American business owners are optimistic about the health of their businesses but lack confidence in the economy, according to new research from Principal Financial Well Being Index: Business Owners.

With Election Day quickly approaching, business owners say the state of the economy is the financial issue that will have the biggest impact on their vote, followed by health care reform and taxes. Almost half of those surveyed (47 percent) say their business financials improved compared to a year ago, and more than half (58 percent) believe their financials will improve in the next 12 months.

But when it comes to the broader picture, nearly half of those surveyed (46 percent) are cautious about the economic outlook for 2013, and two-thirds are holding off on making long-term financial commitments because of the current state of the economy.

“While owners of small to medium-sized businesses report growing confidence in what they can control – their own companies – they do so with a healthy dose of caution in the context of the overall economy,” said Amy Friedrich, vice president of the Principal Financial Group. “As these owners prepare for Election Day, the economy will not only influence their vote, but also their long-term plans for spending.”

Slow to spend

Business owners are also reluctant to spend cash. Sixty-three percent said they have surplus capital, but almost three-quarters (73 percent) of those who have surplus capital are not spending any of it. Still many business owners plan to grow their businesses in the near term. Forty-two percent plan to add staff in the next year, and almost one-third (31 percent) plan to expand business operations in the U.S.

The Principal Financial Well-Being Index: Business Owners, which surveys American business owners at small and mid-sized businesses with 10 to 500 workers, is part of a series on the financial well-being of Americans released quarterly by the Principal Financial Group. The survey is conducted online by Harris Interactive and is The Principal’s first survey on the financial well-being of the American business owner.

Economy, health care drive decision-making

The same financial issues swaying business owners’ votes are also influencing how they run their businesses. Health care and the economy are top-of-mind, with more than half saying health-care costs (57 percent) and economic growth (54 percent) are impacting their business decisions. Other top issues include uncertainty of taxes (45 percent), gas prices (43 percent), unemployment (37 percent) and inflation (36 percent).

Not surprisingly, health care is a priority for business owners in both the political world and the business world. One-fourth (24 percent) rate their top concern for the well-being of their business as managing the cost and administrative responsibilities of health care, and another 24 percent say understanding how health-care reform impacts their business is their top concern.

While business owners may not be able to control or predict the future of health care, many are turning to wellness programs to improve employee health and reduce risks. Nearly two-thirds of those surveyed (64 percent) offer some form of wellness benefit to their employees.

“With lingering ambiguity around health care reform, the challenge of managing health care costs can be overwhelming for owners of small and mid-sized businesses,” Friedrich said. “Business owners are seizing opportunities to take action amidst this uncertainty and experiencing positive results.”

View the full survey results at www.principal.com/wellbeing.