The Results Are In: NAPEO Research Shows That PEOs Are Great For Small Business

Small Business Owner Smiling About PEOPEOs have always marketed themselves as the best solution for small business HR needs. By handling compliance issues, tax filing, vendor management, benefits administration, and a long list of other administrative responsibilities, PEOs can help shoulder the administrative burden and provide relief for overworked business owners.

But do PEOs really offer the benefits they claim to? How do small businesses actually fare when they enter a PEO partnership? That’s the subject of NAPEO’s latest white paper, and we guarantee you’ll be impressed with what the researchers found.

Let’s take a look.

No Mistake: Small Business Owners Love Their PEOs

NAPEO interviewed 71 small businesses that were clients of PEOs, and 30 small businesses who were not PEO clients. Here are three of their most interesting findings: 

1. PEO clients experience higher revenue growth than non-PEO clients.

These statistics should make you sit up and take notice:

  • PEO clients experienced double the median revenue growth as compared with non PEO clients in 2015-2016.
  • PEO clients expect 40% higher median revenue growth than non-PEO clients in 2016-2017.
  • In 2015-2016, PEO clients were 16 times more likely to see an increase in their profitability.

Clearly, working with a PEO makes a difference in a business owner’s ability to generate revenue. But that’s not all it can do.

2. PEO clients feel more equipped to handle business challenges. 

Business challenges like revenue, recruiting, and raising capital weigh heavily on the minds of most small business owners. But those working with a PEO are less likely to rank these concerns as “major” or “moderate” compared with those going it alone:


Major Small Business Concerns


3. PEO clients have happier employees. 

According to NAPEO's research, employees of small businesses that work with a PEO are more satisfied with their jobs. They feel more confident that their employers:

  • Follow good hiring practices
  • Implement strong HR practices
  • Support good customer service
  • Take positive steps toward securing a competitive advantage
  • Show commitment to employees

 PEO-client employees are also more likely to indicate that they plan to stay with their employers until they retire.

What’s Behind The Findings?

According to Forbes, 80% of small businesses fail within the first two years. Yikes. That’s a scary statistic if you happen to be a small business owner. There are, of course, plenty of ideas about what you can do to turn the odds in your favor. Three of the most common are:

  • Boost competitiveness
  • Be innovative
  • Deliver excellent customer service

PEOs help small businesses do all of these things by freeing them up from the tyranny of paperwork and administration. By handing off the busywork, business owners can focus more on critical issues like growth and profit, giving them a better chance of success over the long term.


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