30% of Rural Businesses Say Sales Are Down

While many small- to medium-sized businesses (SMBs) nationwide are charting a course toward long-term growth, a new financial analysis reveals a geographic divide in their optimism.

The PYMNTS Intelligence report “The Urban-Rural Economic Divide: How Location Affects SMBs’ Outlook” uncovered a nuanced landscape for SMBs across the United States. While the aggregate picture suggested optimism, with most SMBs reporting increased revenues in the past year and fewer facing contracting margins or staffing difficulties, a divergence in outlook emerged based on location. Overall, SMBs were optimistic about long-term growth, with a declining number reporting decreased revenue over time.

This optimism, however, was not evenly distributed. SMBs operating in major urban centers generally expressed little reason for concern for their future, often reporting steady growth and increased profits. In contrast, their counterparts in small towns, suburbs and rural areas harbored increasing anxieties about long-term growth and survival.

These worries stemmed from several factors, including the observed shift of workers returning to city offices, which reduces patronage for local SMBs; broader economic concerns; and challenges in accessing finance.

The report drew insights from a survey of 511 SMBs, conducted between Jan. 7 and Jan. 23.

Key data points from the report include:

• Revenue Declines Show Geographic Split: Despite an overall decline in the share of SMBs reporting decreased revenue from 22% in June 2022 to 17% in January, an urban-rural divide persisted. Rural SMBs were twice as likely as those in big cities to report declining revenues, with 30% facing decreases compared to 15% in urban areas. This trend extended to growth, as rural SMBs were also less likely to have reported growing revenues over the past three years. One potential explanation for this trend is a post-pandemic shift of workers from home to city offices, impacting local patronage.
• Urban SMBs Drive Overall Survival Optimism: The general sentiment among SMBs regarding their two-year survival prospects improved, with the share of businesses deeming survival “slightly or not likely at all” falling from nearly 7% in July 2022 to 5% in January 2025. However, this overall trend was predominantly driven by big-city SMBs, where the share of those unlikely to survive declined from 5% in November 2024 to 4% in January. Conversely, all other SMB groups — including those in small cities, small towns and rural areas — reported a reduced likelihood of survival. Rural SMBs specifically saw their share of pessimistic outlooks double from 5% in October to more than 10% in January. However, even with this increase, 90% of rural SMBs still expressed confidence in their two-year survival, indicating a high baseline of optimism across the sector.
• Economic Conditions Top Concern for Survival Doubters: For SMBs, regardless of their location, the primary reason for concern about their long-term survival centered on poor economic conditions, cited by 46% to 51% of worried businesses. This consistently ranked as the leading factor across various industries, including construction, consumer services, retail, professional services and hospitality. Other factors contributing to pessimism included increasing competition, which was a top concern for 43% of SMBs in small cities, along with rising material or equipment costs, difficulties in securing financing, and escalating staffing costs, such as salaries, benefits and payroll taxes.

Beyond these core findings, the report delved into further nuances within the SMB landscape. It revealed that certain industries, like hotels and restaurants, exhibited more volatile revenue trends, being more likely to report increases and decreases, possibly due to elastic consumer demand for leisure activities.

The research also identified how specific concerns disproportionately affected different sectors. For example, nearly 30% of retailers were troubled by supply chain disruptions, while 40% of professional services firms cited staffing costs as their primary worry.

This detailed analysis by PYMNTS Intelligence, a leading global data and analytics platform that uses proprietary data and methods to provide actionable insights, underscored the complex factors shaping the future of the digital economy for SMBs.

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