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American Business Owner Optimism Reaches Highest Point in 3 Years

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Business owners’ economic optimism has reached its highest point in three years, according new research from the Principal Financial Group(R). The Principal Financial Well-Being IndexSM: Business Owners, found that 40 percent of American business owners feel optimistic about the economic outlook for 2015, showing significant improvement from 26 percent in the 2012 survey looking at the economic outlook for 2013.

This rosier outlook follows a strong year for America’s small to mid-sized businesses; 53 percent of business owners say their company’s financials have improved compared to last year. Business owners are also increasingly confident in their outlook for the overall health of their businesses. This year’s survey found that more than half (54 percent) believe their business financials will improve in the coming year and almost nine-out-of-ten (88 percent) business owners rate the financial health of their business as either stable or growing. Additionally, 71 percent have surplus business capital, up from 62 percent in 2013.

On a personal level, most business owners report that their household finances are in good order. Seventy-five percent of business owners see themselves as financially healthy, up from 71 percent in 2013.

“It’s very exciting to see business owner confidence reach its highest point in the three years,” said Amy Friedrich, vice president at The Principal(R). “In addition to strong business financials, the average American business owner is showing vast improvements in the aftermath of the global financial crisis and is poised for even greater growth going forward.”

The Principal Financial Well-Being Index: Business Owners surveyed 600 business owners nationwide who own at least 5 percent of a company in the United States with 10 to 500 employees, and are actively involved in company management. The Index is part of a series of quarterly studies commissioned by The Principal Knowledge Center examining the financial well-being of American workers, business owners and advisor opinions and practice management. The survey is conducted online by Harris Poll(R).

Business Owners Reinvesting Into Their Company
With a positive outlook for the future of their businesses, almost half (46 percent) of business owners are reinvesting profits back into their companies to help secure the future of their businesses. Additionally, some business owners are safeguarding their companies’ futures by enhancing their firms’ technology (37 percent), or taking steps to protect their businesses from unexpected losses (36 percent).

Hiring is also on the rise. Forty-one percent of business owners added full-time staff in the past year, citing customer demand (37 percent), high volumes of business (36 percent) and confidence in future growth (31 percent) as the top reasons for growing their workforce. Likewise, 41 percent plan to add staff in the year ahead, up from 35 percent in 2013.

Retaining top talent is a major focus for business owners striving to stay ahead of the competition. Forty-three percent of business owners are focusing on addressing the challenges of retaining talented employees. In order to keep employees loyal, happy, and healthy, 33 percent of business owners reported providing competitive benefit packages. More business owners plan to add employee benefits in the next 12 months, with 22 percent of respondents pledging to offer additional employee benefits next year, up from only 16 percent in 2013.

“Whether business owners are reinvesting profits back into their businesses, securing new technology to increase operational efficiency, bolstering their benefits packages to attract and retain top talent, or hiring new staff, these actions all indicate that business owners are more confident in their businesses and are taking the proper steps to ensure their future,” said Friedrich.

Other key findings include:

  • The Affordable Care Act: Business owners are becoming more familiar with The Affordable Care Act (ACA), with almost three quarters of them (73 percent) saying they understand it as compared with just 42 percent the year before. With greater understanding may come greater comfort; significantly more business owners feel that the ACA will have a positive effect (23 percent vs. 12 percent in 2013) and significantly fewer feel it will have a negative effect (36 percent vs. 48 percent in 2013).
  • The Impact of a Rising Minimum Wage: 42 percent of business owners feel that the proposed minimum wage hike will have no effect on their businesses, with sentiment split evenly (26 percent each) on whether it will negatively or positively impact their businesses. Business owners with fewer than 50 employees were more likely than larger businesses to anticipate that the minimum wage hike would have no effect on their business (52 percent).
  • Maintaining a Work/Life Balance: Business owners are very mindful of the importance of work/life balance. Almost half of business owners (48 percent) say they take vacation time or use technology so they can work from anywhere they want. Forty-three percent schedule time for exercise, and 39 percent say they have adequate staffing so that they can be away from the office.

For more research, analysis and insights, visit The Principal Knowledge Center and connect with us on Twitter.

Methodology
The study was conducted online by Harris Poll on behalf of the Principal Financial Group among 600 U.S. business owners (own at least 5% of a U.S. company with 10-500 employees; actively involved in company management) in July.

About Nielsen and The Harris Poll
On February 3, 2014, Nielsen acquired Harris Interactive and The Harris Poll. Nielsen Holdings N.V. (NYSE:NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence and mobile measurement. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands. For more information, visit www.nielsen.com.

About the Principal Financial Group
The Principal Financial Group(R) (The Principal(R))1 is a global investment management leader offering retirement services, insurance solutions and asset management. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance through its diverse family of financial services companies. Founded in 1879 and a member of the FORTUNE 500(R), the Principal Financial Group has $517.9 billion in assets under management2 and serves some 19.4 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.

1 “The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
2 As of June 30, 2014.

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