American business owners are optimistic about the health of their businesses but lack confidence in the economy, according to new research.
Principal Financial Group Inc. published this finding in its inaugural release of the “Principal Financial Well Being Index: Business Owners.” Surveying 604 American business owners of small- to medium-sized businesses with 10 to 500 workers, the report 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.
Almost half of those surveyed (47 percent) say their business financials improved compared to a year ago and 58 percent believe their financials will improve in the next 12 months. However, 46 percent are cautious about the economic outlook for 2013. And two-thirds are holding off on making long-term financial commitments because of the current state of the economy.
“While owners of small- to medium-sized businesses report growing confidence in what they can control – their own companies – they do so with a healthy dose of caution in the context of the overall economy,” says Amy Friedrich, vice president of the Principal Financial Group. “As these owners prepare for Election Day, the economy will not only influence their vote, but also their long-term plans for spending.”
Business owners are also reluctant to spend cash. According to the report, 63 percent say they have surplus capital, but 73 percent of those who have surplus capital are not spending any of it.
Still, many business owners plan to grow their businesses in the near term. Forty-two percent plan to add staff in the next year and 31 percent plan to expand business operations in the U.S., the survey reveals.
The same financial issues swaying business owners’ votes are also influencing how they run their businesses. Health care and the economy are top-of-mind, with more than half saying health care costs (57 percent) and economic growth (54 percent) are impacting their business decisions. Other top issues include uncertainty of taxes (45 percent), gas prices (43 percent), unemployment (37 percent) and inflation (36 percent).
Health care remains a priority for business owners in both the political world and the business world, the survey notes. One-fourth (24 percent) rate their top concern for the well-being of their business as managing the cost and administrative responsibilities of health care. And another 24 percent say understanding how health care reform impacts their business is their top concern.
While business owners may not be able to control or predict the future of health care, many are turning to wellness programs to improve employee health and reduce risks. Nearly two-thirds of those surveyed (64 percent) offer some form of wellness benefit to their employees. Among businesses that offer wellness benefits, 32 percent have experienced lower health insurance costs. Business owners report wellness programs have contributed in other ways:
- Employees are more productive at work (47 percent);
- Increased employee retention (42 percent);
- Less time away from work (37 percent);
- Better employee engagement (36 percent).