3 Ways Small Businesses Can Navigate the Ongoing Impact of High Prices

Costs are up and revenues are down. That’s the consensus among small- and medium-size businesses around the U.S. According to recent research, 82% of small-business owners say the increased cost of supplies and inventory is a challenge, while 81% are concerned about reduced consumer spending¹. Fewer than half feel optimistic about their business prospects this year.

Specifically, business owners are contending with volatile material prices, higher labor and operating expenses, elevated interest rates, and changes in trade policy. Smaller firms that rely on imported goods may be particularly vulnerable because they often lack the negotiating power of larger companies.

Predicting where costs will go next is difficult, says Chris Wheat, Managing Director at JPMorganChase and President of the JPMorganChase Institute. “This context makes it especially hard to predict how costs are going to change anytime soon,” he says. “Supplier firms may be holding off on making decisions that ultimately shape the costs small businesses face.”

Despite this, there are plenty of reasons to be optimistic, Wheat says. There are several things owners can do to create opportunities and make their businesses more resilient. Wheat recommends focusing on these three areas.

1. Protect your cash flow

Years of JPMorganChase Institute research have shown that many small businesses operate with limited cash buffers. That leaves them vulnerable when inflation, tariffs, labor expenses, or other costs rise unexpectedly.

“In uncertain environments, cash flow is often the difference between being able to respond strategically and being forced to react,” Wheat says.

Business owners can begin by developing a clear, current picture of the money entering and leaving the business. Regularly reviewing revenue, expenses, payment timing, and upcoming obligations can help leaders identify potential pressure points before they become emergencies.

From there, businesses can consider where they might preserve flexibility. That could include prioritizing essential spending, preparing for different cost scenarios, and discussing potential financing needs with their banking partners before cash becomes critically tight.

The objective is to create enough breathing room to make thoughtful decisions when conditions change.

2. Explore affordable technologies, including AI

Technology investments may sound counterintuitive when expenses are already high. But low-cost tools can sometimes help a business solve a specific problem without requiring a major change to its operations.

Wheat says the JPMorganChase Institute has observed a rapid increase in the number of small-business owners spending money on artificial intelligence (AI) services. The typical payments have been relatively small, suggesting that businesses may be able to experiment with AI without making a substantial upfront investment.

Rather than adopting AI simply because it is popular, owners should start with a defined business challenge. They might explore whether an affordable tool could reduce time spent on a repetitive administrative task, make an existing process more efficient, help employees focus on higher-value work, or help leaders make better decisions.

A focused experiment can help a business evaluate whether a tool delivers meaningful value before expanding its use. According to Wheat, the right question is not necessarily, “How can we use AI?” but, “Is there a specific, costly problem that this technology could help us solve efficiently?”

3. Stay informed about a changing environment

Running a business is often more than a full-time job. Still, Wheat says that making a small investment in following economic, technological, and policy developments may pay off in today’s dynamic environment.

Research from the JPMorganChase Institute on international payments, for example, illustrates how middle-market firms are—and are not—adjusting their behavior in response to changes in trade policy, Wheat explains. For smaller businesses, monitoring developments that affect suppliers, financing, customer demand, and technology can create more time to prepare and respond.

Owners do not need to follow every headline. Instead, they should identify the developments most likely to affect their business and establish a manageable routine for reviewing trusted information. Economic research, industry publications, professional associations, and conversations with financial partners can all contribute to a more complete view.

Reasons for small-business optimism abound

Despite the challenges, Wheat sees reasons for optimism. New-business formation remains higher than it was during the decade preceding the pandemic, and small-business owners have shown a willingness to embrace emerging technologies.

“People who start businesses are an optimistic bunch,” Wheat says. “They see opportunities in the market to do something new and put their resources at risk to do so.”

High prices and economic uncertainty may persist, but maintaining financial flexibility, experimenting carefully with affordable technology, and staying informed can help business owners prepare for what comes next.

^{1 Voice of Main Street: Small Businesses Being Strained by Rising Costs (Small Business Majority, 2026)}