IPA SBRB Study Indicates Healthcare Fastest Growing Small Business Cost; General Economy a Major Concern

BUFFALO GROVE, IL (September 15, 2004) -- Owners of small businesses contend that healthcare costs are their most rapidly increasing expense, according to the results of the International Profit Associates Small Business Research Board (IPA SBRB) survey.

The owners of small businesses in the IPA SBRB poll also indicated that they are being pressured by rising payroll costs and increasing costs for materials and inventory.

"Other than the general state of the economy, the IPA SBRB poll makes it clear that small businesses believe that healthcare costs are impacting their operations more than any other single cost factor," said Gregg Steinberg, President and CEO of International Profit Associates.

"During the last decade, small businesses led the way in the nation’s economic expansion, the longest economic expansion in American history. Rapidly rising healthcare costs threaten the capacity of many small businesses to pay for the healthcare of their employees and, at the same time, make the necessary investments to grow their businesses. Ongoing double-digit increases in healthcare costs weaken the ability of small business to drive an economic and jobs growth recovery," Steinberg added.

Study participants were asked to identify the three costs that were increasing most rapidly for their businesses. The top response from those surveyed was healthcare costs with 70% identifying it as a rapidly growing expense. This was followed by payroll with 67% and the cost of materials and inventory with 66% saying these were among the three fastest growing expenses.

More than 8 in 10 (83%) of the owners surveyed felt the economy would have the greatest impact on their businesses among those variables presented (see chart below) for the rest of this year and into 2005. Healthcare costs were the next greatest concern with 69% of the owners saying it would have a significant impact on their businesses.

Small businesses were asked to comment on a number of issues that could impact their business on a one to five scale, with one meaning no impact, three signifying medium impact and five indicating the greatest impact. Responses are listed below.

Earlier, the IPA SBRB reported that small business owners were six times more likely to hire than decrease staff during the remainder of the year and more than 9 in 10 of those surveyed were going to maintain or increase staff size.

"The IPA SBRB study shows that although hiring trends among small business owners are optimistic, the looming healthcare cost crisis tied to general economic concerns point to a great deal of apprehension regarding the near future," Steinberg said.

The International Profit Associates Small Business Research Board has been created to determine the opinions of small business owners and managers on a wide variety of topics related to their own business as well as national and international issues that may impact their operations.

Participants in the poll provide feedback on significant issues and allow for real-time insight into the state of small businesses nationwide. The universe of participants is developed from among small businesses across the United States. More than 170 small businesses participated in this IPA SBRB poll. The IPA SBRB study is a voluntary survey conducted via phone, email and fax. The poll was structured and supervised through an independent resource.

The latest information about the IPA Small Business Research Board can be found at www.ipasbrb.com.

International Profit Associates, Inc. (IPA) is the largest privately-held provider of management consulting services to small and medium sized businesses in North America. IPA and its more than 1,700 professionals offer a wide range of proven and innovative methodologies to help businesses grow and prosper regardless of the economic cycle. IPA either provides directly or through its affiliated companies a comprehensive array of business advisory services, tax and estate planning services or merger, acquisition and other financial advisory services in the United States and Canada. More information about IPA can be found at www.ipa-iba.com.