New research released this week 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 Financial Group. 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 No. 1, 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%) of business owners said the most important lesson to learn from the recession is the need to be more diversified with assets. In addition, 25% of owners also learned they need to have a plan for how they will exit their business. Despite this sentiment, research shows two-thirds (68%) of owners still do not have a plan in place to exit their business. Also, less than half of these owners (47%) have wills and 30% don’t have wealth transfer plans.