Despite 43% of entrepreneurs saying the economy is hurting their business, 95% remain confident in their success over the next year, according to new research from Ernst & Young LLP (EY US).

The EY Entrepreneur Ecosystem Barometer is a biannual study that surveyed 500 established entrepreneurs with $1 million or more in annual revenue to assess their business outlook and strategies.

When asked to choose what factors threatened their ability to be successful, entrepreneurs reported economic uncertainty (interest rates, inflation and tariffs), as well as regulatory or policy changes, as their leading concerns (38% each). These two factors together illustrate how overall unpredictable the current market has become due to policy choices and the challenges it creates for entrepreneurs.

Despite these concerns, entrepreneurs have an optimistic outlook for their business's ability to succeed. In fact, 73% of entrepreneurs report they've experienced revenue growth this year compared with last year, of which 29% report growth of 20% or higher.

"Entrepreneurs are the backbone of the US economy, so their optimism offers a powerful indicator about what's ahead for 2025. Based on our EY survey, despite economic uncertainty, entrepreneurs are forging ahead, remain resilient and continue to drive growth," said Anna Horndahl, EY Americas Entrepreneur Of The Year™ Co-director and an Assurance partner at EY US.

In the first EY Entrepreneur Ecosystem Barometer (November 2024) 76% of respondents reported revenue growth over the past year.

This optimism extends beyond individual performance. Entrepreneurs also foresee broad market improvement, with 77% anticipating the US economy will be stronger a year from now (April 2026), a slight decrease from 82% in all 2024.

Entrepreneurs chase capital and deals to fuel growth

This confidence is especially visible when considering the volatility that occurred in fundraising and strategic transactions (initial public offerings (IPOs), mergers and acquisitions (M&A), private sale, etc.) over the past six months.

While 95% of entrepreneurs planned to raise capital over the next 18 to 24 months (vs. 91% in fall 2024), only 19% aimed to raise $10 million or more, compared with 30% in fall 2024. Reporting the origins of capital funding, only 36% said they took on debt, a steep drop from 45% in fall 2024. These factors show entrepreneurs are relying less on external capital, signaling growing business strength.

In the fall of 2024, 72% of entrepreneurs were considering a strategic transaction, with 33% in early planning. Just six months later, that rose to 81%, with 51% now in early stages — showing a sharp increase in deal interest at the time. Only 3% said they had no plans for a transaction, down from 12% in fall 2024.

When asked to choose the reasons why they were seeking a strategic transaction, respondents were split fairly evenly:

• 19% to gain access to new markets/customers

• 18% to secure additional capital or financial resources

• 17% to acquire new technology, talent or capabilities

• 16% to achieve economies of scale or operational efficiencies

• 15% to exit the business or transition to a new venture

• 14% to address competitive pressures or industry consolidation

Entrepreneurs turn to AI to boost workforce performance

Entrepreneurs view artificial intelligence (AI) as key to boosting competitiveness. When asked how they're building resilience, 40% cited investing in automation and AI — the top strategy — followed by enhancing employee retention strategies (35%).

Similarly, when asked where they would invest their budget the most over the next year, entrepreneurs placed AI and machine learning technologies in their top three priorities (42%), with re-skilling and training programs for existing employees (39%) and talent identification and recruitment (36%) following closely.

Notably, female entrepreneurs were placing greater priority on re-skilling their existing teams, with 47% noting that it was one of their top three budget priorities, compared with 39% of all respondents.

Entrepreneurs said AI was shaping workforce strategy by helping hire talent (34%), reducing headcount while assisting with recruitment (28%), and boosting productivity without changing staff levels (22%).

Only 2% weren't using AI in workforce decisions, underscoring its growing role in talent management — possibly explaining why 63% say finding qualified talent is now easier.