Business Owner Confidence Remains Steady but Spending Still on Hold
Business owners look to brighter 2014
October 23, 2013 (Des Moines, Iowa) — American business owners are more optimistic about the economy compared to a year ago and remain confident in their own businesses but fewer plan to add jobs according to new research from the Principal Financial Well-Being IndexSM: Business Owners.
Nearly a third of business owners (31 percent) are optimistic about the economic outlook for 2014, up from 26 percent the previous year. Almost half (48 percent) say their business financials have improved compared to last year at this time and even more (55 percent) believe their business financials will improve in the next twelve months.
Despite the bright outlook, business owners aren't planning to increase spending. Nearly two-thirds (62 percent) of those surveyed have surplus capital but three quarters of them say they aren't spending it at this point. Only one-third (35 percent, down from 42 percent last year) of business owners plan to add to staff while 14 percent plan to reduce staff.
"It's been a bumpy road for many small to medium-sized business owners. While being optimistic is in their DNA, it's clear they are still wary of forces beyond their control. One of the issues weighing heaviest on their minds is health care," said Amy Friedrich, vice president at The Principal®.
Friedrich says many business owners are asking for help. "More than three in five business owners are turning to financial professionals to navigate the challenges they face whether it's succession planning or personal finances," said Friedrich. "The financial professional is often the best source for not only education, but to develop a plan to help business owners take action towards reaching their long-term financial goals."
The Principal Financial Well-Being Index: Business Owners surveys American business owners of small and medium-sized businesses with 10 to 500 workers, and is part of a series on the financial well-being of Americans released quarterly by the Principal Financial Group®. The survey is conducted online by Harris Interactive®.
Of the economic factors having the greatest impact on business decisions, owners say health care costs (22 percent) top the list. Other top factors include: economic growth (21 percent) and health care reform (14 percent).
Three quarters of business owners say they completely understand or understand some parts of the Affordable Care Act (health care reform). Many business owners say they will take the following actions (or non-action) as a result of health care reform:
- Seventeen percent plan to take no action, while one in five don't know what action they will take.
- Nearly a quarter (22 percent), plan to keep their workforce under 50 employees.
- Less than one in 10 (8 percent) say they will start offering health care benefits.
"It's clear that running a small to medium-sized business is a family or family-like affair for many of those surveyed," noted Friedrich. "Over half said they consider themselves responsible for managing their employees' best interests."
The importance of family surfaces in a number of other results:
Family credited for business success
- When asked who had the most influence on their professional success, owners put their spouse (25 percent) on the top of the list.
- Almost one in five (19 percent) credit their parents for influencing their success followed by a prior boss (14 percent).
Keeping it in the family
- Over half of business owners (55 percent) have a business succession plan.
- Of those, 39 percent plan to transition the business to family members, while a quarter (24 percent) plan to sell the entity to their business partners.
Big advantages to being smaller
- Business owners say employees at smaller companies have many advantages over those at larger companies.
- Less bureaucracy and more flexibility top the list of advantages according to 61 percent of business owners.
- More than half cited a family-like culture (56 percent) and closer collaboration and teamwork (52 percent) as advantages at a smaller company.
View the full survey results and download the infographic at www.principal.com/wellbeing. For more news and insights from The Principal, connect with us on Twitter at http://twitter.com/ThePrincipal. In addition, The Principal recently updated its online Planning Center with new resources for business owners.
MethodologyThis Principal Financial Well-Being IndexSM survey was conducted online within the United States by Harris Interactive on behalf of the Principal Financial Group® between July 1 and July 26, 2013 among 604 small-to-medium busines owners. Results were weighted as needed for representation of the small to medium-sized firms. This is one in a series of annual studies to identify and track changes in the workplace of small and medium-sized (growing) businesses. The first Principal Financial Well-Being IndexSM survey was conducted in the United States in 2000.
About the Principal Financial Group
The Principal Financial Group® (The Principal ®) is a global investment management leader offering retirement services, insurance solutions and asset management. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance through its diverse family of financial services companies. Founded in 1879 and a member of the FORTUNE 500®, the Principal Financial Group has $450.6 billion in assets under management and serves some 19.8 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. For more information, visit www.principal.com.
About Harris Interactive
Harris Interactive is one of the world's leading 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 proprietary solutions in the areas of market and customer insight, corporate brand and reputation strategy, and marketing, advertising, public relations and communications research. Harris possesses 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. Additionally, Harris has a portfolio of multi-client offerings that complement our custom solutions while maximizing our client's research investment. Serving clients in more than 196 countries and territories through our North American and European offices, Harris specializes in delivering research solutions that help us - and our clients - stay ahead of what's next. For more information, please visit www.harrisinteractive.com.