The majority of small business owners are most concerned about the rising costs associated with attracting and retaining talent and the increasing need for advanced cybersecurity protocols. That’s according to a recent survey of small business owners conducted by investment management firm Principal.
Released last month, Principal’s sixth annual Well-Being Index surveyed U.S. business owners who employ anywhere from two to 1,000 employees about what aspects of their business most concerned them. The report found that healthcare benefits, personnel and cybersecurity were by-and-large the most pressing issues on the top of employers’ minds.
To get some additional insight, we spoke with Jeffrey Bumbales, Director of Marketing with small business fintech lender Credibly to see what is driving business owners to seek funding.
A Generational Divide
Among the top responses Principal received from respondents were several that relate to the cost of personnel. Although healthcare and benefits expenses ranked among the top two responses, the report also highlighted that another top concern—attracting and retaining talent—is a similarly pressing concern.
According to Bumbales, these concerns stem from a similar impulse: the need to establish a compelling reason for talented employees to remain and grow within the business. “It’s pretty well-known that personnel and labor costs are among the biggest expenses for every company. But that expense is kind of amplified for small businesses, which don’t typically have the resources and infrastructure to scale up quite as quickly as larger firms.”
However, the report also elaborates that business owners’ strategies for facing these issues differed between millennial entrepreneurs and baby boomer-owned businesses.
For example, just 14% of the baby boomer-owned businesses increased their budget for employee benefits and perks in 2019. In lieu of an array of expensive benefits and increased wages, Boomer businesses instead prioritize less costly benefits, like flexible schedules and casual work environments.
Millennial owners, on the other hand, are far more willing to invest money into attracting and retaining the best talent, with 30% saying they had increased their employee budget. These companies use the money to offer their higher wages and a variety of compelling benefits while also providing job training and reskilling to ensure employees are growing and developing in step with the company.
These approaches may be unique but, according to Bumbales, the reason for them is typical among the companies with which Credibly works.
Bumbales said that “Since competition for talent is as tight as it is, it makes sense that small businesses are attempting to split the difference between providing competitive benefits while also playing to their strengths. Making sure employees feel needed and appreciated is where small businesses have the edge over larger firms.”
Cybersecurity A Common Thread
While personnel issues may split business owners, one common element does unite them—the growing need to invest in cybersecurity.
This is unsurprising given the increasingly intensive role that data plays throughout the entire economy. More than three-fourths of all respondents to the survey indicated that they regularly handle “personal customer information.”
The alarm over security also came as little surprise to Bumbales, “It is something we’ve been hearing with greater frequency from loan applicants. Business owners are becoming more aware that they have a serious responsibility to protect client information and that failure to do that represents a huge threat to their continuity.”
It also stands to reason given the high-profile nature of recent data breaches involving everyone from Facebook.com, inc. (NASDAQ: FB) Equifax Inc. (NYSE: EFX) and Capital One Financial Corporation (NYSE: COF). What’s more, a recent survey from IBM (NASDAQ: IBM) found that the average cost of a data breach in the U.S. circa 2019 is $8.19 million.
Principal’s survey found that nearly 30% of respondents are seeking outside experts and guidance for help in bulking up their security and educating their employees on proper cybersecurity best practices.
Problems And Bigger Ones
Due to the persistently tight labor market and the unceasing encroachment of data into every aspect of the economy, these concerns will likely only be compounded as 2020 unfolds.
However, with optimism still high among most business owners, these challenges will also likely be met with new and innovative approaches.