Small Business Tracking Study

Wave 1: May 2015

It’s our business to know your business

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We strive to understand

everything we can about the

Small Business segment

to understand their perceptions,

challenges & needs over time

across areas that small businesses need to make the day-to-day of their

business run: Technology, Healthcare, Finance and Insurance

OUR GOAL: Make our marketing work harder for you by digging deeper

and getting smarter about our audience

3 Source: Constant Contact survey 2014

Small businesses will continue to face challenges every day…

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How do I find a work/life balance?

How do I stay ahead of the competition?

How can I be on-the-go all the

time and run a business?

How do I stay on top of new

innovations?

How will the economy affect my business?

I need to reach more customersHow will I grow

my business?

I need to find & keep talent

Are there any new government

regulations?

How do I up my social

game?

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Coffee Shop

We are tracking trends to better speak with small businesses. We want to know what makes them tick, what keeps them going, what is top of mind every day and every minute.

Most importantly, what are their hurdles to being successful?

We have begun our first conversations and created a baseline

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505 small business decision-makers reached through an online survey

40%

21%

13%

13%

11%Number of Employees2 to 4

5 to 910 to 1920 to 4950 to 99

18% Home-based

All across the U.S. and different make-ups:

14% 19% 17% 19% 21% 9%

Revenue Split

$25-100K $100-250K $250-500K $500K-1M $1M-2M $5M+

Years in Business23% 1 to 5 years

22% 6 to 10 years20% 11 to 19 years35% 20+ years

14% Construction-based

Overall, small business owners believe their businesses are growing and are optimistic for the future

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Last year, did your business experience…

Rapid growth (more than 10%) 14%Slow but steady growth 45%No change 28%Slow but steady contraction 10%Rapid contraction (more than 10%) 3%Not sure 1%

Next year, do you think your business will have…

Rapid growth (more than 10%) 19%Slow but steady growth 50%No change 22%Slow but steady contraction 6%Rapid contraction (more than 10%) 1%Not sure 2%

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We asked small business owners about different aspects of running their businesses

Finance TechnologyInsurance Healthcare

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Interesting insights and takeaways from other areas

Finance TechnologyInsurance Healthcare

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Small business owners are upgrading but being kept up at night by cyber security concerns

Keeping up with hardware and software upgrades is the #1 technology initiative businesses deal with, followed by mobile access, social media

presence, and especially cyber security.

Companies that have undergone rapid growth in the last year are far more concerned about their technology needs than other companies.

The faster the growth, the more they think about technology needs with special emphasis on security.

Most small businesses offer benefits because “it is the right thing to do”

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  Total 2-4 5-19 20-49 50-99

You and/or management feels it is the right thing to do 57% 60% 54% 46% 71%

As part of a total compensation package for employees 45% 46% 40% 58% 39%

To attract and retain talented employees 32% 29% 31% 29% 44%

To be competitive with other businesses in your sector 26% 18% 26% 38% 29%

Because of the Affordable Care Act (ACA) 25% 24% 30% 21% 22%

Other 2% 6% - - -

Why Offer Health Insurance?

2-5 5-19 0-49 50-99

50%64%

86% 89%

Offer Health Insurance to Employees

Most small businesses are satisfied with their ability to manage the organization’s health insurance needs.

Smaller businesses are buying employee health insurance through insurance brokers or agents

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 Total  2-4 5-19 20-49 50-99

Through a licensed broker, agent, or advisor 40% 49% 44% 33% 27%

Directly from an insurance company (by phone with a customer service rep) 33% 25% 30% 40% 46%

Directly from an insurance company (through the company website) 23% 13% 21% 31% 34%

By reimbursing employees that purchase health insurance on their own 14% 13% 12% 10% 27%

Through a SHOP Exchange or Marketplace (Small business Health Options Program) 14% 11% 20% 21% -

Health Insurance Purchase Channels

Whereas larger companies are buying directly from the insurance company

Many insights that we found can be applied across the board

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Technology

#1 technology initiative businesses deal with is

keeping up with hardware & software upgrades and need help deciding the next steps

Universal Insight:Whether they are looking for a new Healthcare plan or shopping for productivity solutions, small businesses are looking for an expert “guide” to help them understand options and make the

right decisions.

Healthcare

Small businesses with 2-19 employees are more

likely to purchase through a broker vs. direct

What aresmall businesses thinking about

Finance?

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Most small businesses are satisfied with their ability managing the organization’s financial needs.

Very Somewhat Not satisfied

43%35%

21%

Satisfaction with Company’s Ability to Manage Financial Needs

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Top business financial concerns vary by business size

2-4 5-19 20-49 50-99

Concerns about Financial Issues

Employees

Dealing with business filing requirements

Meeting financial reporting requirements

Collecting your accounts receivable

Finding the right retirement benefits offerings for employees

Deciding whether to offer retirement savings benefits to employees

Getting access to lines of credit Encouraging/Helping employees take

advantage of the retirement benefits package

• Small companies are most concerned with filing and reporting requirements, and accounts receivable.

• Larger businesses are as concerned with filing and reporting requirements as they are with decisions about employee benefits.

Employee retirement plans are the #1 savings plan offered to employees

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   Total 2-4 5-19 20-49 50-99

Employee retirement plan (e.g. 401K, 403b, SEP IRA) 34% 23% 33% 58% 47%

Employee life & disability insurance 27% 15% 24% 46% 51%

Healthcare Savings Account 21% 12% 21% 39% 33%

None/Do not offer a savings plan 44% 64% 46% 12% 13%

Other 1% 1% 1% - -

Financial Services Offered by Small Companies

Larger companies offer a broader selection of savings plans to employees, however, smaller companies are less likely to offer savings plans.

Looking at changes now Less than 1 year ago 1-2 years ago 3-5 years ago More than 5 years ago Never

12%10%

15%

6%

14%

43%

14%11%

17%

9%11%

39%

12%

25%26%

14%12%

11%

22%

16%

22%

13% 13% 13%

2-4 5-19 20-49 50-99

Almost half of small businesses with 19 or fewer employees have never made a change

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• About one-fourth of small businesses we spoke to have made changes to their savings plans in the last year

• Larger businesses (20+ employees) are more likely to make changes than businesses with fewer than 20 employees

Changes to Employee Savings Plans

0%

10%

20%

30%

40%

50%

60%

70%65% 65%

58% 58% 58% 58%54%

42% 42%

31%

37%39%

43%

35%

22%20%

18% 18%20% 20%

18%

44%

40%

36%

27%

22%

44%

24%

Rapid Slow No change Contraction

Leve

l of C

once

rnRapidly growing companies are more concerned with a host of financial issues

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Concerns with Financial Issues

Credit cards are the #1 credit stream available to small businesses

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   Total 2-4 5-19 20-49 50-99

Access to lines of credit (net) 81% 75% 83% 88% 91%

Business credit cards 62% 59% 60% 70% 62%

A credit line(or revolving line of credit) 39% 28% 40% 49% 60%

A fixed loan 16% 11% 16% 26% 24%

Other 5% 5% 9% - 2%

None of these 19% 25% 17% 12% 9%

Access to Credit

Companies with 20+ employees are almost just as likely to have access to other sources of credit, such as a credit line or a fixed loan.

Financial advisers, online research, and insurance brokers are the top channels consulted for financial advice

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   Total 2-4 5-19 20-49 50-99

Consulted any source for financial advice (net) 87% 83% 88% 93% 87%

Financial adviser or accountant 44% 54% 43% 35% 24%

Research online 39% 35% 44% 37% 42%

Insurance broker or specialist 30% 25% 27% 37% 51%

Colleagues you meet at local networking events 17% 12% 15% 26% 24%

Lawyer 15% 9% 20% 16% 22%

Conferences or informational seminars 12% 7% 14% 16% 20%

Other 1% 2% 1% - -

None of these 13% 17% 12% 7% 13%

Financial Services Information Channels

Smaller businesses of 2-4 employees are far more likely to seek financial counsel from a financial adviser than other sources.

What aresmall businesses thinking about

Commercial Insurance?

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Most small businesses are satisfied with their ability managing the organization’s insurance needs.

Very Somewhat Not satisfied

43%36%

19%

Satisfaction with Company’s Ability to Manage Insurance Needs

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Worker’s comp is the most widely held insurance, followed by commercial property & liability insurance

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   Total 2-4 5-19 20-49 50-99Worker’s compensation 53% 48% 58% 57% 54%

Commercial property & liability 48% 52% 46% 45% 46%

Professional liability insurance 40% 38% 45% 29% 46%

Employee life & disability insurance 35% 22% 31% 60% 56%

Commercial auto insurance 32% 28% 31% 45% 30%

Employment practices insurance 17% 7% 19% 28% 32%h

Directors and Officers insurance 13% 11% 8% 26% 20%

Errors & omissions insurance 12% 12% 14% 7% 14%

Key man life insurance 11% 7% 11% 21% 18%

CyberRisk insurance 6% 2% 6% 7% 14%

None of these 7% 11% 4% 3% 8%

Current Insurance

• Cyber security is a major concern, very few businesses are insuring themselves against a cyber breach.

• Larger businesses (20+ employees) are more likely to make changes than businesses with fewer than 20 employees

Two-thirds of companies have made changes to their insurance in the past two years or are looking into making changes

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Changes to Insurance Policies

Looking at changes now Less than 1 year ago 1-2 years ago 3-5 years ago More than 5 years ago Never

12%

21%

24%

16%

14%12%

13%

26%

29%

13%

11%

7%

19%

28%26%

16%

7%5%

16%14%

36%

16%

10%8%

2-4 5-19 20-49 50-99

Most companies are receiving their information from specialists or from online research

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14%

11%

12%

19%

20%

42%

43%Contacted or met with an insurance broker or specialist

Researched online

Talked about it with colleagues you met at local networking events

Contacted or met with a financial adviser or accountant

Conferences or informational seminars

Contacted or met with a lawyer

None of these

Information Channels

Very small companies are much more likely to purchase through a licensed broker, agent, or advisor

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  Total 2-4 5-19 20-49 50-99

Through a licensed broker, agent, or advisor 49% 58% 47% 40% 36%

Directly from an insurance company (through the company website) 27% 16% 27% 41% 46%

Directly from an insurance company (by phone with a customer service rep) 29% 19% 31% 34% 44%

Not sure 7% 8% 7% 5% -

Other 2% 2% 2% - 2%

Insurance Purchase Channels

Companies with more than 20 employees are far more likely to purchase directly from an insurance company.

  2-4 5-19 20-49 50-99

Too much 4% 10% 14% 16%

Right amount 62% 64% 74% 68%

Too little 21% 17% 10% 10%

Not sure 13% 9% 2% 6%

Smaller companies are more likely to be uncertain or feel they are under covered

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9%

65%

17%

9%

Too muchRight amountToo littleNot sure

Do business feel they have Sufficient coverage?

- Two-thirds feel that they have the right amount of insurance

- Those that feel they have “too much” coverage are larger companies

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We have learned a lot …And would love to get to know you to dig deeper and help apply our current and future learnings to your initiatives.

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We also want to get you involved

What would you like to know about your audience?- Let’s work together to craft a questionnaire

specific to your objectives and target market

- We’ll then use those findings to craft data-driven insights to aid all aspects of your strategic marketing efforts

We are offering our partners the opportunity to take part in the next phase of our tracking study

Thank you

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