U.S. Bank Small Business Survey Finds More Than One-Third of Gen Z and Millennial Owners Plan to Acquire a Business From a Retiring Owner – But Many Older Owners Aren't Ready

• Succession Gap: Many older owners lack formal succession plans, even as younger generations prepare to take over.
• Economic & Operational Stress: Owners are feeling stress over the economy, inflation, funding issues, and daily tasks —despite recent growth.
• AI Adoption Rising: Over half are using or planning to use Gen AI, though many feel overwhelmed by tech demands.

U.S. Bank released its third Small Business Perspective survey report today, revealing how owners across the country are responding to an environment defined by rapid change. The nationwide survey of 1,000 small business owners explored how they are navigating challenges ranging from economic stressors to the rise of generative AI, all while remaining focused on long-term growth, succession planning, and leaving a lasting legacy.

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Top 5 use cases small business owners have for Gen AI.

"This year's survey makes it clear that small business owners are committed to future-proofing their businesses in response to today's economic climate and rapid technological change," said Shruti Patel, U.S. Bank's Chief Product Officer for Business Banking. "From embracing generative AI to responding to shifting economic conditions like tariffs and thinking proactively about succession, owners are serious about the future of their businesses. There is a real opportunity – and responsibility – for financial institutions to show up as strategic partners in helping small businesses navigate what's next."

Handing the Reins to the Next Generation

With more than half of U.S. small business owners now over age 55, succession planning is becoming increasingly urgent. While many owners are not yet ready to step away – with only 54% having created a succession plan – new generations are preparing to take their place: more than one-third (36%) of Gen Z and Millennial owners say they plan to acquire a business from a retiring owner.

The report reveals a striking gap between intention and action. While 85% of surveyed participants say they originally became an owner to create something they could pass on, and 84% wanted to create generational wealth for their family, only 54% have a formal succession plan in place.

A growing number of owners (62%) have seen their retirement timelines accelerate in the past five years. But for many, navigating succession is a challenge:

• 62% find the process overwhelming
• 56% worry they won't get a reasonable price for their business when it's time to sell
• 53% lack the proper resources or guidance to plan for the future of their business

Owners with strong business performance were more likely to have a succession plan in place: 64% of those with a plan reported significant growth over the past year, compared to 50% of those without a plan.

Nearly 4 in 10 small business owners (37%) say they plan to sell their business in the next 12 months, suggesting how quickly transitions of ownership may be approaching for some businesses. However, retiring business owners are not the only ones looking to sell, with a higher number of Gen Z and Millennial owners (41%) than Boomers and Gen X (33%) saying they plan to sell their business.

While the small business landscape has changed dramatically over the years, the motivations that originally inspired owners still drive them today. Most remain deeply committed to their work: 86% want to continue running their business as long as possible, and 87% are hopeful they'll leave behind a positive legacy when they eventually step away.

Economic Pressures are Influencing How Owners Operate

The need for small business owners to make long-term plans is reinforced by the day-to-day worries they are facing. Respondents reported their top macroeconomic stressors as:

• The economic environment (98%)
• Inflation or increased costs of materials / supplies (92%)
• Competition (92%)
• The ability of consumers to maintain their spending (86%)
• Fraud or cybersecurity threats (85%)
• Obtaining enough funding to support my business (84%)

Among other stressors small business owners cited, 4 out of 5 (81%) owners felt at least somewhat stressed about tariffs.

Despite these stressors, 96% of owners reported their business as currently successful and 88% saw growth in the past year. To manage pressures and position their businesses for the future, many owners are prioritizing key steps in the year ahead, including focusing on revenue (48%), ensuring enough staff (33%), improving company efficiency and cost-effectiveness (32%), and reacting to the general economic landscape such as inflation and recession risk (29%).

To get a pulse check on the most current sentiment, U.S. Bank conducted a follow-up survey of 500 small business leaders during the month of May. While stress levels on the economic environment were similarly high, two-thirds (66%) said the country's economy is moving in the right direction, with only 18% saying it's going in the wrong direction. This sentiment was even stronger among younger business leaders (Gen Z and Millennial), with 74% saying it was moving in the right direction, vs. 52% of leaders from older generations (Gen X and Boomer).

Despite this optimism, a majority (58%) of the leaders expressed at least some concern that tariffs may impact their business operations, and 57% expect their input costs to go up as a result of tariffs with most expecting a cost increase between 1-10%. At the same time, leaders were slightly more likely to anticipate a positive rather than negative impact from tariffs across several business factors – including cost of goods, customer demand, margin profitability, capital investments, and labor/HR – but these expectations were generally modest, with most leaders expressing a neutral or only slightly positive outlook on the potential effects of tariffs.

Small Business Owners are Turning to Gen AI and Digital Tools to Stay Competitive

As small business owners look to create long-term success for their businesses, they are embracing generative AI (Gen AI) and digital tools. Nearly 6 in 10 (57%) are currently using or plan to implement Gen AI solutions in the next year. Among those using it, the top applications include content creation (44%), data analysis and information gathering (41%), and marketing and sales strategies (39%).

The majority of owners using Gen AI have found that adoption doesn't require a massive investment. Nearly 7 in 10 (68%) Gen AI users report spending less than $50 a month on it, and nearly 1 in 5 (18%) are using free tools or subscriptions. These tools allow users to spend more time on the personal connection they have with their customers (88%).

Still, the rise of AI is not without tension. Over 8 in 10 (81%) report keeping up with technological advancements such as Gen AI is stressful, and 56% worry their business (or products / services) will be replaced by Gen AI or automation.

Beyond AI, digital tools are seen as essential now more than ever. The number of owners who view digital tools as very important or essential jumped a striking 15 percentage points from last year (87% in 2025 vs. 72% in 2024). At the same time, 63% say they're overwhelmed by the number of tools needed to run their business and 82% say consolidating them is a priority.

Looking at payment methods, nearly half (48%) of owners still report cash as a primary method of in-person payment. However, newer methods of payment are catching up with 42% reporting tap-to-pay as a primary method.

Despite Challenges, Most Owners Would Do It Again

Even amid today's business challenges, most small business owners remain grounded in their original purpose that inspired them to become entrepreneurs. When asked why they launched their business, 90% say they wanted to be their own boss, 88% cited a desire to control their financial future, and 86% wanted their passions to be part of their work.

Legacy has also played a defining role. More than two-thirds (67%) of owners come from a family of entrepreneurs, and 62% took over a relative's business to carry on their family legacy. For Gen Z and Millennial entrepreneurs, however, the path to ownership has often been shaped by necessity. More than half (52%) of younger owners say they became business owners because they couldn't find a job elsewhere, compared to 44% of Gen X and Boomer owners.

When asked if they'd do it all over again, 80% of owners say they'd still start their business today. This confidence is particularly notable given challenges they see in today's environment. Almost 8 in 10 (79%) say there is greater market competition today than when they started and 70% say that securing funding and capital is more difficult now.

For an in-depth look at insights from U.S. small business owners, please read the full 2025 U.S. Bank Small Business Perspective report.

Methodology

20-minute survey among 1,000 U.S. small business owners with annual revenue of $25 million or less and between two and 99 employees. Fielding for this study was conducted from March 14, 2025 – April 4, 2025, and the margin of error is ±3.1% for the U.S. owners.

Pulse Survey Methodology

10-minute survey conducted online by Morning Consult from May 8 to May 23, 2025, among a national sample of 500 small business leaders. Respondents were decision makers (Director, VP, or C-level) at companies with annual revenues of $25 million or less and between 2 and 99 employees. The margin of error is ±4 percentage points.

About U.S. Bank

U.S. Bancorp, with approximately 70,000 employees and $676 billion in assets as of March 31, 2025, is the parent company of U.S. Bank National Association. Headquartered in Minneapolis, the company serves millions of customers locally, nationally and globally through a diversified mix of businesses including consumer banking, business banking, commercial banking, institutional banking, payments and wealth management. U.S. Bancorp has been recognized for its approach to digital innovation, community partnerships and customer service, including being named one of the 2025 World's Most Ethical Companies and one of Fortune's most admired superregional banks. Learn more at usbank.com/about.

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Media Contacts:

Rick Rothacker, U.S. Bank Public Affairs & Communications

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Anna Christensen, U.S. Bank Public Affairs & Communications

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