American small businesses are generating more revenue, but hiring is losing momentum.
According to the October 2026 Intuit QuickBooks Small Business Index, average inflation-adjusted revenue among US businesses with one to nine employees increased by 1.68% in September, while employment declined by approximately 7,000 jobs.
Separate research from the National Federation of Independent Business (NFIB) found that fewer small business owners were hiring or trying to hire.
At first glance, the figures appear contradictory. If businesses are bringing in more revenue, why aren't they expanding their workforce? Are companies becoming more efficient? Are owners uncertain about future demand? Or could stronger sales be concealing challenges that aren't immediately visible?
The latest figures reveal a more complicated picture. They also highlight something every business owner should understand: increasing revenue doesn't necessarily mean a business is getting stronger.
September's revenue growth hides a weaker quarter
September appeared to be a positive month for US small businesses.
The QuickBooks Small Business Index reported average monthly revenue of $50,560 per business, measured in inflation-adjusted 2017 dollars. Revenue increased across 11 of the 12 industries tracked and in 19 of the 20 states covered by the report.
However, the quarterly figures released on October 15 tell a different story.
Across the third quarter of 2026, average inflation-adjusted revenue declined by 0.13% compared with the previous quarter. Employment also decreased by approximately 28,700 jobs, representing a 0.22% decline.
| Business indicator | September 2026 | Third quarter 2026 |
|---|---|---|
| Real revenue change | +1.68% | −0.13% |
| Employment change | −0.05% | −0.22% |
| Estimated jobs lost | 7,000 | 28,700 |
September figures compare with August; Q3 figures compare with Q2. The Index figures are estimates for businesses with one to nine employees, not direct counts of every US small business.
September's improvement occurred within a quarter that was weaker overall.
The utilities sector provides an especially interesting example. Revenue increased by 8.61% in September, the strongest monthly growth among the industries tracked. Yet across the full third quarter, utilities revenue declined by 3.94%.
Both figures are correct. They simply measure different periods.
Consider a retailer experiencing disappointing sales in July and August, followed by a strong September. Looking only at September might suggest that business performance has recovered. But examining the entire quarter could reveal that revenue remains below earlier levels.
This is why the reporting period matters. A strong month can indicate an encouraging change without establishing that a business has returned to sustained growth.
Before increasing inventory, hiring employees, or expanding operations, the more useful question is whether stronger sales reflect a lasting improvement—and what is actually driving them.
Why is hiring slowing despite higher revenue?
Stronger sales often suggest that a business might need additional employees. However, hiring decisions depend on considerably more than revenue.
The NFIB's September 2026 jobs report found that 51% of surveyed small business owners were hiring or trying to hire, down from 56% in August.
At the same time, 32% reported openings they could not fill. Among those hiring or trying to hire, 87% said they received few or no qualified applicants.
These findings highlight an important distinction: hiring activity was slowing, but many businesses looking to recruit still struggled to find suitable employees.
The survey also found that a seasonally adjusted net 17% of owners planned to create jobs over the following three months, unchanged from August. Slower current hiring does not necessarily mean companies abandoned plans to expand.
There are several reasons revenue and employment may move differently.
A retailer might generate more revenue because customers purchase more expensive products. A service business might book higher-value work. An ecommerce company might improve fulfillment and handle more orders without immediately adding staff.
Other companies may delay hiring until they are confident that stronger demand will continue.
These are possible explanations, not causes established by the national reports. And because the QuickBooks figures are adjusted for general inflation, the national revenue increase cannot simply be attributed to higher prices.
The data demonstrates that revenue growth and employment growth do not always happen together. Understanding why requires looking more closely at individual businesses.
More revenue with the same employees: is that better performance?
Imagine a small online retailer processing 2,000 orders a month. Its employees collectively spend 1,000 working hours handling orders, fulfillment, and related tasks: two orders per labor hour.
The following month, orders increase by 10% to 2,200.
If the business handles those orders using the same 1,000 labor hours, output measured by orders per labor hour increases from 2.0 to 2.2—a 10% improvement.
That might indicate more effective use of existing resources.
But consider another business with the same increase in orders that requires 1,150 labor hours to complete the work. Orders per labor hour fall from 2.0 to approximately 1.91. Order volume rose 10%, but that particular measure of labor productivity declined by approximately 4.3%.
Both businesses experienced the same order growth, yet their operational performance moved in different directions.
These are hypothetical examples, not findings from the national studies. Even orders per labor hour cannot tell the whole story. More complicated orders, outsourcing, changing product mix, and service quality can all affect the results.
Owners also need to consider whether additional demand creates overtime, longer delivery times, employee pressure, or customer complaints.
The goal isn't simply to generate more revenue with fewer resources. It is to understand whether those resources are being used effectively and sustainably.
What should business owners examine before hiring or expanding?
Before expanding a workforce or committing to additional spending, owners should understand how sales, costs, demand, and operating capacity are changing.
Where is revenue growth coming from? Higher revenue might reflect more customers, more frequent purchases, larger orders, or changes in selling prices. A business generating more revenue from larger orders may face different operational demands from one handling substantially more transactions. Sales records broken down by customer, product, service, and channel can help explain the difference.
Is additional demand putting pressure on operations? More orders without more staff do not automatically mean the operation is improving. Compare activity with labor hours, overtime, delivery times, and service quality to see whether the current workforce has enough capacity.
Is the growth financially beneficial? Higher sales do not always translate into higher profit. Lower-margin products, rising fulfillment costs, and costly promotions can weaken financial performance even as revenue grows. Examine costs and profitability alongside sales.
Is the improvement consistent? A single strong month may reflect temporary demand, an unusually large order, or a promotion. Compare several months or quarters to see whether the change continues.
Many businesses already have useful information in sales records, employee schedules, accounting software, ecommerce systems, or spreadsheets.
The value comes from connecting that information and identifying which relationships matter to the decision being made.
When the right decision isn't to hire more employees
The September figures do not suggest every small business should delay recruitment. Nor do they establish that companies can keep increasing sales indefinitely without adding people.
Instead, they show why the right hiring decision depends on conditions inside each business.
A company experiencing sustained order growth, increasing overtime, and delayed deliveries may need more capacity. Another might discover that revenue growth comes mainly from higher average transaction values, with little increase in workload.
A third might find that scheduling or process improvements help its existing team handle additional demand without sacrificing quality.
Hiring more employees may be appropriate in one case; improving processes or investigating costs may be more useful in another.
Making that distinction requires more than a sales dashboard. It requires understanding how revenue, customer activity, staffing, costs, and operations relate to each other.
Business Performance Analysis helps move the discussion from what happened to what may be driving the result—and what the evidence supports.
What the latest US small business data really tells us
The October 2026 figures present a mixed picture of the US small business economy.
Average revenue increased in September, but the broader quarterly figures remained weaker. Employment declined over both periods, while separate survey evidence showed slower hiring alongside continued difficulty finding qualified workers.
These developments do not prove that businesses are replacing employees with technology, becoming more productive, or deliberately avoiding expansion.
They demonstrate why revenue and employment figures need careful interpretation.
A business can experience stronger sales while profitability deteriorates. It can maintain its workforce while employees struggle to handle additional demand. And it can have an impressive month without establishing a sustainable growth trend.
National statistics provide valuable context, but they cannot explain the performance of an individual business.
More revenue is encouraging. Understanding what produces it, what it costs, and whether it strengthens the business is what turns growth into meaningful progress.
Understand what's driving your business performance
Averidi helps businesses analyze sales, customer behavior, costs, and operational performance to uncover patterns, investigate changes, and identify practical next steps.
Whether sales are increasing, profitability is declining, or performance is difficult to explain, the starting point is understanding what the available data can reliably reveal.
Business Performance Analysis connects relevant information to specific business questions, helping owners and managers make more informed decisions.
Understand the numbers behind your business decisions. Contact Averidi to discuss your business data and the questions you need answered.