Study Reveals 'Business Protection' is Top Priority for Owners
However, planning takes a back seat despite good intentions
December 14, 2010 (Des Moines, IA) - New research from the Principal Financial Group® indicates business and income protection have moved up in importance for many small business owners in the uncertain economy.
The study, which surveyed 511 business owners with 2-500 employees about their priorities, was conducted by Harris Interactive® for The Principal®. The research considers both business issues and personal finance needs of small to medium sized business owners.
When business owners were asked their most important business priorities, “business protection” was named number one, eclipsing “health insurance” as their top priority, while “income protection” moved from fifth last year to third in priority.
“It is clear that the effects of the recession have brought protection of one’s business and income to the forefront of the business owner’s planning,” says Steve Parrish, national advanced solutions consultant for The Principal. “Benefits, for both owners and their employees, are crucial, but in their planning, owners are cognizant of the need to make sure these benefits cover contingencies like death and disability.”
Business owners learn lessons, but still have not taken action
Over a quarter (26 percent) of business owners said that the most important lesson to learn from the recession is the need to be more diversified with assets. In addition, 25 percent of owners also learned that they need to have a plan for how they will exit their business. Despite this sentiment, research shows that two-thirds (68 percent) of owners still do not have a plan in place to exit their business. Also, less than half of these owners (47 percent) have wills and 30 percent don’t have wealth transfer plans at all.
“We are seeing a lack of realism among business owners who in spite of their good intentions, are not following up with actions,” says Parrish. “Despite this, we are seeing a trend towards the realization that they need to act. With so many baby boomer business owners contemplating the financial future of both their businesses and themselves, it is essential that they act now as the economy makes its slow climb out of the recession.”
Balancing Business and Personal Priorities
This is the fourth study related to business owners’ priorities released by The Principal. According to Parrish, the findings are compelling because it shows the dilemma business owners have in balancing their own personal financial well-being and the needs of their businesses.
“This study goes deeper than just ranking stated priorities,” he said. “It gives us a hint as to what kind of things are keeping business owners awake at night.”
An in-depth analysis of the research is available at: www.principal.com/about/news/documents/businesspriorities_whitepaper.pdf (PDF: 240 K)
For more news and insights from The Principal, connect with us on Twitter at: http://twitter.com/ThePrincipal.
The survey was conducted by Harris Interactive® and includes 511 online interviews conducted from July 13, 2010, to August 9, 2010. Interviews were conducted using the Harris Interactive® Small Business Panel.
Respondents qualified for this survey if they met the following criteria:
- United States residents age 21 and older
- Currently employed, either full-time, part-time or self-employed
- Business owner of at least 5 percent of the company
- Actively manage their business
- Own a company with between 2 and 500 employees
Results were weighted for company size based on the number of employees, entity type, and annual sales. Potential respondents for this survey were selected from among those who have agreed to participate in Harris Interactive® surveys. Because the sample is based on those who agreed to be invited to participate in the Harris Interactive® online research panel, no estimates of theoretical sampling error can be calculated.
About the Principal Financial Group
The Principal Financial Group® (The Principal®) is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $284.7 billion in assets under management and serves some 18.9 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG.
About Harris Interactive
Harris Interactive is one of the world’s leading custom market research firms, leveraging research, technology and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries, including health care, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant and consumer package goods. Serving clients in more than 215 countries and territories through its North American, European and Asian offices and a network of independent market research firms, Harris specializes in delivering research solutions that help clients stay ahead of what’s next. For more information, please visit www.harrisinteractive.com.
- The Principal Financial Group and The Principal are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
- As of Sept. 30, 2010.