2025 Holiday Season: How SMBs Are Preparing

Small business owners are gearing up for what looks like a robust 2025 holiday season, with expected foot traffic and sales signaling cautious optimism and growth potential. According to the 2025 Paychex Small Business Holiday Outlook Survey, which polled more than 770 business leaders with 5-499 employees, 87% expect this holiday season to outperform last year. What’s more, the overwhelming majority are raising wages for seasonal employees and investing in training and technology to ensure they’re prepared for the holiday rush.

Small Businesses Are Nimble and Resilient

We surveyed relevant businesses that operate in industries with a high likelihood of seasonal traffic as consumers ramp up for the holidays, such as retail establishments — both online and brick and mortar — and restaurants. These companies employ 5-499 employees, which the U.S. Bureau of Labor Statistics categorizes as “small business.” Small businesses in this sector can often be more nimble than larger firms, facing less red tape and demonstrating entrepreneurial spirit and resilience. These businesses often benefit from a push to support local through national events such as Small Business Saturday, as many communities rally around supporting the shops that line Main Streets across America.

Optimism Heading Into the Holidays

Businesses that will be ramping up their staff this holiday season are pointing to several key factors for doing so: 48% expect growth to continue into 2026, 47% anticipate higher customer traffic or orders, and 41% are confident about revenue opportunities. Other top reasons include expanding hours or services (39%) and responding to increased demand (39%).

The confidence extends beyond the immediate holiday season with 88% of small businesses reporting that their 2025 revenue is already up compared to 2024, and the same percentage expects revenue growth to continue in 2026. When it comes to holiday performance specifically, 87% expect this season to outperform last year’s results.

Wages Are Rising To Attract Top Talent for the Season

Competition for seasonal talent is heating up, and businesses are responding with their wallets. The survey found that 79% of small businesses are offering higher wages or incentives for seasonal staff this year, with 20% reporting significantly higher compensation and 59% offering slightly higher pay.

The food service industry leads the way, with 88% of restaurants and food establishments increasing wages or incentives for their holiday workers. Retail and hospitality sectors are also stepping up their compensation packages to remain competitive. While finding qualified candidates has historically been a pain point for seasonal hiring, this year’s outlook is a bit more optimistic. Over half (56%) of respondents said it’s easy to find qualified seasonal workers, 23% feel neutral about the process, and only 21% report difficulty.

However, challenges remain. When asked about their biggest hiring obstacles, 29% cited difficulty finding reliable or qualified candidates, 20% struggled with scheduling flexibility, and 17% faced issues with turnover and no-shows.

“I waste a lot of time, energy, and money hiring workers that do not show up after 2 weeks of work.”
Principal, Transportation/Distribution/Warehousing, 100-499 employees

Managing the Holiday Workforce: Training, Tech, and Flexibility

Small businesses are getting creative with existing resources and planning to work smarter this holiday season. Fifty-four percent are training current employees to take on different roles, and 36% are relying more on automation and artificial intelligence to handle increased demand.

The strategies businesses are using to adapt to holiday staffing needs include flexible scheduling (40%), cross-training and upskilling current staff (39%), hiring temporary or gig workers (34%), increased use of technology and automation (32%), and offering retention bonuses or incentives (31%).

Arguably, technology is playing a bigger role than ever before. The tools that respondents said help them most during the holiday season include employee communication and engagement platforms (52%), payroll and HR software (50%), recruiting and job posting platforms (46%), scheduling and shift management tools (41%), and time-tracking and attendance systems (39%).

This investment in both people and technology appears to be paying off. When asked how prepared they feel to handle unexpected staffing issues during the holiday season, 36% of business leaders said they feel very prepared and 58% feel somewhat prepared — meaning nearly 95% feel ready for whatever the season brings.

What Businesses Want To Improve

Whether it be the customer experience, products on the shelf, or the bottom line, business owners are always looking for ways to improve. That’s no different this holiday season as they think about management processes this season. When asked about what they can improve, the most common theme was speed: nearly one in three respondents wants a faster, more efficient hiring and onboarding process. Many cited frustrations with delays caused by background checks, corporate approvals, or excessive paperwork.

About one in four business owners wish they could attract more dependable or qualified seasonal workers, with common complaints including no-shows, poor work ethic, and lack of relevant experience.

Training also emerged as a key area for improvement, with around 20% of respondents wanting to make training more structured, shorter, or more hands-on so seasonal workers can become productive more quickly.

Finally, roughly 15% of businesses expressed a desire to keep high-performing seasonal staff longer or transition them into permanent roles — a sign that the line between “seasonal” and “permanent” hiring may be beginning to blur.

Looking Ahead to 2026

When asked about their overall outlook for 2026, small business owners expressed optimism tempered with realism. Roughly two-thirds described their outlook as positive, often referencing expansion plans, new customers, and technology investments.

Representative quotes from business leaders include:

• “We see 2026 as a year of big growth.” – Senior Management, Food/Beverage/Restaurants, 100-400 employees
• “All signs are pointing up in 2026. I expect about a 15% more increase in overall revenue.” – Principal, Retail, 5-19 employees
• “My overall outlook for 2026 is to hire more employees and increase revenue while opening another brick-and-mortar store.” – Principal, Food/Beverage/Restaurants, 100-400 employees

Balancing Confidence With Caution

On the other hand, the challenges are real and persistent. About one in five business owners mentioned concerns related to tariffs, inflation, or broader economic uncertainty. The gap between single-location businesses (37% hiring more) and multi-location operations (nearly 60% hiring more) suggests that scale and resources matter in navigating these challenges.

Representative quotes from business leaders include:

• “Everything is up and in more ways than one. Products cost more, but businesses are also paying more for entry-level jobs and services.” – Principal, Transportation/Distribution/Warehousing, 100-499 employees
• “I think next year will be a challenge as people are ordering less and we are distributing less due to concerns about the economy…We will struggle due to growing concern about the direction of basic prices on goods and services.” – Senior Management, Transportation/Distribution/Warehousing, 100-499 employees
• “Concerned about the effects of tariffs on my overall profits.” – Principal, Retail, 50-99 employees

Conclusion

For small business owners, the path forward when it comes to preparing for the holiday season involves several key strategies:

• Start Hiring Early: With one-third of respondents wanting faster hiring processes, beginning recruitment well ahead of peak season can provide a competitive advantage.
• Invest in Training: The 54% who are cross-training employees recognize that flexibility within existing teams can offset hiring challenges.
• Leverage Technology: From AI-powered screening to automated scheduling, the right tools can streamline operations and reduce administrative burden.
• Focus on Retention: The 15% who want to convert seasonal workers to permanent roles understand that finding good talent is hard — keeping these individuals is smart business.
• Plan for Flexibility: With 40% emphasizing flexible scheduling, meeting workers where they are has become essential.

While challenges like supply chain costs, labor shortages, and shifting consumer spending remain on the radar, the prevailing sentiment is one of confidence and readiness. The small businesses that thrive this holiday season will be those that balance optimism with realism — investing in growth while maintaining the flexibility to adapt if conditions shift.

Methodology

Online survey of 770 U.S. small business owners and decision-makers from companies with 5–499 employees; industries include retail, food service, hospitality, transportation/warehousing, personal services, and others. Fielded October 2025. Percentages are rounded to whole numbers; multi-select questions may sum above 100.