Small Businesses Temper 2014 Economic Plans but Remain Positive, According to Insperity Survey

  • 39% plan to add new employees, down from 50% in January
  • 57% maintain staffing levels, up from 47% last survey
  • 60% expect sales increase in 2014, down from 66% previously
  • 44% unsure when to expect economic upturn versus 37% last survey

HOUSTON--()--Small business owners maintain a positive outlook but are moderating the aggressive economic plans they voiced in January, 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. A more conservative 39 percent now plan to add employees compared to 50 percent in January; 57 percent are maintaining current staffing levels versus 47 percent last quarter; and just over 4 percent are planning layoffs, compared to 3 percent in January.

Insperity also announced compensation metrics from its base of 5,300 small and medium-sized Workforce Optimization® clients. Average compensation for the first quarter 2014 increased 1.2 percent over the first quarter of 2013, while bonuses were down 5.1 percent compared to the 2013 period. Average commissions received by worksite employees reflected an increase of 3.0 percent. Overtime pay was 9.4 percent of regular pay, below the 10 percent level that generally indicates a need for additional employees, but up from 8.6 percent in the first quarter of 2013.

According to the survey, 79 percent of respondents expect to meet or exceed the 2014 performance objectives they set in January, down from 92 percent in the last survey; while 21 percent expect to do worse in 2014, more than doubling the 8 percent from three months ago. Concerning the timing of an economic rebound, 33 percent think one is currently in process versus 38 percent in January; 17 percent expect a rebound in the third quarter of 2014 or later, and 44 percent are unsure versus 37 percent in January.

“The optimistic 2014 outlook from our business owners in January is still present, but has been moderated by the ongoing realities of a challenging economy,” said Paul J. Sarvadi, Insperity chairman and chief executive officer. “True to form, businesses seem to be doing all they can to move ahead while balancing economic opportunity with the restraints of increasing government regulation, which was the top long-term concern named by our survey respondents.”

The list of short-term concerns is led by the economy, according to 51 percent of survey respondents; tied for second place are hiring the right people and rising health care costs at 46 percent. National health care reform is listed a close fourth by 45 percent of respondents. Government expansion again topped the list of long-term concerns at 57 percent; potential tax increases came in at 55 percent; the federal deficit at 52 percent; and the economy by 44 percent.

When asked about their pipelines for new business through 2014, 60 percent of survey respondents expect sales to increase, down from 66 percent in January; 28 percent anticipate no change versus 25 percent last quarter; 6 percent predict decreasing sales and 6 percent are unsure.

The survey results show that 29 percent plan to increase employee compensation, down from 46 percent in January; 60 percent plan to maintain compensation at current levels, up sharply from 43 percent last quarter; 1 percent again expect decreases; and 11 percent are unsure.

Concerning their current profit-generating activities, 69 percent list selling new accounts and 65 percent cite increased service to existing clients. This was followed by 50 percent who indicate adding new services or products, and 34 percent list investing in new improvements. All of these responses were little changed from the first quarter survey.

Insperity conducted the survey April 8-10, 2014, of chief executive officers, chief financial officers and other executives in a variety of industries from its base of approximately 5,300 Workforce Optimization clients throughout the United States. The overall sampling error of the national survey is +/- 4.6 percent at the 95 percent confidence level.

Insperity, a trusted advisor to America’s best businesses for more than 28 years, provides an array of human resources and business solutions designed to help improve business performance. Insperity® 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 Optimization 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 2013 revenues of $2.3 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) adverse 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 and federal 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 acquisitions; (x) failure of our information technology systems; and (xi) 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, Inc.
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, Inc.
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