Business Owners Lack Confidence, Preparation
More than three-quarters (77 percent) of business owners say they started their companies to provide financially for their families, yet despite these good intentions, less than half feel confident with their current personal financial situation. More than a quarter (28 percent) say that it is all they can do to keep up with everyday business expenses, let alone think too much about their future.
This disparity is among the key findings of Massachusetts Mutual Life Insurance Company's (MassMutual) new study, "Business Owner Perspectives: 2011 Insights in an Uncertain Economy," a survey of more than 1,600 business owners in the United States. The study looks at business owners' thoughts about both their personal and business finances and includes multicultural and women business owners, two fast-growing groups in the U.S.
"Entrepreneurial businesses are vital to our economic recovery, so it is concerning that so many business owners seem to be sacrificing their own and their family's financial future," says Tara Reynolds, corporate vice president of consumer and product marketing at MassMutual. "With help, business owners can look past the seemingly overwhelming day-to-day demands of running their businesses and establish and meet their long-term financial goals."
Only four in 10 business owners realize it is very important to know what their business is worth right now, and 43 percent of business owners have not had their businesses valued in the past three years. "Knowing and carefully tracking the value of their business is the key to keeping business owners in control of their own futures," says Reynolds. "Those aware of their company's value can take steps to protect it from unexpected events-such as the death or illness of a partner-using it as the foundation for sound business, succession and estate plans. Working with a professional who is qualified to value businesses is a key first step to any long-term planning."
The top business concern of owners who participated in the study was keeping key employees loyal, with 53 percent expressing this concern. However, 30 percent said they have special benefits in place to help ensure employees who are integral to the business' survival remain loyal and with the company.
In addition to special incentive benefits, the study suggested business owners can take steps to protect their businesses against the loss of an essential employee-perhaps their most valuable asset-and the lost sales, productivity or even some good customers that may result. The first step may be estimating the financial impact on the business, if a key employee is unable to work or leaves the company.