Table of Contents
Competition is becoming a defining factor for small businesses in 2026—but not in a uniform way.
New data from the Small Business Expo Research Desk (n=1,179) shows that while a large share of small businesses report rising competition, a nearly equal share say the opposite.
This creates a more complex picture than a simple narrative of rising pressure. Instead, the data suggests that the competitive landscape is splitting, with some businesses facing increasing difficulty while others are experiencing less competition.
Understanding this divide is critical, as it points to a growing gap in how small businesses are experiencing the market.
Highlights
- 39.7% of small businesses say competition is getting harder
- 34.5% say competition is getting easier
- 35.9% say small businesses are losing ground to larger competitors
- 30.9% are unsure whether they are losing ground
- Among businesses losing ground, 67% say competition is getting harder
Rising Competition Is Dividing Small Businesses
Small business owners were asked how the level of competition in their industry has changed over time.
Competition Trends (n = 1,179)
- Getting harder — 468 (39.7%)
- Getting easier — 407 (34.5%)
- About the same — 304 (25.8%)
At first glance, the headline finding is straightforward: more businesses report rising competition than any other response.
However, the full distribution tells a more nuanced story. A nearly equal share of businesses report that competition is getting easier, while a smaller portion report no change.
This suggests that competition is not simply increasing across the board. Instead, the market is becoming more divided, with some businesses facing growing pressure and others benefiting from improved positioning.
More Businesses Feel Pressure Than Are Losing Ground
The survey also asked whether small businesses are losing ground to larger competitors.
- Yes — 423 (35.9%)
- No — 392 (33.2%)
- Unsure — 364 (30.9%)
While over one-third of businesses report losing ground, the majority either do not feel they are falling behind or are uncertain about their position.
When compared to competition trends, an important pattern emerges. A larger share of businesses report that competition is getting harder than report actually losing ground.
This indicates that competitive pressure is building before it is consistently translating into negative outcomes. Many businesses appear to be maintaining their position, but doing so in a more challenging environment.
Competition Pressure and Performance Are Closely Linked
When the data is examined together, a strong relationship appears between competition and perceived performance.
Among businesses that report losing ground:
- 67% say competition is getting harder
Among businesses that report not losing ground:
- Only 19% say competition is getting harder
This difference highlights how closely competitive pressure and performance are connected. Businesses facing increased competition are significantly more likely to feel that they are falling behind, suggesting that changes in the competitive environment are already affecting outcomes for some.
A Large Share of Businesses Are Uncertain
One of the most notable findings in the data is the size of the “unsure” group.
Nearly one-third of respondents say they are unsure whether they are losing ground. This level of uncertainty indicates that many businesses do not have a clear view of their competitive position.
This lack of visibility can make it more difficult to:
- Evaluate performance
- Respond to competitive threats
- Make informed strategic decisions
As the competitive environment becomes more uneven, this uncertainty may become an increasingly important factor in how businesses navigate the market.
A Competitive Landscape That Is Still Evolving
Taken together, the data suggests that small businesses are operating in a competitive environment that is becoming more complex and less predictable.
Competition is increasing for a significant portion of businesses, but not for all. At the same time, outcomes are mixed, and a large number of businesses remain uncertain about where they stand.
This combination points to a market that is not simply becoming more competitive, but more fragmented. Some businesses are adapting successfully, while others are facing increasing pressure, and many are still trying to determine their position.
Final Takeaway
Competition is becoming a more important factor in small business performance, but it is not affecting all businesses in the same way.
With a substantial share of businesses reporting rising competition alongside a nearly equal share reporting the opposite, the data reflects a market that is dividing rather than moving in a single direction. At the same time, the strong relationship between competition pressure and perceived performance suggests that these shifts are already influencing which businesses feel they are keeping up and which feel they are falling behind.
Footnotes
- U.S. Chamber of Commerce. Small Business Trends and Employer Firm Data. https://www.uschamber.com/small-business/small-business-data-center
- McKinsey & Company. The State of Small Business: Competitive Pressures and Growth. https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-state-of-small-business
- Harvard Business Review. The Competitive Advantage of Small Businesses in Changing Markets. https://hbr.org/2020/03/the-competitive-advantage-of-small-businesses
Related: Nearly 60% of Small Businesses Say Customers Are More Price-Sensitive in 2026