. This huge decrease in rates will lead to easier borrowing for businesses in 2026 to help fund expansion plans.

Your Business

Now is the time to look to what you have done in 2025 on your income statement and project what the neutral scenario is for your business. Assume that your revenue and expenses will grow by 2%, and make sure you are forecasting your cash to make sure you’re not going to be in a cash crunch which could have been foreseen. Businesses should be looking at things like pricing, how much cash they have in reserves, and how leveraged with debt those businesses are.

If you weren’t a first mover on increasing your prices, now is the time to start doing it. Especially those in food service, retail, and hospitality who may have been afraid to raise prices. Most likely these businesses in 2025 have started to grow market share due to being perceived by customers as a “value”. 2026 is the time to test the water to see if any of these new value consumers have developed a brand loyalty and will continue to be customers. If it’s done right, modest and transparent price hikes will either lead to revenue staying the same with less input costs due to capturing more revenue per customer while having less customers or will increase your revenue. Both scenarios should be viewed as positives for businesses unless you can continue to take the hit to gain even more customers.

Smaller businesses should also start looking at their balance sheets, the statement that shows the business’ assets, debt, and equity. Businesses should look at their cash position and try to build a cash cushion if they can. A good starting place would be to have 6 months of operating expenses in the bank, but that is a stretch goal, especially for smaller businesses. Having the cash on hand will help you weather the storm, especially in the case in which a vendor payment comes in late. If you’re carrying debt, also determining whether to refinance the debt either to lock in an interest rate which most likely will not go any lower, or to just move your variable interest rate debt to fixed-rate debt to ensure your debt costs do not balloon in the future. Unless there is a determinable return on investment, smaller businesses should avoid any large new loans and keep their money to build the cash reserves from above.

Business Backoffice

Businesses should be looking to streamline as much of the admin side of their business as possible, allowing key employees to focus on building new revenue, and managing employees. Some streamlined items may also help reduce the time it takes for businesses to get paid, allowing your business to maintain a healthy cashflow.

Using a platform to send invoices to clients via email and accepting card payments is a great first step for small businesses. It decreases the barriers to you getting paid, but what about for clients or customers who are slow to pay? Most platforms allow you to schedule notification reminders to customers for unpaid invoices. This should help bring down the time outstanding for your invoices by ensuring you don’t slip through the cracks for you clients.

Another way to help your business is by ensuring your technology can connect to each other and share data. It will allow you to cut down on repeating client data entry from client onboarding, doing the work, to client invoicing. Keying in the same information multiple times really stacks up, especially for businesses which may have many customers. This day and age most technology has a webpage letting you know what other software it connects to. Make sure you’re investigating this before making any change decisions for your business’ tech stack.

Lastly, and I’m cautious to say this, try out one of the many publicly available LLM Artificial Intelligence models. These models include Open AI’s ChatGPT, Microsoft’s Copilot, or Googles Claude model. If you’re a low stakes user not looking for anything complex, they all are interchangeable. These models can be used to do things’ like draft emails for you, help come up with ideas, drafts skeletons for documents like employee manuals, press releases, or doing a light audit of your business compared to the local competition. All of this “busy work” is stuff that would normally take hours, but if you do it right through an LLM model, could take 15 minutes. The thing to keep in mind though is that the AI should not replace human judgement. At the end of the day, you are the face of the business, so the AI by extension is you. Also ensure you are not inputting sensitive data into your prompts, as most of these models’ free version uses your prompts to help train the model.

Workforce Development

At this point in time, the labor market is still tight, even with a recent unemployment rate increase to 4.6% in November 2025. Bank of America surveyed owners and found that 61% of them are feeling the recent labor shortage, and 40% of them have started to increase wages to attract new talent. Pair this with the fact that only 1% are planning for layoffs and 43% plan to hire more, that means that the market is going to start getting tighter, so ensuring your employees are happy or you will risk losing them.

With turnover expected to be lower, expectations from employees will start to rise. You should focus on staying competitive in the market either through raising wages and bonuses to the market. Also, don’t neglect benefits like health plans, retirement matches or out-of-the box perks like extra PTO, flexible work arrangements (ie. Work from home), or even the occasional appreciation event. Culture and growth are also areas which can help develop a solid workforce, as well as ensuring everyone feels like they’re a part of the team.

Ensuring your organization has a great culture as a great way that businesses can keep baseline employees, but your most competent employees who also need a transparent path that allows them to grow both within the organization, but also through professional development. Ensuring you are continuously developing them and allowing them to move up will help ensure they aren’t asking “What’s next?” It’s understandable that this could be an issue for smaller businesses which are not experiencing growth, but for those that are, it’s a great way to ensure you’re not losing valuable knowledge.

Conclusion

Ensuring that you keep these points in mind, you’ll look to finish 2025 strong and look to how your 2026 will shape out for your business. From the general economy, your business’ finances, to your business’ Backoffice and workforce, now is the time to start putting plans in place to ensure your business is working more for you and your employees, as well as not providing you any unneeded stress throughout 2026.