A new survey from NEXT Insurance, a digital insurtech company focused on serving small businesses, reveals that economic pressures remain intense for entrepreneurs heading into 2025.

The findings, drawn from a sample of 500 small business owners across the United States, show that inflation and labor shortages continue to be the most pressing issues.

The data also suggests that while most small businesses carry insurance, few feel confident that their coverage adequately addresses their needs.

According to the report from NEXT Insurance, inflation remains the top concern for small business owners, with 62% citing it as their primary stressor.

While this marks a slight decline from 68 percent in 2023, it remains the dominant source of anxiety. Compounding the situation is a growing unease about consumer demand—43% of respondents expressed worry over reduced customer spending, pointing to continued volatility in purchasing behaviour.

The survey also underscores a significant shift in labor dynamics. NEXT Insurance reports that concern over labor shortages has more than doubled since 2023, increasing from 14% to 30%.

This jump reflects the growing difficulty small businesses face in attracting and keeping qualified staff. For those looking to start new ventures, the landscape appears equally challenging. Rising costs of goods and services, changes in tax regulations, and the tight labor market are among the top barriers identified by respondents.

Beyond these operational concerns, NEXT Insurance highlights a troubling gap between insurance coverage and confidence. While 92% of those surveyed reported having some form of insurance for their business, only a small fraction—13%—felt fully prepared for potential risks. Even fewer, just 14%, said their coverage was tailored to the specific needs of their business.

Additionally, more than two-thirds of respondents admitted to struggling with understanding the details of their policies, including coverage limits and terms.

The findings from NEXT Insurance point to a widening disconnect between insurance ownership and insurance comprehension. For agents and brokers working with small businesses, the data serves as a reminder that standard policies may not be sufficient, and that clearer communication and customisation are becoming more critical than ever.

“Small business owners are demonstrating remarkable resilience amid economic headwinds,” added Chris Rhodes, President & Chief Insurance Officer at NEXT Insurance. “This data underscores the importance of providing accessible, tailored insurance solutions to help these businesses navigate their specific needs and protect their operations during times of market volatility and overall uncertainty.”

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