Small- and Medium-Business Employee Healthcare Insurance: Yes Or No

Shock waves are hitting a majority of smaller businesses receiving notices about the premiums due for employee healthcare insurance policies in 2016.
The new rates exceed 20% for many enterprises based on surveys done by Information Strategies, Inc. and other organizations.
An average 23% increases were reported in ISI’s survey of 233 randomly selected businesses under 50 employees. Other soundings surfaced similar increases ranging from 19% to 24%. One respondent reported a 49% increase.
Many companies are pondering alternatives such as providing stipends in lieu of benefits, increasing deductibles, reducing coverage to the minimums required by the Accountable Care Act (ACA), or doing away with any coverage.
For companies with under 50 employees, this last alternative does not involve government sanctions.
Organizations with 100 or more employees have weighty penalties for abandoning employee healthcare insurance.
Perhaps hardest hit are enterprises with 51-99 employees who are seeing massive increases in healthcare insurance premiums.
During the past two years, companies have held down premium costs by shifting the burden to employees either through higher deductibles, increasing the percentage paid by employees, or trimming benefits.
Most of these savings have been wrung out and there are few other alternatives.
While last year, only 6% of respondents said they were considering eliminating healthcare insurance benefits (believed important for employee recruiting and retention), in 2015 the number more than doubled to 13% in ISI’s survey and two other surveys reviewed.
Here are two ways small businesses can attack the cost hurdle.
The first involves a government program offering subsidies to smaller enterprises. This program is complicated and less than 100,000 companies have attempted to use it. The program is called the Small Business Healthcare Options.
The second involves setting up a private exchange enabling employees to purchase individual policies and obtain government subsidies under the ACA.
It has been reported that such programs can save companies significant dollars while providing individually tailored healthcare insurance. To learn more about this approach small business leaders can go to HealthMarkets.com.
If you know of other alternatives, please share them.
No matter what course of action is taken for 2016, small- and medium-businesses can expect 2017 premium rates will be higher.

SMBs Need To Get Their Financial Houses In Order

If as many economists believe the economy will expand in coming quarters, in order to take advantage of new opportunities or even remain competitive will require many small- and medium-size businesses (SMBs) to seek additional funding.

While never easy, finding funds to maintain current sales and/or fuel growth is expected to be harder in the last quarter of this year and more so in 2016.

It is reported many larger banks are opening the lending spigots, other financing sources are tightening their programs.

Institutional lenders blame the advent of the full implementation of the Sarbanes-Oxley Act as a key reason for the changes. However, there are other factors at work.

None of them make funding searches easier.

Low, low interest rates have helped many SMBs to survive the five year economic malaise.

This life jacket may be sinking as the Federal Reserve Governors just signaled that the low to non-existent interest rates will soon be a thing of the past.

In recent years, new funding sources including crowd funding; websites offering individualized paths to multiple lenders; and other non-bank lenders appeared. These channels have experienced explosive growth as start-ups and SMBs sought funds to stay alive or for growth.

However, federal bureaucrats are beginning to eye these non-traditional financing outlets as avenues through which the opportunities for mischief are becoming more frequent, obvious.

For most of the recent depression, community banks and specialized lending groups were the main sources of funding for SMBs.  Over the past twelve months, these sources have been steadily withdrawing from the marketplace. While larger banks have taken up some of the slack, they have not fully replaced the monies no longer available.

Another factor is these larger banks take longer to make a decision and often require onerous terms.

Recent surveys by Information Strategies, Inc. and others indicate a majority of SMB leaders think good times are ahead.

They also anticipate they will need additional funding to meet the costs of satisfying higher demand levels.

Thanks to the revolution by Internet cloud offerings and other technology advances in simplifying the ability to start a new company, SMB leaders also are recognizing that the number of competitors in all fields will be greater than before the recession.

Given this evolving scenario small business leaders should be acting now.

Mitigating against their efforts are two factors:

The first is that many SMBs have depleted their reserves during the past five years maintaining themselves during the economic downturn. They therefore appear more vulnerable to lenders.

The second is that SMBs have found the funding sources are reluctant to accept much risk in their lending practices.

To improve their chances of finding funding, experts suggest SMBs start lining up credit lines or taking out fixed rate loans or accept those with limited interest rate escalation clauses before then end of the current quarter.

As one expert said: “The time to borrow is when you don’t need the monies immediately. This gives the owner/manager time to shop around for the best possible loan source.”

While difficult, it is important that SMBs have, build, or rebuild a cash reserve.

If indeed the economy is strengthening, now is the time to generate financing to take advantage of those new opportunities.

Warning Signals Abound; Are Small Business Leaders Listening?

When Staples opened its first store, stationary establishments were amongst the most profitable retail operations in America.

Within 15 years they were losing money and have almost disappeared from most shopping areas.

For those owners who did not heed the warnings blared at them by their fellow owners and trade press at the time they lost everything.

It is no different in today’s rapidly changing world.

As consumers and business purchasers change their buying habits, many small-and medium-size businesses are getting left behind.

Therefore it is important that even the most successful small business leader should take lessons from birds.

A recent study of wild birds found that different species learn the warning calls of other forest creatures.

Moreover, they learn what the calls mean and if the predator can be targeting them.

The landscape is evolving quickly and even the most mundane small business will be affected.

There are many venues preaching the need for change.

They are the distant drumbeats warning of danger to profits that can’t be ignored.

However, for many managers buried in day-to-day activities these warning signals are not being heard.

Only when the threat of a new technology approach becomes immediate is action taken.

By then it may be too late.

Warning calls are all about us, it is important to hear, heed them.

In business there is a need to be familiar not only with one’s industry and competitors but other sectors.

Then too, economic, social, and financial trends also affect any small businesses.

When the economy shrinks, some small businesses are affected to a greater extent than others.

Likewise, as the economy expands, some small businesses are negatively impacted.

For an individual small business the first warnings signs come when customers stop reordering; phone calls are ignored; products are returned; store traffic slows; etc.

When this happens, it is important to listen to:

* Customers

* Suppliers

* Employees

* Other industry participants

* Trade press

* Family/friends

What is heard may shock, but it is the key to learning.

Today, small business leaders need to learn quickly or get left behind.

Keys To Small Business Success

Keep innovating, choose good staff and watch cash flow are the three most repeated keys to success gleaned over the years from successful entrepreneurs.

Consistently, when successful entrepreneurs and business executives are asked to tell small business leaders what they consider most important three traits these are cited most often.

For instance, John Sculley, the former Apple CEO, even wrote a book arguing small business leaders must constantly strive to stay innovative.

“Don’t become comfortable in your niche. There are always people coming up with new ways of doing what a company is based on,” he said in a recent interview on our Small Business Digest radio program.

Likewise, Jim Fowler, who created and sold Sawbuck to Salesforce for more than $1 billion thought focusing on finding the right people was important along with managing cash.

Other successful entrepreneurs almost always mention cash management as the cornerstone of success.

Despite this constant mention of these three key components, small leaders often ignore them.

They focus on the product and/or immediate sales. Which they rightly should. But even the most successful small business can be destroyed if they are not aware of how innovation from other entrepreneurs can damage their enterprise.

One reason is this revolution in technology is making innovation possible for very little cost.

In today’s world, technology allows start-ups to focus on the product/service with much of the infrastructure easily obtainable and managed.

Given that much of infrastructure management is now in the clouds, small business leaders should stay focused on innovation.

It is not enough to have a successful product/service, he or she needs be aware of what, where, and how their company could be in danger.

Here are some way of keeping ahead of the curve:

• Listen to what customers are saying
• Talk to buyers who are no longer buying
• Stay abreast of technological changes that may affect the company
• Review pricing, marketing, sales strategies at least once-a-year
• Hear when staff report on potential clouds/issues
• Take a break from day-to-day routines and ask what is happening outside the company
• Put aside monies for possible lean years Invite in others with ideas for the company to share them

The world always changes but right now it is evolving at an unbelievable pace and small business leaders should not be content with the status quo.

Share with us what you are doing to succeed in your business.

Small Businesses Need To Utilize Their Best Advantage, Personal Relationships

Most small businesses grow through their personal relationships.

Despite being closer to their customers/clients small businesses often fail to use this advantage effectively.

At the same time and unhappily, more and more in the Internet age they are sacrificing their ability to apply the personal touch.

Everyone agrees it is critical to be on the web, have social media contact, market effectively online, and devote resources to all things electronic.

However, it is equally as important to maintain an individual relationship with current and potential customers/clients.

A small business can easily identify if it is truly touching its audience by asking three simple questions.

1. When was the last time a staff member orally spoke with a current/potential purchaser?
2. When was the last time a current/potential customer was asked his or her needs?
3. When was a problem brought to the company’s attention and resolved personally?

Let’s discuss each of these questions individually.

People still like to talk to someone: Much of today’s businesses (B2B, consumer) is transacted on the Internet.  But the Internet is really a barrier to true communication because it prevents direct interaction and those interactions skew negative without tone and body language. A sales pitch can be made over the Internet but if the customer says “no” the only recourse is another online exchange.

There is a sales adage: “The sale begins when the customer says no.” Personal interaction elicits the reasons for declining and allows these objections to be overcome. An existing customer has already proven his or her interest in the company’s offering. Talking with them can lead to additional sale, maintaining the relationship, or a word of mouth endorsement.

People always have needs but are seldom asked what they are: A call asking them simple questions such as: How do you like our product or service? What does it not provide for you? What other needs are not being fulfilled? All can reinforce the relationship and provide valuable feedback. The key reason for doing this exercise is reinforce the personal side of doing business. Smaller companies can implement this process better than larger counterparts given their finite customer list and ability to deploy staff members who have already dealt with customers, in many cases.  Regardless of your business size, test with a few familiar customers first and then work your way from your largest to smallest customers.

Small businesses have more flexibility in solving problems: People hate hearing their problems need to be resolved by higher authorities. Often small businesses solve problems on the spot because of shorter management levels: Making the customer happier by quickly addressing issues whether it is in their favor or not usually means they remain loyal. Problems should be looked on as opportunities to interact with a disgruntled purchaser. Verbal communications often surfaces other issues and sometimes gems of knowledge.

The Internet is an important media but so is oral communication. Don’t lose touch with the customer. They are the lifeblood of the company.  Get in touch with your current customers today.