Everything costs more, but founders are building anyway

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Everything costs more, but founders are building anyway

Running a business cost more than planned for most founders this year. A recent survey of 1,500 early-stage founders and builders from Mercury, a fintech platform that offers business and personal banking services*, found that 75% of respondents said their costs came in higher than expected — up from 66% last year. Exactly zero said costs came in much lower than expected.

Eight percent of respondents said they’d made changes to their business in response to economic factors over the past year, and those changes often showed up in what they charged, how much cash they kept on hand, who they bought from, and which investments they put off until things settled.

Higher costs hit broadly, and founders responded in different ways

First-time and repeat founders were equally caught off guard by the higher costs of running a business in 2026, perhaps signaling that this is not just about a given founder’s personal experience and knowledge. Inflation may be a contributing factor, with more than half of respondents (51%) saying inflation negatively impacted their business this year, versus 36% last year.

There wasn’t one dominant playbook for how founders reacted to the increase in costs:

• 27% passed costs to customers, absorbed them in margins, or both
• 26% held onto more cash than usual as a buffer
• 25% switched suppliers or started sourcing alternatives
• 24% postponed or canceled a planned investment — like a hire, equipment, or an expansion — or went the other way and built up inventory ahead of expected tariff changes

Mercury’s own data backs up the cash-buffer approach. Companies incorporated in the past six years are holding an average of 27% more cash on hand in 2026 than in 2024.

Of the founders who passed costs along, 68% did it to the tune of 5% to 10% increases — something many people who’ve bought anything this year are probably unsurprised by.

Cost pressure showed up in staffing decisions too, though perhaps less than headlines might suggest. While the majority of companies surveyed looked healthy on hiring (especially those who have heavily adopted artificial intelligence), 12% of respondents said that sometime in the past year they’d laid off or reduced staff expressly because of the higher costs of doing business.

Nearly every founder saw customer behavior shift this year

This year, 90% of respondents noticed some kind of change in customer behavior, whether downstream of their own pricing moves, their competitors’, or the wider economy. For example, respondents reported that:

• 31% of customers increased pushback on pricing
• 26% of customers downsized orders
• 26% of customers left for cheaper alternatives
• 25% of customers had longer payment cycles

On the upside, in fields like tech (28%) and manufacturing (26%), some saw larger contracts or orders. And, across industries, when competitors raised prices, some respondents (28%) still found themselves with new customers.

Cost pressure reached founders’ own paychecks

Rising business costs can be difficult to navigate, but the majority of their founders still feel confident: 84% of respondents reported improved confidence in their business prospects year over year. And this confidence has direct ties to founders’ paychecks. Among those whose business confidence had improved year over year, 81% were paying themselves a market rate salary. But among those with stagnant or declining confidence, only 56% said the same.

In an interesting near-parallel, 80% of founders at companies that have adopted AI pay themselves market rate salaries, versus 57% of non-AI adopters. First-time founders were a bit more likely than repeat founders — 79% vs. 66% — to pay themselves at market rate. Men who are founders (82%) were more likely than women founders (63%) to say the same.

What it adds up to

Higher costs this year didn’t push founders into retreat so much as into precision. Some of them repriced, but fairly modestly, while some held more cash, and others switched suppliers, deferred the investments that could wait, and generally managed to keep their teams largely intact. It’s not quite business as usual, but it also doesn’t look like panic. Founders are continuing to build and grow with the numbers they have rather than the ones they planned for, and the majority are confident in where they’re heading.

Methodology

The findings in this story are based on a May 2026 online survey of 1,500 U.S. adults who had been involved in starting a company in the last six years. The sample was provided by Sago, a research panel company. Numbers are rounded to the next whole digit; percentages may not add up to 100%.

* Mercury is a fintech company, not an FDIC-insured bank. Banking services provided through Choice Financial Group and Column N.A., Members FDIC.

This story was produced by Mercury and reviewed and distributed by Stacker.