By Andrew Miller
A third of small business owners took a pay cut this year instead of passing costs on to customers.
Even so, nearly a quarter of owners strengthened their cash reserves.
The findings come from a 2026 Small Business Survey by KeyBank, which surveyed 1,500 business owners in August. Every business in the survey brings in less than $10 million a year in revenue.
For the second year running, inflation is the top concern. 53% of owners named inflation and rising costs as the biggest threat to their business, up from 50% last year.
On paper, the businesses themselves are in better shape than a year ago.
54% of owners say they’re certain they could cover one month of operating expenses from cash reserves alone, up from 46% in 2025. A quarter paid down debt this year.
Fewer are scrambling, too.
17% describe their focus as short-term survival, down from 23% last year. Most are looking ahead instead, with 42% planning cautiously and 28% actively investing for long-term growth. Both numbers are up from last year.
Confidence rose alongside them. 87% of owners feel at least somewhat confident making key business decisions in today’s environment, up from 80% last year.
And 88% report feeling just as motivated as ever by the dream that started their business.
Nearly every owner could point to a tangible win this year, such as improving operating efficiency, sustaining their customer base, adding new products or services, or growing revenue.
Holding prices also counted as a win. For a third of owners, it was a win they paid for themselves.
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