Small Businesses Still Growing but Continued Economic Uncertainty Tempers Plans According to Insperity Survey

  • 70 % are meeting or exceeding 2011 performance plans
  • 52 % expect a year-over-year sales increase in 2011
  • 32 % plan to add new employees this year
  • 40% delay economic rebound expectations to 2012 or later

HOUSTON--()--Although small business owners are slowly proceeding with growth plans in 2011, 40 percent are now delaying their expectations of an economic rebound to the first quarter of 2012 or later, 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 to America’s best businesses. Only 12 percent expressed a belief that an economic recovery is currently under way versus 23 percent in May. In summary, over 82 percent of respondents either delayed their expectations of an economic recovery to 2012 or later, or are unsure. Business owner sentiment returned to a wait-and-see tone similar to the November 2010 survey compared to last quarter’s somewhat optimistic note.

InsperityTM also announced compensation metrics from its base of more than 5,700 small and medium-sized businesses. Compared to the 2010 second quarter data, average compensation is up 4.2 percent, bonuses are down 3.9 percent and average commissions received by worksite employees reflected a drop of 2.8 percent versus an increase of 5.4 percent as reported in May 2011. Overtime pay is still low, running 8.5 percent of regular pay, under the 10 percent level that generally indicates a need for additional employees, but up slightly from 8.0 percent in the first quarter of 2011.

In the survey conducted July 12-14, when asked how they are managing the number of company employees, 32 percent said they are adding new positions, down from 37 percent previously; 62 percent are maintaining current staffing levels, up from 57 percent; and 6 percent are laying off employees, unchanged from the prior quarter.

“The lackluster economy combined with significant long-term concerns have caused many owners of small to medium-sized businesses to slow their growth activities,” said Paul J. Sarvadi, Insperity’s chairman and chief executive officer. “Elevated fears over the national debt, government expansion and prospective tax increases are currently outweighing the natural optimism and entrepreneurial instincts in the small business community.”

The economy was again listed as the leading short-term concern by 79 percent of business owners, up from 68 percent in May; followed by 47 percent specifying rising health care costs, versus 46 percent previously; 46 percent citing government health care reform and 39 percent listing controlling operating costs. For the longer-term, the top responses were led by 74 percent saying they were either very concerned or had elevated concerns about the federal deficit and the total national debt; 70 percent designated the economy, up from 61 percent in May; 63 percent cited government expansion and its effect on business; and 61 percent listed potential tax increases.

When asked about their pipelines for new business for the balance of 2011, 52 percent of survey respondents said that they expect a sales increase, versus 53 percent in May but only 38 percent last fall; 32 percent predicted it will stay the same; 11 percent anticipated decreasing sales; and 5 percent were unsure.

In addition, 70 percent of owners and managers of small and medium-sized businesses said that they are either meeting or exceeding their 2011 performance plans, down from 76 percent in the last survey; while the remaining 30 percent reported that they are doing worse than expected, higher than the 24 percent reported in May.

The survey also said that 63 percent of participants expected to maintain employee compensation at current levels throughout 2011, versus 54 percent last quarter; 24 percent planned increases, down from 31 percent in the last survey and even down from the 26 percent last fall; 4 percent expected decreases; and 10 percent were unsure.

Concerning their current profit-generating activities, 70 percent of respondents named both increased service to clients and selling new accounts as the leading strategies. This was followed by 49 percent who said they were adding new services or products, 32 percent who listed negotiating with vendors and 27 percent named investing in new improvements.

Insperity, a trusted advisor to America’s best businesses for more than 25 years, provides an array of human resources and business solutions designed to help improve business performance. Insperity Business Performance Advisors offer the most comprehensive Workforce OptimizationTM solution in the marketplace that delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity. Additional offerings include MidMarket SolutionsTM, Performance Management, Expense Management, Time and Attendance, Organizational Planning, Recruiting Services, Employment Screening, Retirement Services, Business Insurance and Technology Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2010 revenues in excess of $1.7 billion, Insperity operates in 56 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 and other insurers, 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 return 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.

Contacts

Insperity
Investor Relations Contact:
Douglas S. Sharp, 281-348-3232
Senior Vice President of Finance,
Chief Financial Officer and Treasurer
or
News Media Contact:
Jason Cutbirth, 281-312-3085
Senior Vice President of Marketing
jason.cutbirth@insperity.com

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Contacts

Insperity
Investor Relations Contact:
Douglas S. Sharp, 281-348-3232
Senior Vice President of Finance,
Chief Financial Officer and Treasurer
or
News Media Contact:
Jason Cutbirth, 281-312-3085
Senior Vice President of Marketing
jason.cutbirth@insperity.com