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Small Business Digest


Small Businesses Prepare to Hire but Struggle With Benefits

The nation’s unemployment rate may have hit a 26-year high, but many small-business owners are getting ready to hire.

The latest Intuit Payroll survey from Intuit Inc. finds that nearly half of the small-business owners surveyed, 44%, are planning to hire new employees within the next 12 months. At the same time, many small-business owners believe that benefits are critical to attracting new hires but are finding such lures difficult to afford.

“Economists may have declared the recession over, but on Main Street, unemployment figures are what really matter,” said Nora Denzel, senior vice president of Intuit’s Employee Management Solutions Division, which helps more than one million small businesses manage their payrolls. “There are struggles ahead; nobody is uncorking the Champagne bottle quite yet; but we are starting to see small signs of optimism.”

For the Intuit Payroll survey respondents, these 12-month hiring plans coincide with a somewhat optimistic view of their own prospects for growth. Sixty percent expect their business to grow in the next year. Newer businesses are the most bullish: 80% of companies founded less than three years ago expect to grow during the next year, compared with roughly half that have been in operation 10 years or more.

As to hiring, small-business owners are looking for candidates with a broader skill set. Fifty percent of the small-business respondents said they were looking for a “people person” or “jack of all trades” over a "creative genius” (11%) or “mathematical wizard” (4%).

Benefits Key to Attracting Talent

While small-business owners get ready to hire, many of them are in a quandary when it comes to attracting talent. Nearly 90% of survey participants said that health-insurance benefits are important to attracting and retaining good employees. Yet 58% don’t offer healthcare insurance, with nearly 50% stating hat they can’t afford to.

Employer-provided retirement plans are even scarcer. Among the businesses surveyed, just one-fourth offer retirement benefits. Of those who don’t, nearly two-thirds said they don’t have a responsibility to do so, while the remainder said that they can’t find an affordable plan.

“There’s a widening gap of expectations,” Denzel said. “On one hand, we as a society assume that health and retirement benefits are part of every employee’s compensation package. And yet even as these small businesses gear up to hire, according to our results, small businesses are leery about what those benefits will cost.”

Additional Findings

The survey also found that:

Friends and family matter. Seventy-nine percent of small-business owners surveyed have hired a friend or family member, and only 22% said that this was a bad decision. The reason may have to do with trust, which was cited as one of the two biggest hiring challenges, along with finding employees with the right experience.

Long-term relationships are important.  Forty-four percent of the small-business-owner respondents reported that their first employee still works for them.

Stimulus funds aren't a factor. Consistent with the previous Intuit Payroll Survey conducted three months earlier, only 1% of respondents reported receiving federal stimulus money. Yet 74% acknowledge that they probably aren't taking advantage of all the benefits available to their business under the federal economic-stimulus plan.

“Small-business owners are busy people, and it’s not surprising that they don’t know all that’s available to them under the federal economic-stimulus plan,” Denzel said. “But in the end they could be leaving money on the table.”

More survey findings can be found at

Survey Methodology
The third-quarter 2009 Intuit Payroll Survey was conducted by Global Strategy Group Sept. 21-30, with 1,004 Intuit Payroll customers who participated in the online survey. The margin of error for this survey at the 95% confidence level is plus or minus 3.1 percentage points on the overall sample. The margin of error on subsamples is greater.

To help small businesses as they prepare to hire, Intuit Payroll provides useful hiring and employee- management tips and resources at

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