With 2026 half over, now is a great time to review your results year-to-date and, if needed, revise your plans for the second half of the year. The first half of the year has been challenging for small businesses. Gas prices were high, inflation persisted, and interest rates did not fall. Looking ahead, there’s still uncertainly about the future, making it difficult to plan ahead.
The NFIB Small Business Economic Trends for May 2026 shows optimism among small business owners declined somewhat but remains well above the historical average.
So, what are your plans for the second half of the year? Your actions may depend on how well you’ve performed year to date and your projections for the future.
Concerns impacting planning
What’s causing uncertainty?
- Inflation. The rate of inflation popped up in recent months due in part to high gasoline prices. With the signing of a memorandum of understanding (MoU) with Iran, gas prices should decline dramatically, and the inflation rate should reflect this soon. Of course, other items continue to be high, so will inflation continue to come down in the second half of 2026?
- Interest rates. The first statement issued by new Fed Chairman Warsh kept interest rates unchanged for the present. If inflation comes down (see above), will the Fed finally reduce its rate, which will lower the cost of borrowing for businesses?
- Geopolitical issues. While there’s a MoU in place to stop the conflict in the Middle East, things could change at any moment. And what is Russia up to (will the war with Ukraine end; will Russia try to extend its authority into other East European countries)? It’s been reported that despite global disruption, SME leaders are optimistic about international business expansion opportunities.
Ideas for businesses doing well
If your business is profitable and you don’t see problems arising, there are a number of actions you can take now to nail down a great year.
Invest in machinery and equipment. According to the NFIB survey referenced earlier, 55% of small businesses made capital outlays in the first half of this year. If you want to buy equipment and machinery in the second half of the year, tax rules may provide additional tax incentives. In your decision-making, factor in the following federal income tax breaks. And consider state income tax rules, which may or may not allow these breaks in whole or in part:
- 100% bonus depreciation. This deduction is an immediate write-off of the cost for the purchase of eligible property—new or used—placed in service this year. The full deduction applies whether the purchase is financed in whole or in party.
- First-year expensing. This is another immediate deduction for the cost of eligible property. For 2026, this is up to $2,560,000, assuming you have profits to utilize this tax break. Again, financing your purchase(s) does not impact the deduction.
Increase R&D. Depending on the nature of your business, you may also want to engage in new or additional research and development activities. The cost of domestic research and experimentation (R&E) costs can be expensed (deducted in full in the first year). Note: Small businesses that had R&E costs in 2022, 2023, and 2024, have until July 6, 2026, to amend tax returns for these years to reverse amortizing costs over 5 years and instead retroactively elect to use expensing. Partnerships file administrative adjustment requests (AARs) rather than amended returns.
Expand your staff. If your business is growing, you may need additional personnel to service your customers. The NFIB reported that 29% of small businesses had job openings in May 2026 that they couldn’t fill.
Review your wages and benefits. BLS reported that average hourly wages decreased year-over-year by 0.7% as of May 2026. With that said, NFIB reported that compensation was up 1% from the previous month, and that 18% of small businesses planned to raise compensation in the next 3 months. And don’t overlook higher minimum wage rates effective July 1 that may apply to your business.
Ideas for businesses underperforming their expectations
If your business hasn’t done well, forecast what you think will happen in the second half of the year. You may want or need to adjust prices to boost your bottom line. But if you don’t expect significant improvement and are just hanging on, take steps that can help you survive.
- Reduce estimated taxes for the rest of 2026. There are two payments remaining for 2026: one in September and one in December for calendar year C corporations or January 2027 for owners of pass-through entities. Reducing the payments gives you more cash to use in your business.
- Get a handle on inventory management. Use technology and expert advice to optimize your inventory (the Goldilocks approach of not too much, not too little, but just right). Optilogic offers 5 steps for inventory management this year.
- Meet with your CPA or other tax adviser. Don’t wait until the end of the year to find ways that can help your business on a tax-advantaged basis.
Final thought
Walt Disney said: “Times and conditions change so rapidly that we must keep our aim constantly focused on the future.”
Look to the future—the second half of 2026. To plan accordingly, know where you stand so you can adapt and be responsive to change. Make plans for the rest of the year that will ensure continued growth—or at least survival for those struggling now. And monitor what’s happening locally, nationally, and globally.
Additional information about business planning can be found in this list of blogs.
