41% expect increase in sales in the last half of 2009
Employment and compensation levels stabilize
The economy was listed by 83 percent of business owners as their biggest concern for 2009, followed by 53 percent citing government healthcare reform, 44 percent listing controlling operating costs and 33 percent specifying rising healthcare costs. However, for 2010 and later, concern about the overall state of the economy fell to fourth place, at 36 percent, when the largest number of survey participants expressed a 55 percent tie vote for being “very concerned” about both potential tax increases and the effect of government expansion on business, and 50 percent listed the Federal deficit.
When respondents were asked about their pipeline for new business for the balance of 2009, 41 percent responded that they expect a sales increase, 35 percent predict it will stay the same, while only 15 percent anticipate decreasing sales and 9 percent weighed in as unsure.
In addition, 60 percent of owners and managers of small and medium-sized businesses said that they are either meeting or exceeding their 2009 performance plans, with the remaining 40 percent reporting that they are doing worse than expected.
“Throughout America’s history, the entrepreneurial spirit has overcome obstacles and capitalized on opportunities, and our current economic setting is no exception,” said Paul J. Sarvadi, Administaff's chairman and chief executive officer. “Small and medium-sized businesses are battling through the challenges of the recession and appear to be preparing for a recovery in 2010.”
Since increased employment is one of the final signs of an economic recovery, respondents said that they are continuing to use cautious approaches in managing current staffing and compensation plans. In the survey conducted late last month, 60 percent of participants said they are maintaining current staffing levels, while 23 percent are adding new positions, up from the 18 percent in the survey conducted three months ago. Layoffs were named by 16 percent as a current management strategy versus 19 percent in May.
The survey also revealed that 68 percent of participants expect to maintain employee compensation at current levels for the remainder of this year; 10 percent plan increases; 6 percent expect decreases, down from 12 percent previously; and 16 percent were unsure.
When polled about their current profit-generating activities, 72 percent of participants listed selling new accounts as the leading strategy, an increase from 66 percent in May. This was followed closely by 68 percent naming increased service to clients. Negotiating with vendors garnered 31 percent, and survey respondents listed acquisitions fourth at 17 percent.
Of the 57 percent citing current plans to cut operating expenses from current levels in the remainder of 2009, 70 percent said they would do so by limiting travel and/or entertainment, 60 percent named negotiating with vendors, and more than 53 percent each specified postponing or cutting capital investments and/or canceling or delaying projects.
Administaff also announced compensation data from its base of more than 5,900 small and medium-sized businesses. Compared to the 2008 second quarter data, average compensation is up 2.1 percent, bonuses are up 2.0 percent and commissions increased by 0.2 percent in 2009. Overtime pay is running a low 7.1 percent of regular pay, continuing to signal the lack of demand for additional employees at this stage of the economic cycle.
