Has optimism returned among American business owners? According to The Principal Financial Well-being IndexSM: Business Owners survey on 604 SMB owners across the United States, the answer is: Yes. U.S. SMB owners are more optimistic about the economy this year compared to 2012 – and they remain confident that their business will grow this year.
To learn more about the findings, we have a rare opportunity to connect right with the source; we are privileged to have a Q&A session with Amy Friedrich, Vice President at the Principal Financial Group. Here is the Q&A:
Noobpreneur.com (Q): Hi, Amy – please tell us a bit about the Principal Financial Well-Being Index: Business Owners; what is it, why you do it and how small business owners can benefit from your survey
Amy Friedrich (A): Small to medium-businesses are bellwethers of the economy. We believe it is critically important to understand the views and plans of their owners. The Principal Financial Well-being IndexSM: Business Owners is designed to identify and track the attitudes and perceptions of Americans who own businesses with 10 to 500 workers.
Small and medium-sized businesses are the drivers of America’s well-being. They are responsible for creating jobs, driving innovation and generating exports. According to the Small Business Administration, (2011 report) they employ half of all U.S. workers, represent 99.7 percent of all employers and have generated 65 percent of new jobs (net) over past 17 years.
The Business Owner survey is part of a series on the financial well-being of Americans that has been released quarterly by The Principal for 13 years. This is our second survey on the financial well-being of the American business owner. The survey is conducted online by Harris Interactive®.
Q: Despite the “rumor” of the fall of the U.S. economy, 31 percent of your surveyed SMB owners are optimistic about the economic outlook for 2014, significantly up from 26 percent in 2013. What’s your view about the contrasting sentiments?
A: It is very encouraging to see growing optimism about the overall economy among small to medium-sized business owners. We believe it is fueled in part by the high confidence they have in their own financials. Nearly half of the business owners say their financials have improved compared to last year and more than half believe financials will continue to improve.
That is consistent with the conversations we have with small business owners. These business owners know their local markets. They know what they need to do to provide quality products and services to their customers. They are comfortable they will be able to take advantage of macroeconomic improvements such as improving equity markets or when crediting rates begin to rise.
Despite the optimism, these owners are still being cautious. They remain in a holding pattern on spending and fewer plan to hire than last year. They want to make sure that if they add a job, they can keep that job.
Q: Obamacare: Only 8 percent of SMB owners will start to offer health care benefits – political matters aside, is Obamacare really for the benefits of small business?
A: The primary objective of the Affordable Care Act was to expand affordable coverage to more Americans. It was never intended to primarily benefit small business. But businesses of all sizes are impacted because the workplace is where many people access health insurance. While the survey shows that three-quarters of business owners understand the Affordable Care Act, in the time it has been in effect, it is clear they are learning, as we all are, more about what it means to comply. The ultimate impact to costs and growth will be something that will emerge over time for business – both small and large.
Q: SMB owners in your survey suggest that for employees, smaller organization is better: What’s your opinion?
A: There are clearly advantages for employees in smaller organizations just as there are advantages in larger organizations.
The key is that both large organizations and small organizations can learn from one another. Large organizations could absolutely take more cues from small business in terms of rapid decision making, openness and quickly embracing new ideas. Those processes generally take longer in larger companies. But larger organizations have risk protection protocols and long-term planning processes in place that are good models for smaller companies.
The winning formula is a blend of what both small and large organizations do well.
That is one of the reasons we have showcased small to medium-sized companies for the past dozen years in another program called The Principal 10 Best Companies for Employee Financial Security.
An independent panel of judges selects the top 10 companies each year that excel at providing financial security to employees through benefits and other management strategies. Companies of all sizes can learn from the real life success stories of these leading organizations. We will unveil our 2013 winners On Nov. 19th.
Q: Any advice for our small business owner audience?
A: Don’t go it alone. Network with other business owners to get their perspective and share ideas. Read industry best practices like the case studies of The Principal 10 Best. Don’t be afraid to consult an expert. Nearly two thirds of the business owners in our survey turn to financial experts for help in benefits issues (such as the Affordable Care Act, business succession planning etc.) and also to develop a plan to take action toward reaching their own personal financial goals.
Many thanks for sharing your insights, Amy!