Technical appendix for ‘Small businesses optimistic despite facing uncertainty, tariffs, technology changes’

There were five to seven participants in each focus group with a total of 19 participants overall. Participants represented 17 small businesses from a variety of industries, generally within the rule of thumb for qualitative study sizes. The small businesses included both employer and non-employer firms. All firms had fewer than 500 employees. The majority of participants in our focus groups were micro businesses, which have fewer than 10 employees and represent 72 percent of small businesses in Texas according to the Small Business Credit Survey Texas Chartbook.

Focus groups were in-person and took place in San Antonio, Houston and Brownsville. Two note-takers monitored each conversation with participants’ permission. The transcript-style notes from these focus groups were used for analysis.

We asked our participants the following questions, which were vetted internally with other qualitative researchers:

1. Please describe current business conditions over the last two months. 
2. Has current trade policy (namely tariffs) affected your business?
1. Are you planning to pass costs (all or part) to customers? If so, when?
2. Have you taken any actions to avoid tariffs?
3. What are your expectations for tariff policy in the future (through the end of the year)?
3. Are you planning to expand your business or downsize in the near future (next three months)? What is driving that decision?
1. If you are expanding, are you seeking financing to do so, from where?
2. If you are downsizing, are you seeking financing to stay afloat, if so from where?
4. Please describe current labor conditions for your business (last two months). Are you hiring, downsizing, or keeping headcount the same (now or in near future/next three months)? What is the main driver behind these decisions?
1. If you are hiring, is it currently difficult to find qualified candidates?
2. Are you currently using artificial intelligence within your business operations?
3. If so, has using AI impacted your workforce? Hiring?
5. What is your outlook for the future of business, between now and the end of the year (positive or negative)? What is the main factor driving that outlook? 
1. Main challenges faced?
2. Any tailwinds?

Over three focus groups we reached saturation. We did a thematic analysis of data gathered from these focus groups using inductive coding. Coding was performed manually.

1. The sample could be biased toward more successful firms, since we connected with participants through small business intermediaries and they might have greater access to funding resources or business mentorship.
1. While random sampling is not standard practice in qualitative research, we did our best to account for bias by including people with a wide array of experiences from different geographies and industries represented.
2. We used two note-takers for each focus group instead of using a recording device or artificial intelligence in order to retain a more nuanced record of the conversations and create trusted human relationships. These notes are subject to human error.
3. In some cases, qualitative studies use two coders to review the data. This study only used one coder.
4. We hosted three separate roundtables in different locations with a broad range of industries, which created heterogeneity in the data.  

In some cases participants knew each other, while in other cases they did not. This could have resulted in groupthink, which we did our best to account for in the analysis.