What If Starting More Businesses Isn't the Win We Think It Is
October 15, 2026
Something has not been sitting right with me for a while now, and I have been trying to figure out if I am seeing a real pattern or just feeling the general unease of the moment. Through 37 Oaks, I spend my days working with small business owners, watching them navigate a changing economy, start new ventures, and try to grow the ones they already have. Recently, this role has kept bringing me back to the same question:
Can small businesses still start, grow, scale, and have real impact in this current market?
I have spent nearly 30 years in the retail and commerce industry, with 20 of those as a national buyer for some of the largest retail organizations in the US, managing close to $1 billion across more than 15,000 retail outlets. The last 10 years have been spent working globally, with product- and service-based businesses, from startup through growth-stage. Throughout my career, monitoring how small and large businesses adjust to changing market conditions has been a major part of my responsibility, which makes me hypersensitive to shifts like this one.
What I Noticed
Sensing a "foundation-shaking" market shift did not start in 2026. I first noticed it in late 2024, and it sharpened through 2025, enough that I wrote about it in a blog called "The Small Business Ecosystem We Need, Doesn't Exist (Yet)." What I sensed coming is now showing up in the data. I researched periods when small businesses were thriving and periods when they were not, to see what the market conditions around them had in common. This research, along with my own experience, led me to identify 7 market conditions that determine whether a small business can start, grow, scale and have impact:
Today, these conditions are pulling in different directions. Culture is strong, with real appetite for starting something new. Nearly 3.7 million business applications were filed from January through July 2026 [10]. At the same time, three of the others are under real pressure at once. The condition that gets people started is strong, while the conditions that help a business grow and scale are weakening. That gap is why I read this moment as a foundation-shaking shift.
Where the Pressure Is Building
Some of the 7 conditions started weakening in 2025, and by 2026, 3 of them were under real pressure at once: Demand, Support Infrastructure, and Macroeconomic Environment. Seeing them converge is what pushed me to look beyond the individual pressures and ask whether something larger was changing.
DEMAND
Nearly 70% of the US economy runs on consumer spending. When that spending pulls back, the impact is felt not only by small businesses, but across the broader economy. Right now, spending is increasingly concentrated at the top. According to a revised Moody's Analytics estimate, the top 10% of earners accounted for 45.8% of US consumer spending in 2025 [7]. The exact share is difficult to measure, but the broader trend is clear: higher-income households are accounting for a growing share of spending while many other households remain under financial pressure. Credit card balances 90 or more days delinquent remained elevated at 12.9% in the second quarter of 2026 [8], the personal savings rate fell to 4.0%, down from 6.2% 2 years earlier [8], and the 60-day-plus delinquency rate on subprime auto loans reached 6.9% in January 2026, the highest level since Fitch Ratings began tracking the measure in the early 1990s [9]. Together, these indicators point to continued financial strain among many households.
Jobs have also become less certain for many people, and when someone is not working, or is worried they might not be for much longer, they either do not have money to spend or they spend it cautiously. That squeezed population, rather than the highest-income households, represents much of the customer base small businesses, consumer goods, and professional services depend on.
The Uncomfortable Reality: What happens to small businesses when the customers they depend on have less money to spend?
SUPPORT INFRASTRUCTURE
The organizations built to coach, train, and technically equip small business owners are also navigating significant changes in resources and capacity. The SBA announced plans in March 2025 to reduce its workforce by approximately 2,700 positions, or 43%, as part of an agency-wide reorganization that returns staffing to pre-pandemic levels [11]. Whatever the longer-term structure becomes, changes of this magnitude raise important questions about the infrastructure entrepreneurs rely on for education, technical assistance, mentorship, and connections to resources. More people are pursuing business ownership while entering a Demand environment that is compromised and a Support Infrastructure environment that is strained.
The Uncomfortable Reality: What happens when more people pursue entrepreneurship while the infrastructure designed to support them is under strain?
MACROECONOMIC ENVIRONMENT
In one 2026 small business survey, 73% of owners said tariffs had affected their operations, with 66% reporting higher supply costs and 46% reporting margin compression [12]. Research from the Federal Reserve Bank of New York also found that businesses facing greater tariff challenges were less likely to expect higher revenue or employment in 2026, with imported input costs playing an important role [13].
The cost of borrowing money is moving in the wrong direction too. On September 16, 2026, the Federal Reserve raised its benchmark interest rate by a quarter point to a target range of 3.75% to 4.00%, citing inflation that remained elevated [14]. Rising costs on one side and squeezed customers on the other press the same margin from both directions, while higher borrowing costs make it more expensive for businesses to use credit to absorb that pressure.
The Uncomfortable Reality: What happens when it costs more to operate a business, more to finance it, and customers have less to spend?
A New Era, Not a Collapse
Initially, I was discouraged. I felt the answer to “Can small businesses still start, grow, scale, and have real impact in this current market?” was no. I kept seeing owners with years of real work behind them slow down, rethink their operations, or weigh protecting what they had built against risking more to keep going. But after a reframe, I realized that how I felt about the market and the reality of the market are 2 different things.
"The pressures we are seeing do not point to the collapse of the small business ecosystem, but to changing conditions that require both business owners and the organizations that support them to operate differently than before."
So my answer is yes, with a different focus. The appetite to start is strong. The opportunity now is in building the support, resources, and partnerships that help those businesses grow into what comes next.
I have seen a structural shift like this play out before. E-commerce accounted for less than 1% of total US retail sales in 2000, and for years afterward, much of the retail industry treated it as a niche channel, something worth a small line item rather than a fundamental change in how business got done [16]. By the mid-2020s, online sales had climbed past 16% of all retail spending. E-commerce was no longer simply another channel; it had become part of how retail operated. Businesses that continued treating it as a passing trend risked being left behind.
None of it looked like the beginning of a new era while it was happening. It looked like an ordinary market cycle that was easy to dismiss. But it was early evidence of a new operating model that went on to reshape how business was built over the next two decades. I believe we are standing inside that same kind of moment now, early in a new phase with a different set of baseline conditions than the ones much of our small business support infrastructure was originally built around. I wrote about this in January 2026 in “Planning for 2026? The Market Shift You Can’t Plan Around” [15].
Some of the conditions that are creating pressure today will change. Interest rates will move, consumer spending will cycle, funding and policy priorities will shift, and some of the conditions that are strained today will strengthen again. The conditions themselves are not the shift. Their weakening at the same time made the shift visible, and it raises a question about the role of the ecosystem built to support small businesses.
From Entrepreneurship to Enterprise
For decades, economic development organizations, government, and financial institutions have invested heavily in expanding access to entrepreneurship. We help people turn ideas into businesses, learn the fundamentals, access capital, enter markets, build networks, and pursue opportunities that historically were much harder for many entrepreneurs to reach. That work still matters, but helping more people enter entrepreneurship is only one part of the economic opportunity. The larger impact comes from what those businesses are able to become after they start.
We have spent decades expanding pathways into entrepreneurship. The next opportunity is strengthening the pathways from entrepreneurship to enterprise.
Enterprise development itself is not new, but much of the support designed for it comes later in the business journey: once a company is scaling, manufacturing at greater capacity, preparing for acquisition, or reaching other markers of maturity. I explored one example of this gap recently when looking at business ownership and acquisition in "Most Small Businesses Don't Sell. They Stop." [17] I believe this next era requires us to begin that work earlier. The systems, financial health, technology, teams, processes, and market position that make a business scalable, valuable, and impactful are not things we add once a business becomes mature. They are how a business becomes mature in the first place.
That does not mean every business needs to become large or pursue the same definition of scale. It means enterprise development should occupy a larger and more intentional place in the small business support continuum, extending the work that begins at startup and helping more entrepreneurs intentionally build what comes next. This is where businesses develop the infrastructure to grow sustainably, scale where appropriate, create lasting value, and generate greater economic and community impact.
Access to capital, knowledge, coaching, markets, technology, and networks still matters, but our definition of small business development needs to expand beyond access alone. We also have to consider what that access is helping an entrepreneur build.
Are we only helping more people participate in entrepreneurship, or are we also creating the conditions for more of them to build sustainable, scalable, and valuable enterprises?
What We Build Next
If this is where small business development is headed, then the question for those of us who support this ecosystem is no longer only how we help more people become entrepreneurs. It is also how we help more of those entrepreneurs build enterprises capable of creating the jobs, wealth, innovation, and community impact that made supporting entrepreneurship so important in the first place.
If enterprise development needs to begin earlier, then those of us who fund, design, and deliver small business support should look at where our resources are concentrated across the business journey. Startup support remains essential, but enterprise development is cumulative. What a business learns and builds at one stage becomes the foundation for what it can do next. That requires greater continuity across the journey, with opportunities for entrepreneurs to learn, implement with guidance, reach new milestones, and access more advanced support as their businesses develop. No single organization needs to provide all of it, but we should be more intentional about where we each fit in the continuum and how entrepreneurs move between us without losing momentum.
It also requires us to reconsider how we measure impact. The timeline of a program is not necessarily the timeline of its impact. A technology program, manufacturing course, capital investment, or market opportunity may happen at a specific point in time, while the business outcomes may take months or years to develop. Program completion, capital accessed, contracts secured, and other immediate outcomes still matter, but enterprise development asks us to look further. Did those interventions help the business strengthen its operations, increase capacity, create value, reach its next milestone, and become better positioned for what comes next?
This is not about replacing the small business support ecosystem we have built. It is about building on it. We have made important progress expanding access to entrepreneurship, and that work should continue. The opportunity now is to create a more connected path from starting a business to building an enterprise, with the right education, guidance, resources, and partners available as businesses develop. The next era of small business development will not only be defined by how many businesses we help start, but by how many are able to grow into enterprises that create jobs, build wealth, and strengthen communities.
Terrand Smith
Founder/CEO
37 Oaks
Who is 37 Oaks?
37 Oaks is a global commerce development company that translates the complex language of commerce, distribution, and scaling into something entrepreneurs can learn, apply, and build with — turning growing businesses into scalable enterprises and stronger economies.
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Sources
[1] Terrand Smith, "The Small Business Ecosystem We Need, Doesn't Exist (Yet)," 37 Oaks, May 2025. https://www.37oaks.com/post/the-small-business-ecosystem-we-need-doesn-t-exist-yet
[2] TD Economics, "Small and Medium Sized Businesses in the Recovery," May 2010, citing Bureau of Labor Statistics data. https://www.td.com/document/PDF/economics/special/td-economics-special-jm0510-smbs.pdf
[3] Consumer Financial Protection Bureau, "Data Point: Small Business Lending and the Great Recession." https://files.consumerfinance.gov/f/documents/cfpb_data-point_small-business-lending-great-recession.pdf
[4] Federal Reserve Board, "Business Entry and Exit in the COVID-19 Pandemic: A Preliminary Look at Official Data," May 2022, using BLS Business Employment Dynamics data. https://www.federalreserve.gov/econres/notes/feds-notes/business-entry-and-exit-in-the-covid-19-pandemic-a-preliminary-look-at-official-data-20220506.html
[5] American Bar Association, "Bankruptcy Filings During and After the COVID-19 Recession," March 2022. https://www.americanbar.org/groups/business_law/resources/business-law-today/2022-march/bankruptcy-filings-during-and-after-the-covid-19-recession/
[6] Economic Innovation Group, "The Startup Surge? Unpacking 2020 Trends in Business Formation," using U.S. Census Bureau Business Formation Statistics. https://eig.org/the-startup-surge-business-formation-trends-in-2020/
[7] Moody's Analytics analysis of consumer spending by income, as discussed by Bloomberg, September 2025, and reviewed by the Federal Reserve Bank of Minneapolis. Revised, more conservative estimates put the top 10% of earners at more than 45% of US consumer spending in 2025. https://www.bloomberg.com/news/articles/2025-09-16/top-10-of-earners-drive-a-growing-share-of-us-consumer-spending
[8] Federal Reserve Bank of New York, Quarterly Report on Household Debt and Credit, Q2 2026; U.S. personal savings rate data as reported in May 2026. https://restaurant.org/research-and-media/research/restaurant-economic-insights/economic-indicators/consumer-outlook/
[9] Fitch Ratings subprime auto-loan delinquency data, January 2026, via CarEdge. https://caredge.com/guides/auto-loan-crisis-32-year-record
[10] U.S. Census Bureau, Business Formation Statistics, January through July 2026. Monthly Business Application data total nearly 3.7 million applications over the 7-month period. Business applications represent EIN applications and should not be interpreted as completed business formations. https://www.census.gov/econ/bfs/current/index.html
[11] U.S. Small Business Administration, agency-wide reorganization announcement, March 2025; Federal News Network and congressional reporting on SBA staffing and SCORE funding. https://federalnewsnetwork.com/workforce/2025/03/sba-to-cut-43-of-workforce-return-to-pre-pandemic-staffing-levels/
[12] Fora Financial, "Small Business Inflation Statistics for 2026," July 2026. https://www.forafinancial.com/blog/small-business/small-business-economic-outlook/
[13] Will Aarons and Asani Sarkar, "Effect of Tariffs on U.S. Small Businesses," Federal Reserve Bank of New York, Liberty Street Economics, July 2026. https://libertystreeteconomics.newyorkfed.org/2026/07/effect-of-tariffs-on-u-s-small-businesses/
[14] Federal Reserve Board, FOMC Statement, September 16, 2026, https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a.htm; Implementation Note, September 16, 2026, https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a1.htm
[15] Terrand Smith, "Planning for 2026? The Market Shift You Can't Plan Around," 37 Oaks, January 2026. https://www.37oaks.com/post/planning-for-2026
[16] U.S. Census Bureau retail e-commerce data via Federal Reserve Bank of St. Louis, FRED, "E-Commerce Retail Sales as a Percent of Total Sales." https://fred.stlouisfed.org/series/ECOMPCTSA
[17] Terrand Smith, "Most Small Businesses Don't Sell. They Stop.," 37 Oaks. https://www.37oaks.com/post/most-small-businesses-don-t-sell-they-stop
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