FOR IMMEDIATE RELEASE
Contact: John Kabateck, California State Director, john@kabstrat.com
or Tony Malandra, Senior Media Manager, anthony.malandra@nfib.org

SACRAMENTO, Calif., March 2, 2026—A new California Small Business Economic Trends (SBET) report, produced by the National Federation of Independent Business (NFIB) Research Center and released today, highlights responses from California small business owners on a variety of issues compared to national averages from the NFIB’s monthly SBET surveys throughout the year.

“The Small Business Economic Trends survey has provided essential information about the small business economy for decades,” said Holly Wade, Executive Director of NFIB’s Research Center. “While this data is a useful tool for evaluating the economy on a national scale, no state can be defined by national numbers alone. This state-specific report allows us to better understand business conditions and the unique challenges and strengths owners’ face in California.”

The Small Business Optimism Index for California small businesses in summer (April-Sept.) 2025 was 94.4, 3.5 points worse than the national average. Negative expectations about the overall economy and low plans to increase employment were contributing factors to the pessimism among small businesses in California.

“This report will come as no surprise to any small business owner in California,” said John Kabateck, NFIB’s State Director for California. “This data simply underscores the barrage of regulatory and economic difficulties California entrepreneurs regularly endure. Our small business members are telling us that government regulation is by far the greatest hurdle they face. It is time for lawmakers in Sacramento to heed the concerns of California’s Main Street businesses and make positive change.”

Business Health

When asked to evaluate the overall health of their business, California small business owners reported that they are faring worse than the rest of the country. In California, only 6% of owners rated the health of their business as excellent (six points below the national average of 12%), 50% rated it as good (two points below the national average), 37% rated it fair (seven points above the national average), and 6% rated it poor (up two points from the national average).

Single Most Important Problem

Compared to the U.S. overall, California small business owners reported government regulation as the single most important problem impacting their small business in summer 2025. While government regulation is tied for fifth most important nationally, it is by far the greatest issue for California small businesses.

Conversely, labor quality was far less challenging for small businesses in California compared to the rest of the nation, with only 15% of owners claiming it as their most important operating problem, compared to the national average of 20%.

A notable change in California is the reduction in the number of small businesses reporting inflation as their top issue. Last year, 20% of California small businesses reported inflation as their most important problem, the number one issue that year. This year, only 10% of owners considered inflation their top concern, falling to the number five problem among small businesses in the state.

Uncertainty Index

Unfortunately, small businesses in California and the U.S. as a whole experienced elevated levels of uncertainty throughout 2025, with many owners reporting “don’t know” or “uncertain” when asked a variety of questions about their plans for their business over the course of the year. That led to 2025 being the highest year on record for NFIB’s Small Business Uncertainty Index, with little difference between the numbers for the U.S. and California. This level of uncertainty greatly impacts the ability of small businesses to plan and operate, particularly affecting any potential capital investment plans.The data for this report is sourced from NFIB’s Small Business Economic Trends (SBET) Survey. The NFIB Research Center has collected SBET data, polled from a random sample of NFIB members, with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. To create this new state-specific report, we pooled data from multiple surveys into a weighted average for a given season (Apr-Sep for summer and Oct-Mar for winter). This report analyzes data from California respondents from summer 2025.

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For over 80 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is a nonprofit, nonpartisan, and member-driven association. Since our founding in 1943, NFIB has been exclusively dedicated to small and independent businesses and remains so today. For more information, please visit nfib.com.