SMBs Rewrite the Recession Playbook with Disciplined Tech Investment

CAMBRIDGE, MA – July 21, 2026

In a landscape clouded by persistent inflation and the specter of recession, America's small and midsized businesses (SMBs) are deviating from the traditional script of defensive austerity. A landmark report from market research firm Bredin reveals a sector engaged not in panicked cost-cutting, but in a disciplined, forward-looking recalibration. SMBs are strengthening their financial foundations while making deliberate, strategic investments in technology and artificial intelligence, signaling a fundamental shift in how they navigate economic turbulence.

The latest "Bredin State of SMB" report, which combines a national survey of 500 U.S. business principals with the firm's proprietary trend data, paints a picture of calculated adaptation. While the challenges are undeniable—43% of SMBs report a significant or severe impact from inflation and 41% believe a recession is either here or imminent—the response is one of unprecedented strategic maturity. This isn't a story of survival; it's a story of preparing to thrive.

A New Playbook for Uncertainty

Historically, economic downturns have prompted businesses to slash spending across the board and wait for clearer skies. The current approach, as detailed by Bredin's research, is far more nuanced. Among the cohort of businesses bracing for a recession, the focus is on building a robust financial fortress. A majority (51%) are trimming discretionary spending, 48% are actively reducing debt, and 45% are building up cash reserves. This isn't just hunkering down; it's creating a war chest.

This disciplined financial management is the foundation for a longer-term growth strategy. It's a move away from reactive fear and towards proactive preparation. "SMBs have always adapted to change, but our research shows they're doing it differently," noted Stu Richards, CEO of Bredin, in the report's release. "Rather than waiting for economic conditions to improve, they’re making deliberate decisions now to strengthen their businesses while continuing to invest for growth."

This sentiment is reflected in the sector's outlook. Despite the headwinds, a surprising majority expect revenue growth, with 71% of very small businesses (fewer than 20 employees) and a staggering 95% of midsized businesses (100 to 1,000 employees) anticipating higher revenue in 2026 than in 2025. This optimism isn't based on wishful thinking, but on the strategic investments they are making today.

Technology as the Engine of Efficiency

The cornerstone of this new SMB playbook is the strategic deployment of technology. While customer acquisition remains a top priority for 60% of businesses, the path to achieving it has changed. The report highlights a significant planned increase in technology spending over the next year, with improving operational efficiency cited as the primary driver. This trend is particularly pronounced as businesses scale: 43% of very small businesses, 67% of small businesses (20-100 employees), and 78% of midsized businesses are set to boost their tech budgets.

This investment is a direct response to rising costs. While 39% of SMBs have raised prices to manage inflation, the data reveals a telling divergence in strategy. Very small businesses, often with the tightest margins, are most likely to pass costs to consumers. Midsized businesses, however, are more inclined to invest in technology to streamline operations and absorb cost pressures internally. This approach not only preserves customer relationships but also builds a more resilient and competitive long-term operational model. Technology is no longer a discretionary add-on; it is core infrastructure for navigating the new economic normal.

The Double-Edged Sword of AI

Nowhere is the complexity of the current environment more apparent than in the adoption and perception of artificial intelligence. The Bredin report shows AI emerging as a significant, if nascent, engine for growth. A notable portion of the market—ranging from 12% of very small businesses to 33% of midsized ones—report that AI has already enabled enough growth to warrant increased hiring. This data point directly counters the common narrative of AI as a job replacement technology, reframing it as a tool for expansion and opportunity creation within the SMB sector.

However, this technological frontier comes with a dark side. The very same innovation driving efficiency is also powering a new wave of sophisticated threats. According to the report, AI-enabled scams have become the single top fraud concern across SMBs of all sizes. These are not the poorly-worded phishing emails of the past. Businesses now face hyper-realistic fake invoices, deepfake audio calls impersonating executives or vendors, and highly targeted impersonation schemes that are increasingly difficult to detect. For SMBs, which often lack the dedicated cybersecurity resources of larger corporations, this represents a critical and escalating vulnerability. The adoption of AI is becoming a race to harness its benefits while simultaneously building defenses against its weaponization.

Size Matters: A Segmented Strategy for Resilience

The report underscores a crucial reality: the "SMB" label encompasses a vast and varied landscape of businesses, each with distinct challenges and strategies. Bredin's segmentation—very small (under 20 employees), small (20-100), and midsized (100-1,000)—reveals stark differences in how these groups are adapting.

While optimism for revenue growth is high across the board, the scale of that optimism and the strategies to achieve it differ significantly. Midsized businesses, with greater access to capital and human resources, are leading the charge in technology investment and are most bullish on their growth prospects (95%). They are leveraging their scale to invest in efficiency-driving systems that will pay dividends for years.

Conversely, very small businesses, while still optimistic (71%), face more immediate pressures. They are more likely to rely on price increases to manage inflation and are less likely to have made significant investments in technology or AI. Their agility is their primary asset, but they are also the most vulnerable to cash flow disruptions, with 22% of all SMBs reporting that customers are taking longer to pay their bills—a pressure felt most acutely at the smaller end of the spectrum. This divergence highlights the need for tailored policy and support, recognizing that a one-size-fits-all approach to the SMB economy is no longer viable in an environment that rewards strategic, resource-informed adaptation.