Bank of America: Supply Chain Concerns Persist for SMBs

Despite cautious optimism about the next 12 months, small and medium-sized businesses (SMBs) remain concerned over the security of their supply chains, with labour shortages and inflation causing wider issues.

That's according to the 2025 Bank of America (BofA) Business Owner Report, which finds that around two in five (39%) SMBs would feel more confident about their fortunes if supply chains became stronger. 

Leaders are relying on a more steady global economy, with 53% saying their confidence would grow with more stable tariffs policies.

Collecting insights

BofA is a leading financial institution serving SMBs, individual consumers and large corporations across banking, investment and risk management services.

Its latest report was compiled in collaboration with the Bank of America Institute, which draws on data and analyses from around the world to provide insights on the economy and global transformation. 

The Business Owner Report explores the thoughts of more than 800 small business owners (two to 99 employees and US$100,000-US$4,999,999 in revenue) and around 250 medium-sized business owners (two to 499 employees and US$5,000,000-US$49,999,999 in revenue) in the US

Changing trends

Almost three-quarters (74%) of SMB owners anticipate revenue increases over the next 12 months, while almost 60% have plans to expand their businesses. Approximately half believe local (53%), national (48%) and global (45%) economies will improve over the next year. 

More than half (52%) note that cooling inflation would ease economic concerns, while the same proportion say lower interest rates would increase confidence. 

“Business owners are approaching the coming year with confidence and a clear focus on growth,” says Sharon Miller, President of Business Banking at Bank of America.

“Many plan to retain their current staff and hire more, and anticipate that local, national and global economies will improve.”

Tight labour market

Around three in five (61%) business owners say they are facing issues as a result of labour shortages. Half are working longer hours to compensate, while 40% are raising wages to appeal to a larger network. Only 1% of business owners are planning to make job cuts in the next year, whereas 43% are planning to hire more to expand their businesses. 

AI adoption

More than three-quarters (77%) of business owners have started utilising AI within their operations. Half are using it for marketing, 38% for content production, 37% for customer service and 28% for inventory management. The BofA Institute found that small business payments to tech services, including AI providers, were up 8% year-over-year.

Optimising supply chains

Due to issues with changing trade regulations and geopolitical turmoil, 75% of business owners are facing supply chain issues. More than half (52%) of these are having to raise their prices in order to mitigate disruption, and 32% are facing issues with sourcing products themselves.

Managing inflation

The majority (88%) of business owners are facing problems as a result of inflation. To lessen its impact, 64% are raising the prices of goods/services. Almost two in five (39%) are re-evaluating cash flow and spending for the upcoming year to plan for disruption. 

The future of business

Despite various concerns, business owners are cautiously optimistic about the upcoming year. Owners have plans in place to inspire growth and innovation across their companies over the next five years.

Almost half (47%) of businesses are prioritising expanding their customer bases, 39% will be expanding products and services to diversify their offerings and 35% will be exploring new marketing tactics.

Digitalisation is becoming a main priority for business owners, with 91% intending to adopt more digital tools including AI. This will help them modernise, increase growth and improve employee efficiency over the next five years.

Of these businesses, 52% will accept more forms of digital payments; 47% will improve employee workflows to increase efficiency; and 30% will increase cybersecurity measures.

When it comes to succession planning, 70% of business owners do not have a focus on exit strategies for the next five years, but 60% do have a succession plan in place. Of those with a succession plan, 32% are planning to hand over the business to a family member, whereas 38% are planning to sell the business.

Despite the turbulence of recent years, plans for expansion and modernisation demonstrate optimism about a steadying market.