Small Businesses Slowly Increasing Economic Activity, According to Insperity Survey
Small Businesses Slowly Increasing Economic Activity, According to Insperity Survey
- 40% plan to add new employees, up from 28% last quarter
- 59% expect sales increase through 2013
- Average compensation up 3.7%, data shows uptick in commissions
- 45% remain unsure when economy will rebound
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 today by Insperity, Inc. (NYSE: NSP), a leading provider of human resources and business performance solutions for America’s best businesses. More than 40 percent of respondents say they are adding employees, up from 28 percent last October; 55 percent are maintaining current staffing levels, versus 63 percent last fall; and 5 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 OptimizationTM 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 that generally indicates a need for additional employees, but up slightly from 8.5 percent in the first quarter of 2012.
In the survey, 74 percent of respondents said that 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, 28 percent think one is currently in process versus 20 percent last fall; 26 percent expect a rebound in the third quarter or later; and 45 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 chief executive officer. “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, 63 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; and 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; 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; and 31 percent listing negotiating with vendors.
Insperity conducted the survey April 9-11, 2013, of more than 4,840 chief executive officers, chief financial officers 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.
Insperity, a trusted advisor to America’s best businesses for more than 27 years, provides an array of human resources and business solutions designed to help improve business performance. InsperityTM Business Performance Advisors offer the most comprehensive suite of products and services available in the marketplace. Insperity delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity through its premier Workforce OptimizationTM solution. Additional company offerings include Human Capital Management, Payroll Services, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Financial Services, Expense Management, Retirement Services and Insurance Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2012 revenues of $2.2 billion, Insperity operates in 57 offices throughout the United States. For more information, visit http://www.insperity.com.
The statements contained herein that are not historical facts are forward-looking statements within the meaning of the federal securities laws (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). You can identify such forward-looking statements by the words “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “likely,” “possibly,” “probably,” “goal,” “opportunity,” “objective,” “target,” “assume,” “outlook,” “guidance,” “predicts,” “appears,” “indicator” and similar expressions. Forward-looking statements involve a number of risks and uncertainties. In the normal course of business, Insperity, Inc., in an effort to help keep our stockholders and the public informed about our operations, may from time to time issue such forward-looking statements, either orally or in writing. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of such plans or strategies, or projections involving anticipated revenues, earnings, unit growth, profit per worksite employee, pricing, operating expenses or other aspects of operating results. We base the forward-looking statements on our expectations, estimates and projections at the time such statements are made. These statements are not guarantees of future performance and involve risks and uncertainties that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Therefore, the actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are: (i) continued effects of the economic recession and general economic conditions; (ii) regulatory and tax developments and possible adverse application of various federal, state and local regulations; (iii) the ability to secure competitive replacement contracts for health insurance and workers’ compensation contracts at expiration of current contracts; (iv) increases in health insurance costs and workers’ compensation rates and underlying claims trends, health care reform, financial solvency of workers’ compensation carriers, other insurers or financial institutions, state unemployment tax rates, liabilities for employee and client actions or payroll-related claims; (v) failure to manage growth of our operations and the effectiveness of our sales and marketing efforts; (vi) changes in the competitive environment in the PEO industry, including the entrance of new competitors and our ability to renew or replace client companies; (vii) our liability for worksite employee payroll, payroll taxes and benefits costs; (viii) our liability for disclosure of sensitive or private information; (ix) our ability to integrate or realize expected returns on our Adjacent Business strategy, including acquisitions; and (x) an adverse final judgment or settlement of claims against Insperity. These factors are discussed in further detail in Insperity’s filings with the U.S. Securities and Exchange Commission. Any of these factors, or a combination of such factors, could materially affect the results of our operations and whether forward-looking statements we make ultimately prove to be accurate. Except to the extent otherwise required by federal securities law, we do not undertake any obligation to update our forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.
Investor Relations Contact:
Douglas S. Sharp, 281-348-3232
Senior Vice President of Finance,
Chief Financial Officer and Treasurer
News Media Contact:
Jason Cutbirth, 281-312-3085
Senior Vice President of Marketing