Starting a small business is notoriously hard work. Building a business to last the test of time, even harder. Statistics show that half of all small firms fail within the first five years. A third manage to last a decade. Of course, any successful business owner will tell you that hard work is a given, but no matter how many hours you put in, the world always seems to be stacked against you and your firm.
To some degree, that’s true.
The U.S. Small Business Administration (SBA), itself a government agency, reports that smaller firms spend 36 percent more per employee to comply with federal regulations than larger companies. They spend three times more per employee on tax compliance than their larger counterparts. Often times, smaller businesses simply lack the resources, access, and expertise available to corporations necessary to navigate today’s highly complex bureaucracies. How then, can any small business hope to survive, let alone thrive?
PEOs Increase the Odds In Your Favor
According to a 2013 report by NAPEO, “Professional Employer Organizations: Fueling Small Business Growth,” a comprehensive study determined that small businesses in PEO arrangements displayed more robust growth than firms going it alone, and executives who employed PEOs were better able to focus their time and attention on addressing core business issues rather than bureaucratic red tape. Across all industries, the results reflect clear advantages for PEO clients on two of the most fundamental issues affecting long term survival and viability: the ability to overcome regulatory burdens while reducing risk exposure, and employee retention.
That’s right, one of the key reasons businesses fail is simply an inability to either attract or retain the kind of employees that make a business successful. Depending on how the data is parsed, the employee turnover rate for PEO clients can be nearly 15 percentage points lower per year than that of comparable companies in the same industry. The average overall employee turnover rate in the United States was over 40 percent per year in 2012. It was around 30 percent for firms that opted to work with PEOs. Getting employees to stay, is the hallmark of a successful enterprise. And PEOs make that possible for their clients by providing critical HR infrastructure and competitive benefits packages that encourage employees to not only work harder, but to work happier.
As a direct result, businesses that use PEOs are approximately half as likely to fail or permanently cease operations than similar companies who do not.
That’s a huge difference. PEOs not only increase the odds of survival, they help lay the bureaucratic groundwork for success.
- Half of all small business fail in the first five years; two-thirds fail within a decade.
- Part of the reason many businesses fail is because of costly regulations and bureaucratic blunders, along with an inability to retain competitive talent.
- PEOs provide the critical HR infrastructure necessary to navigate regulation, and can help their clients secure competitive benefits packages at affordable prices.
- PEOs help small employers recruit, hire, and retain the kind top-flight talent that ultimately drives long-term growth.
See if a PEO is right for your business.