Confident But Concerned: American Small-Business Owners Tell Allstate What’s Ahead and What’s Keeping Them Up at Night
By Mike Barton, President, Allstate Business Insurance
In late April, the Commerce Department reported that first quarter gross domestic product expanded at a meager 0.1 percent, an unexpected development fueling fears that the U.S. economy is losing steam.
It’s a troubling headline at a time when many American businesses are still dealing with the fallout from the great recession of 2008. But despite the troubling topline data, a recent Allstate survey reveals that US small-business owners are cautiously optimistic about their own prospects, remaining confident that they can continue to grow even as they worry about a number of risks.
The outlook of small-business owners is an essential barometer of America’s current and future economic health. There are 28 million small businesses in the United States, employing one-third of the workforce and serving as essential anchors of their respective communities.
In Allstate’s mid-April survey of over 500 small business owners, 78% reported that their company was performing well in terms of financials like profitability and revenue. And over 47% of respondents said they expected their business to grow compared to only 9% who expected it to shrink.
But that confidence is leavened with significant uncertainty. The small-business owners in our survey may feel good about future growth prospects, but they aren’t feeling secure enough to hire new workers. 75% of our survey respondents said they are looking to keep staffing at their current levels.
The slow growth in the broader economy and dysfunction in Washington certainly isn’t helping. When small-business owners were asked to rate the single biggest challenge for their business, the leading responses were “identifying and marketing to new and prospective customers” and “charging enough to make a profit after expenses and operating costs” – two variables that are significantly influenced by broader macroeconomic conditions. Owners also noted the difficulty of navigating government regulations and tax reporting requirements.
Unfortunately, there isn’t much Allstate can do about the broader economy and the political gridlock in our nation’s capital. We do however understand the unique challenges of owning a business. Allstate is an insurance provider for 250,000 small-business policyholders and teams with 10,000 of our own small-business insurance agency owners. Accordingly, we’ve developed a number of important services to deal with their pressing concerns.
For example, owners rated talent retention and recruitment as the third biggest challenge to running their business. Talent should be a top priority for business owners as firms with high-performing employees have been shown to grow three times faster than their peers. With labor accounting for the single biggest business expense for most companies, talent is one thing you need to get right.
For small-business owners, an essential part of talent retention and recruitment is proving the long-term success and durability of your business. Current or prospective employees want to know that their employer is equipped to weather the storms – whether they’re caused by bad weather, a bad accident or just bad luck.
Too few businesses are prepared when disaster strikes as evidenced by the fact that at least 25 percent of businesses that close due to a disaster do not reopen.
Allstate offers a number of services to keep small businesses running during difficult times, such as business interruption insurance, which can help replace reduced or lost income in the aftermath of an accident, disaster or owner illness. This type of coverage brings peace of mind to many small-business owners, who in our survey said that the biggest risk to their business was an interruption to business due to their injury or illness.
America’s small businesses will continue to face uncertainty in the economy and the risks inherent in running any enterprise. But they don’t have to share those risks alone. Whether its business interruption coverage or more traditional offerings like auto and property insurance, Allstate can customize solutions to meet every business owners’ needs.