How 2017 PEO Trends Boost Small Business Growth
More than one million small businesses with between 10 and 99 employees have hung out their shingle in the United States. That’s the target market for PEO firms, and it’s a thriving segment of the business landscape. As economic optimism increases, it’s likely that the number of new entrepreneurial ventures will grow as well.
In September of 2016, the National Association of Professional Employer Organizations (NAPEO) published their State of the PEO Industry report. Now, just one month into Q2 2017, we’re already seeing some of those predictions gaining traction.
Let’s look at NAPEO’s top trends and projections for 2017—and how they affect small businesses.
Trends Shaping the PEO Industry This Year
State-level HR mandates, healthcare regulations and uncertainties, and new federal guidelines for small businesses have made HR responsibilities seem even more daunting than they used to be. That’s good news for PEOs, because it means more small business owners will turn to outsourcing for their HR needs. Here are six of NAPEO’s top observations for the PEO market:
- The number of small businesses has remained consistent over time. The number of businesses with between 10 and 99 remained at approximately 1.1 million from 1998 to 2013. While percentages shifted slightly over that time, the absolute number remained the same due to fluctuations in the economy.
- There are almost as many businesses with 5-9 employees as those with 10-99. Although most businesses this size don’t utilize a PEO, it still presents an interesting opportunity for the industry. The key, of course, is to find a cost-effective, profitable way to serve this market segment.
- Small business owners are most concerned about healthcare, hiring, and taxes. This isn’t surprising, since these areas require in-depth knowledge and a significant time investment. They’re also perfectly aligned with PEO offerings.
- PEO clients outperform other small businesses in areas like employment growth, turnover, and business survival. Specifically, small businesses that partner with a PEO are 50% less likely to go out of business.
- The SBEA may make business owners more likely to view outsourcing as a viable solution. The Small Business Efficiency Act created a voluntary certification process for PEOs that includes bonding, annual audits, and quarterly tax attestations. This process may give business owners greater confidence in the legitimacy of a PEO.
- The greatest competition PEOs face is the growth of SaaS HR technology models. HR startups like Namely market themselves primarily to small businesses that need help with payroll, core HR, and talent management. The PEO industry may need to diversify in order to maintain their market share.
What Does All This Mean for Small Business Growth?
For the small business owner, these trends mean that you have more options and resources than ever before. There’s no need to keep juggling the million and one activities of HR in addition to running your day-to-day operations.
When you’re ready to take the next step with your business, look closely at the benefits of partnering with a PEO. It’s a whole lot easier than simply adding another technology platform that you have to manage. Here are just a few of the benefits you’ll enjoy:
- Benefits Administration
- Healthcare Compliance
- Tax Preparation and Filing
- Recruiting Assistance
- Vendor Management
- Workers’ Compensation
- Legal Assistance
- Regulatory Compliance
- Employee Training
- Risk Mitigation
And when you’re ready to take that step, your PEO will help you grow your business quickly, efficiently, and with minimal risk.
Looking for the right PEO for your small business? Take our PEO survey to find your perfect PEO match based on your unique requirements!
