What's on the mind of the small-to-medium sized business ownerwhen asked to forecast business conditions in 2014? Healthcoverage, above all else.

Research by Principal Financial drew a picture of these businessowners as fairly optimistic about 2014, but concerned about healthinsurance. Asked to rank what they felt would be the issues thatwould have the greatest effect on their businesses next year, 36%listed either health care costs or health care reform as the No. 1factor. Second? The impact of economic growth their business.

Principal found that about a third of the business owners arefeeling optimistic about business conditions overall for 2014, and55 percent said they thought their financials would be better ayear from now as the economy continues to rebound.

They aren't spending much yet in anticipation of more business,however. While two-thirds said they have surplus capital,three-quarters said they're keeping their powder dry until they'reconvinced they need to start spending on their businessesagain.

While last year 42% told Principal they planned to add to theirstaff, now, just 35% see themselves hiring in the next year.

They survey delved further into the health coverage issue. Askedabout healthcare reform, three-quarters reported that theycompletely understand or understand some parts of the PatientProtection and Affordable Care Act. Asked what actions they wereplanning to take as healthcare reform kicks in, here are some ofthe responses:

• Take no action: 17%
• Don't know what action they will take: 20%
• Plan to keep their workforce under 50 employees: 22%
• Will start offering health care benefits: 8%.