Survey Finds Small Businesses Slowly Increasing Economic Activity

Small business owners are showing a willingness to hire more employees amidst signs of expanding business activity, according to the most recent Business Confidence Survey released by Insperity, Inc., a provider of human resources and business performance solutions.

  • More than 40 percent of respondents say they are adding employees, up from 28 percent last October.
  • Fifty-five percent are maintaining current staffing levels, versus 63 percent last fall.
  • Five percent are laying off employees, down from 9 percent in October.
Insperity also announced compensation metrics from its base of more than 5,500 small and medium-sized Workforce Optimization clients:
  • Compared to the 2012 first quarter data, average compensation is up 3.7 percent and bonuses are down 0.6 percent.
  • Average commissions received by worksite employees reflected an increase of 4 percent, versus a 2.6 percent increase in the first quarter of 2012.
  • Overtime pay is still low, at 8.7 percent of regular pay, down from the 10 percent level seen last quarter, which generally indicates a need for additional employees. However, it is up slightly from 8.5 percent in the first quarter of 2012.
In the survey, 74 percent of respondents said they are either meeting or exceeding their 2013 performance plans, up from 71 percent in the last survey. Meanwhile, 26 percent report that they are doing worse than expected, down from the 29 percent response in October.
Concerning the timing of an economic rebound:
  • Twenty-eight percent think one is currently in process, versus 20 percent last fall.
  • Twenty-six percent expect a rebound in the third quarter or later.
  • Forty-five percent are unsure. The percentage of those unsure of the timing of an economic rebound has remained at or above 40 for the last year.
"Business owners are slowly beginning to implement business plans that they hope will take advantage of any coming economic opportunities," said Paul J. Sarvadi, Insperity's chairman and CEO. "However, as in the previous survey, a significant number of respondents express continuing concerns about the negative impact of governmental policies on business activity." A representative comment from one participant was, "New federal regulations make plan execution difficult because more effort is going into avoiding penalties and less into delivering the product."
Although the economy still leads the list of short-term concerns of business owners, it dropped to 62 percent from 72 percent in October and 74 percent last July. Government health care reform and rising health care costs are tied for second on the list at 51 percent, followed by hiring the right people, remaining at 42 percent.
For the list of longer-term concerns:
  • Sixty-three percent indicate they are either very concerned or have elevated concerns about potential tax increases, down from 69 percent in October.
  • The federal deficit and the total national debt ranked second at 60 percent.
  • Government expansion and its effect on business was third at 59 percent.
  • The economy dropped to fourth place at 50 percent, down sharply from 66 percent last October.
When asked about their pipelines for new business through 2013, 59 percent of survey respondents expect sales to increase, up from 52 percent in October; 28 percent anticipate no change, down from 34 percent last fall; and 7 percent predict decreasing sales and 7 percent are unsure, both the same as the previous survey.
The survey results show that 59 percent of participants expect to maintain employee compensation at current levels through 2013, versus 53 percent in October; 26 percent plan increases, versus 29 percent last October, but still up from 19 percent last July; 3 percent expect decreases; and 12 percent are unsure.
Concerning their current profit-generating activities, 67 percent listed increased service to existing clients as the leading strategy, and 66 percent cited selling new accounts. This was followed by 50 percent saying they were adding new services or products, versus 44 percent last fall. Thirty-one percent listed negotiating with vendors.
About the survey:
Insperity conducted the survey April 9-11, 2013, of more than 4,840 CEOs, CFOs, and other executives in a variety of industries at its more than 5,500 client companies throughout the United States. The overall sampling error of the national survey is +/- 4.25 percent at the 95 percent confidence level.
Source: Insperity

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