At MartinoWest, we work with small business owners every day, people who wear every hat in the building and carry the weight of their company’s success on their shoulders. After 26 years of working with small businesses, we can say without a doubt that running a small business takes grit, vision, and more than a little creativity.
This National Small Business Week, we’re celebrating the unwavering tenacity of U.S. small businesses and exploring the current landscape in 2025. Because while the spirit of entrepreneurship remains strong, the road forward is anything but easy.
Our mission is to support the entrepreneurs empowering the heart of our economy. In honor of Small Business Week, we’re shining a light on what we believe are the five biggest hurdles small businesses are facing — and showing how each one holds a real chance to help owners not just survive but truly thrive.
Top 5 Challenges for Small Businesses
1. Hiring and Retaining Talent
Hiring continues to be a major hurdle. According to the National Federation of Independent Business 40% of owners report open roles they can’t fill, and nearly half say they’re not getting qualified applicants.
Labor shortages, rising wage expectations, and stiff competition from larger employers with deeper pockets are making it tough to build and keep a reliable team. Small businesses with fewer than 10 employees are likely to feel a more substantial impact.
And retaining great employees? That’s an even tougher battle. High turnover — fueled by limited growth opportunities, low pay, poor management, toxic culture, burnout, and economic uncertainty — keeps many small businesses stuck in a costly cycle of constant hiring and retraining.
2. Compliance Overload
From wage laws and paid leave rules to tax changes and OSHA updates, compliance is getting more complex — and more expensive. Managing it in-house drains time and money, especially for owners without HR or legal expertise. One wrong move — like misclassifying an employee as an independent contractor, using the wrong workers’ comp code, or mishandling an HR issue — can lead to costly fines, lawsuits, and serious financial setbacks.
Without a dedicated HR team, small business owners are forced to juggle paperwork, payroll, benefits, and safety checks themselves — pulling focus from growth. In 2025, staying compliant feels like aiming at a moving target, and the real risk is to your bottom line.
3. Soaring Labor and Insurance Costs
Wages are up, and nearly 42% of small businesses reported double-digit increases in health insurance premiums last year.
Benefits packages are getting more expensive across the board, and for the smallest employers, insurance costs consume a disproportionate share of payroll. Whether it’s workers’ comp, liability, or group health, costs are rising faster than many owners can budget for.
In 2025, business owners face significant challenges as rising labor and insurance costs strain budgets and complicate efforts to attract and retain talent.
4. Administrative Overload and Inefficiencies
Small business owners often start with a do-it-yourself mindset, which serves them well in the beginning. But as the business grows, juggling accounting, payroll, sales, customer service, HR, and growth strategies alone can quickly become overwhelming.
Without proper support systems, the administrative burden can quickly lead to burnout, stalled growth, and declining business performance. Relying on patchwork tools and manual processes only adds to the strain, making sustainable growth even harder to achieve.
5. Tech Confusion and Cybersecurity Risks
Digital tools can streamline operations — but choosing and managing the right tech isn’t always simple. Many small business owners underestimate their cybersecurity risks, often believing they aren’t likely targets. Unfortunately, that couldn’t be farther from the truth. Nearly half of all cyberattacks now target small businesses, and 56% of owners report being affected by a cyber threat. Yet implementing secure solutions takes time, expertise, and resources.
From payroll software and CRM systems to AI tools and cybersecurity best practices, many owners feel overwhelmed by the choices and underprepared for growing digital threats. Despite the risks, only 17% of small businesses carry cyber insurance, leaving most financially exposed if an attack happens.
Top 5 Biggest Opportunities in 2025
Thankfully, it’s not all doom and gloom. The good news is that each challenge carries the seed of an opportunity. Business owners who acknowledge their challenges and take proactive steps to address them greatly increase their chances of long-term success.
1. Outsourcing Critical Tasks
Small businesses that leverage partnerships by outsourcing payroll, HR, safety compliance, IT, and marketing can significantly improve efficiencies.
We can’t say this enough: you don’t have to do it all alone.
More and more small businesses are partnering with outside experts to handle these tasks, freeing up time, improving accuracy, and reducing liability.
One powerful example? Businesses that use a PEO (Professional Employer Organization) grow faster, have lower turnover, and are half as likely to fail. By outsourcing key back-office tasks, they can focus on what really matters: their core mission.
Outsourcing doesn’t mean giving up control. It means leveraging experts so you’re not buried in paperwork or risking compliance mistakes. For many businesses, this support is the difference between staying afloat and scaling with confidence.
There is no one-size-fits all solution, our team of experts can help you find the right outsourcing solution to fit your unique business needs!
2. Embracing Technology and Automation
Today’s digital tools aren’t just for enterprise giants. Small businesses now have access to affordable, intuitive platforms for payroll, accounting, CRM, employee management, and more.
Businesses that utilize tech eliminate repetitive tasks and increase accuracy. In fact, over 53% of small businesses now use AI tools to streamline customer service and operations.
Even modest tech upgrades can make a big impact. The key is picking the right tools (and partners) to match your business’s size and needs.
3. Protecting Your Business Assets
Building a strong workforce is important — but protecting your business is essential. Without the right protections in place, one incident can quickly derail growth and financial stability.
Here are key areas every small business should safeguard:
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Workers’ Compensation Insurance – Protects your business and employees if someone is injured on the job.
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General Liability Insurance – Covers claims related to property damage, bodily injury, or other accidents involving customers or third parties.
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Cyber Liability Insurance – Shields your business from the financial impact of cyberattacks, data breaches, and digital threats.
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Employment Practices Liability Insurance (EPLI) – Helps protect against claims from employees, such as wrongful termination, harassment, or discrimination.
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Patron and Customer Claims – Addresses risks related to client interactions, on-site accidents, and other customer-related incidents.
Protecting your business isn’t just a safety net — it’s a smart investment that allows you to grow with confidence, knowing you’re covered if something unexpected happens.
4. Investing in Your Team
If hiring is hard, retention is where small businesses can win. You may not compete on salary, but you can offer growth, flexibility, and a personal culture that makes people want to stay.
Studies show 94% of employees would stay longer at companies that invest in their development. That could mean mentoring, training, or simply recognizing contributions.
Professional development, flexibility, appreciation, and creative benefits (like extra PTO or wellness perks) go a long way. Employees are more likely to stay where they feel supported and seen. A positive culture can be your secret weapon—and it costs less than you think.
5. Focusing on Core Strengths
With all the moving parts in a business, clarity is power. The best way to grow in 2025 is to double down on what you do best—and delegate the rest.
By focusing on your strengths and outsourcing tasks that drain your resources, you can maximize efficiency and drive sustainable growth. Embrace strategic partnerships and leverage technology to streamline operations and stay ahead in a competitive market
Focus, simplify, and strengthen your foundation. Resilience isn’t just about surviving the next storm—it’s about building something that lasts.
At MartinoWest, we believe the key is long-term thinking over quick fixes. By partnering with us, you align with our commitment to sustainable growth and strategic planning. Together, we can build lasting relationships and provide reliable solutions that contribute to your long-term success.
During National Small Business Week, we honor you. The innovators, the achievers, the foundation of our economy. We’re here to support you as you take your next strategic step forward.
MartinoWest – Supporting entrepreneurs, driven by progress, and empowering the heart of our economy.
Let’s take the next step together.
