The Coronavirus pandemic has forced many small businesses into survival mode, with three out of four small business owners feeling concerned about the future of their companies, and many lacking resources and contingencies for a downturn.
A new survey from ShareBuilder 401k found more than half (54 percent) of small business owners expect market volatility to last more than six months, and more than a third (35 percent) anticipate conditions will continue for at least a year. Meanwhile, more business owners are neglecting long-term plans, further amplifying America’s retirement savings gap.
The survey of 500 small business owners (“SBOs”) was conducted March 27th through April 3rd and revealed:
- Business owners expect down markets to continue and are greatly unprepared.
- Nearly half (47 percent) don’t have an emergency fund to support them through a downturn; 79 percent have no access to loans; and 75 percent lack open lines of credit.
- Twenty-five percent have no emergency contingencies in place at all.
- Most SBOs plan to cut marketing and operating costs first, followed by workforce and business hours, and benefits.
- SBOs report marketing expenditures (30 percent) and operating costs (30 percent) are most likely to be reduced first, ahead of workforce (15 percent), business hours (15 percent) and benefits (10 percent).
- Retirement plans and savings are increasingly at risk.
- Forty-four percent of SBOs are not confident they are saving enough for retirement (up six points from 2017).
- More than two in five (43 percent) are contributing less than one percent or nothing to retirement.
- A majority (73 percent) of those expecting to retire are counting on Social Security to help fund retirement.
- Fewer small businesses offer a 401(k) plan (28 percent, down from 32 percent in 2017).
- And a vast majority (88 percent) are unaware of new legislation, the SECURE Act, aimed at helping more business owners and workers save.
“As we focus on helping small businesses find relief and survive in the near-term, we must also consider the long-term impacts this pandemic will have on America’s ability to save for the future,” said Stuart Robertson, CEO of ShareBuilder 401k. “With more than half of American workers employed by small businesses, we must work to deliver the right tools, information, access and resources necessary for both near-term survival and long-term success.”
Visit ShareBuilder 401k’s blog for additional survey insights and analysis, as well as informative content, education, FAQs and tips to help SBOs and workers save.
About ShareBuilder 401k
ShareBuilder 401k is a leading 401(k) provider bringing together digital solutions, service and investment expertise to deliver low-cost, all-ETF retirement products and resources for small- to mid-sized companies, including owner-only businesses. Founded in 2005 and now serving more than 6,500 businesses nationally, ShareBuilder 401k pioneered the all index-based 401(k) using ETFs, digital quoting and purchasing of retirement plans, and providing investment management (ERISA 3(38)) services for every client’s fund roster. ShareBuilder 401k is committed to further expanding access to retirement plans and leading more Americans to save through intuitive technology, low costs, and high service including investment oversight and plan design support for sponsors, and quality education and training for employees.
The ShareBuilder Retirement Survey was conducted by Wakefield Research (www.wakefieldresearch.com) among 500 U.S. Small Business Owners at companies of 1-50 employees, between March 27th and April 3rd, 2020, using an email invitation and an online survey.