Dive Brief:

• Optimism among small businesses last month fell short of forecasts, with a smaller percentage of business owners expecting higher sales during the coming quarter, the National Federation of Independent Business said Tuesday.
• Reports of actual sales, however, hit the highest level since May 2022, and earnings trends also gained, the NFIB found in a survey.
• “High sales and increased profits made February a more positive month for many owners, but competition from large businesses is putting stress on Main Street firms as they navigate the current economic climate,” NFIB Chief Economist Bill Dunkelberg said in a statement.

Dive Insight:

Some findings by the NFIB tracked those of a similar survey by the Federal Reserve released last week.

For example, increasing sales was the most common operational challenge cited by small businesses surveyed by the 12 Fed regional banks, according to the central bank report.

At the same time, small businesses were more likely to report that revenues fell rather than rose in the prior 12 months, according to the Fed. The central bank ended its survey on Nov. 14, 2025 after receiving 6,525 responses from companies with fewer than 500 employees.

More than two out of every five firms said that higher prices from the highest U.S. tariffs since the 1930s posed a financial challenge, along with the rising cost of goods, services and/or wages, according to the Fed. Sixty-nine percent of retailers and 62% of manufacturing businesses cited the tariff headwind.

“The never-ending increase in the cost of doing business causes small businesses to work longer hours for less profits,” a respondent from a services company in Missouri told the NFIB. “Every day, every month, every year, we keep less of the dollar we bring in.”

With optimism ebbing, the share of small business owners reporting capital outlays last month fell to 54% from 60% in January, the NFIB said.

The percentage of small business owners planning to make capital outlays in the next six months — 18% —  was unchanged from January, NFIB said.

Nineteen percent of small business owners ranked taxes as their biggest problem, a 1 percentage point increase from January, according to the NFIB.

“We need to keep taxes as low as possible so I can pay employees more money,” a respondent from a financial firm in Kansas told the NFIB.

Taxes often rank as the top problem when other concerns —  such as labor quality, inflation and poor sales —  are not too troubling, the NFIB said.

Twelve percent of business owners identified inflation as their No. 1 business problem, unchanged from January, the NFIB said.

“Inflationary pressures continue to persist, and they make it more difficult to plan pricing and capital expenditures,” a respondent from an agricultural business in Indiana told the NFIB.  “Overhead expenses continue to rise — more than what is reasonable.”

Forty six percent of U.S. workers are employed by a small business, according to the Small Business Administration.

The federation received 428 responses to its February survey.