00:00among U.S. small business owners declined for a second month in February on less optimism
00:04about the outlook for sales and the economy. We're joined now for more insight by Sukhinder
00:09Singh, Cassidy, CEO of Zero, a global small business platform. Sukhinder, thank you for
00:14joining us. And this is perfect for you because you reach out, Zero, and you to so many different
00:20small businesses. Does the sentiment of what you're seeing among the community match what
00:26some of these surveys are saying? Yes. And in fact, we run our own survey, which I would say lines
00:32up
00:32in an interesting way against the latest NFIB data. So as you noted, uncertainty is up, though
00:37interestingly, it's near all-time high still, which is in an environment where what we see is real
00:45sales growth is slowing. Our own data suggests that in 2025, sales growth was close to 2.5%,
00:51which is half the average historically for the U.S., and the December quarter was 0.9%. When you
00:57juxtapose those data points, you can understand why optimism is a little down. And while sales
01:02growth, real sales growth, is actually harder to come by over the past year and indeed in the
01:07December quarter. So where does this stress show up first, Sukhinder? Do you see it in hiring,
01:13in invoices, in late payments? Well, you hit it. Late payments, I think, is probably one of the
01:20biggest sources of stress. It's ongoing stress. Late payments data suggests that late payments
01:25are down slightly, but they're still, on average, eight days late. And for a small business, that is
01:30the lifeblood of their cash flow. I think the other thing that you see in the NFIB data that
01:35complements the XSBI data, the zero data, is that you still are in quite a tight labor market, meaning
01:41over 54% of employers trying to hire and 34% saying job rules unfilled in February. So I think
01:51there is
01:51an uncertain environment, despite what you would call a near high on the optimism index, even though
01:57it fell month over month. How long does that need to last before we do see a hit to hiring
02:02Sukhinder?
02:02Because the stat that you saw in your data, as you mentioned, the poor sales coming from NFIB,
02:07where 11% of respondents list that as their single most important problem, the highest since July
02:122025. Historically, that has been a harbinger that leads to a weaker labor market. Is it your
02:19expectation that that will play out this time, too? You know, I think the good thing about small
02:25businesses, and you continue to see a tight labor market despite slower sales, is I think they are
02:29cautious hirers. I think they manage cash flow tightly. So when you talk about a weaker versus
02:34a stronger labor market, we've also seen since COVID, actually, an inability to fill all of the
02:39jobs. So I think what we see is, interestingly, a relatively stable SMB environment in rather,
02:46you know, we would say volatile years, as you and I would both agree, the last few years have been.
02:51And I think that speaks more to the cautiousness of their expanding their capital and their labor.
02:57So I think in that regard, I don't think they've made severe increases. I think they are monitoring
03:02and managing labor. Their headcount quite tightly and still finding it hard to fill.
03:07We've seen oil rise 50 percent year to date. We've seen the cost of gasoline at the pump go up
03:16now over
03:17$3.50. How much do these things affect small businesses? Because I would expect them to be even
03:23more susceptible to those kind of price increases arise in the cost of unleaded gas. Do you see that
03:31coming through? Well, I think what you see, keep in mind, and you and I both know this,
03:34the data that we're seeing right now is from February. We've yet to see March data. I think
03:39what it does speak to overall is inflation, right? And so one of the ongoing fears, you know,
03:45for small businesses, of course, is both the cost of their prices, whether that's gas,
03:50whether that's inventory, you know, as a result of tariffs, and then the need to pass on some of
03:55those costs to the consumer. So I think what this all, you know, looks at really is the likelihood
04:01of price increases. And indeed, in the NFIB data, you see that 34 percent on a net basis said that
04:06they were going, you're planning price increases. So I think when they have to manage the cost of
04:11their supply, you know, invariably, they have to think about their own price increases to customers.
04:16So I think it does speak to what we might see in the cost of goods sold and the cost
04:21to run a
04:22business. And then indeed, let's see what happens with consumer pricing from small businesses.
04:26How much room is there left to raise prices, Sukinder? You already had that happening out
04:31of COVID. And now it feels like there's this price hike fatigue among consumers. It happens again,
04:36maybe to a smaller degree, but it happens again with tariffs. Is there really still room to go
04:41and having consumers stomach higher prices at this point?
04:44Well, I think you're hitting a couple of things. This is only one sector of the economy,
04:48which is the small business economy, of course, but consumers, you know, they're dealing with this
04:52across the board. So I think, you know, we've seen, and when you look at the data again from
04:57small businesses, you know, they don't all raise their prices at the same time. They are kind of
05:01metering and very conscious of price rises. I think the consumer overall is dealing, you know,
05:07with having to manage this across the board. So, you know, I think this is a bigger phenomenon than
05:11small businesses. But of course, for small businesses, I think they are also consumers. So they need to
05:17manage both ends of the spectrum. Are small businesses able to reduce costs materially with
05:24AI? So, Kinder, I mean, are you are you hearing about this anecdotally? Are you seeing it in the
05:29data? Well, of course, I think, you know, we are providers of small business software back end
05:34accounting software. And I think what we see and what we provide to our customers is, in fact,
05:39you know, increased productivity on things like the time they spend bookkeeping. So I think there is an
05:44expectation and I think optimism that we can help small business productivity actually with AI over
05:52the short, medium and long term. But are we seeing it in the data yet? Not yet. I think what
05:57you're
05:57starting to see, which is you as you know, I live in tech, you live, you live with the tech
06:02industry
06:02all the time. I think what we're really starting to see is productivity gains in hours spent through
06:07use of software. I don't think that's yet translating to sort of the need to, you know,
06:12you know, the measurement of like how many hours are saved, we can see it, you know, in what we're
06:17saving small businesses, our expectation over time is it does increase capacity and productivity more
06:25materially.
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