Study: Three in four women small business owners predict more tough times in 2012

Sketchy economic outlook has many cautious about adding employee benefits this year

 

FOR IMMEDIATE RELEASE
January 12, 2012

Contact:
Jeff Whetzel (614) 249-6354
whetzej@nationwide.com

Mike Switzer (614) 249-4092
switzem1@nationwide.com

Columbus, OH – A new Nationwide Financial study shows three quarters (74 percent) of women small business owners expect their business to be negatively impacted in 2012 by the economy. Just one in five (22 percent) think the state of the economy will improve and one third (34 percent) expect their sales and revenue to decline.

Based on this cautious outlook, it’s not surprising that about a third of women small business owners plan to cut back on hiring (37 percent) and eliminate or delay raises (31 percent) or bonuses (30 percent) within the next 12-24 months, according to the Harris Poll of 501 small business owners released today. Nearly one in five (17 percent) fear they will be forced to lay off employees and only 11 percent plan to add or enhance benefits in the next two years.

The survey also found that only 14 percent of women-owned small businesses currently offer their employees a 401(k) or other employee-funded retirement plan, and only five percent offer a company-funded defined benefit plan. Of those who plan to enhance employee benefits, only 12 percent say they will add an employee-funded retirement plan.

It's not that women small business owners are unsympathetic to the needs of their employees. In fact, eight in ten (81 percent) agree that the lack of preparation for retirement in America has reached crisis levels, and nearly half (45 percent) say offering retirement plans would help them attract qualified workers.

But 69 percent say their businesses are too small to offer retirement plans, and over half (53 percent) say doing so is too expensive.

“Women small business owners, like most of the small business owners we surveyed, may find it hard to invest in new benefits for their employees when they are unsure about the direction of the economy and how it will affect their business,” said Anne Arvia, president of Nationwide Retirement Plans. “It’s a tough position when you cannot predict or control many of the factors that affect your ability to grow your business and provide benefits to attract and retain employees.”

The survey may reveal one opportunity for small business owners concerned with cost. Nearly two in three (65 percent) women small business owners were unaware that some retirement plans do not require employers to match employee contributions.

“That's a common misperception,” said Arvia. “An employee-funded retirement plan that does not involve a company match may be worth considering for owners who are concerned about cost, but want to help their employees prepare for the future.”

The survey also found that women owners who currently offer a self-funded retirement plan are less likely to offer an employee funded 401(k) than the general sample of small business owners surveyed (46 percent vs. 59 percent), but more likely to offer a SEP (Simplified Employee Pension Plan), with 39 percent doing so compared to 34 percent of all owners.

“Small business owners should develop a relationship with a good financial advisor who can help them understand the wide range of options available for supporting their employees with retirement and other benefits,” said Arvia. “Only about one third (34 percent) of women small business owners we surveyed indicated a financial advisor is their primary contact for advice or consultation.”

Small business owners may also be interested in learning more about the SAVE Act, a piece of legislation currently before Congress that could make offering retirement plans more affordable for small business owners. The SAVE Act encourages small businesses to pool together to offer Multiple Small Employer Plans (MSEP) that are much less expensive than single employer plans and simplify an employer’s administrative requirements. H.B. 4742, sponsored by Ron Kind (D-WI) and David Reichert (R-WA), allows small employers to reduce costs by pooling their resources under a single plan with easier administrative requirements.

“The retirement savings crisis is one of the key issues facing our nation,” added Arvia. “These survey results are another reminder of how important it is for retirement plan providers, plan sponsors, and legislators to work together to develop practical solutions to increase access to employer-sponsored retirement plans.”

Survey Methodology
On behalf of Nationwide Financial, Harris Interactive Inc. conducted 501 online interviews of small business owners in the U.S. with 1-100 employees, and 202 women small business owners, surveyed August 3-12, 2011. Results are weighted to be representative of U.S. companies with 1 to 100 employees with respect to number of employees.

About Nationwide
Nationwide, based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by A.M. Best. The company provides a full range of personalized insurance and financial services, including auto insurance, motorcycle, boat, homeowners, life insurance, farm, commercial insurance, administrative services, annuities, mortgages, mutual funds, pensions, long-term savings plans and health and productivity services. For more information, visit www.nationwide.com.

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