Tips to Prevent a Toxic Work Environment

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What Is a “Toxic Work Environment”?

“Toxic Work Environment” is a phrase that evolved into a buzzword notably fast; while the business world at large is quick to use this phrase as a catchall for any kind of “bad” workplace, toxic work environments have very specific warning signs that, if understood by managers, owners, and supervisors, can then be more mindfully weeded out. Toxic working environments are, in essence, a workplace marred by significant and distracting interpersonal conflicts between employees which eventually can affect employees’ wellbeing and mental health.

What is especially troublesome about toxic work environments is that they frequently appear normal from the outside, and often are normal for some other employees. Silent frustrations brew in the staff members who feel as though they aren’t considered, and managers likely don’t know that certain staff feel that way since the cycle is inward. It is exceptionally difficult to diagnose a toxic workplace because even if asked directly, staff who are suffering toxic thinking likely wouldn’t admit it. It is, then, a worthy exercise for small business owners to assume and predict the ways their workplace may be considered toxic to root out toxicity that may already be in your workplace, silently building employee distrust and eventual resignation.

Tips to Prevent

Keep Inter-Staff Communication Frequent

Toxicity grows slowly over long periods of time. As employees feel their input isn’t heard or their opinions don’t matter, they’ll slowly become sardonic. To help alleviate the feeling that employees work in their own bubbles, and that their work isn’t important, schedule regular meetings that allow staff to communicate more freely. Put managers in a room with their staff. Put supervisors in the same rooms as managers. Do everything you can to burst bubbles and break barriers; toxic work environments thrive as well because the humanity of the coworker or manager they view as “toxic” is devalued; those “toxic” employees become caricatures of their reality in the gossips and snide remarks that fly behind their backs. Even if you don’t know who is viewed as “toxic” among your staff, take it upon yourself to give space for everyone to speak to, and even more importantly get to know the people they work with.

Recognition and Accountability

Work environments become toxic when employees feel their actions go unnoticed. This, however, goes in both directions. If an employee is excelling but feels ignored, they will often store those feelings inside and turn them around, becoming cynical of the business itself. Just as well, if certain staff are underperforming or acting out of order and seeing no meaningful repercussions, this can be a morale hit of the century for all of your staff. If you are avoiding confrontation or withholding praise for your employees, let me tell you: they know.

The most meaningful way to address both extremes of positive recognition and reasonable accountability is the same response: speak to your staff. Go out of your way to recognize excelling staff and do not be afraid to hold staff (or, and most especially, yourself) accountable when things go wrong.

Ask Managers and Supervisors to Regularly Review Performance of their Direct Staff

One of the most common dynamics of toxicity brews between managers and their direct staff. As a business owner, it’s your responsibility to direct managers. While you can’t be everywhere at once, a great first step to alleviate potential toxicity between staff and their managers is to require those managers to regularly evaluate the performance of their direct staff. As to whether they should report the performance directly to you or simply share it with the staff member in a one-on-one discussion, that will likely depend on your current structure. Find a system that doesn’t impede your managers’ time or become a chore (or dread) for your staff.

Mindful Scheduling

Employees in an environment they already view as toxic are unlikely to speak out. Little innocuous choices like scheduling for shifts has the potential to only add to the stress and discomfort of your staff. When making schedules for your managers and staff, step into their minds for a moment and trace any frustration that may come from the schedule you are drafting. A classic scheduling choice that can build employee frustration is “clopening” shifts where employees work a third shift immediately followed by a first. Especially if this lands on a Sunday night and Monday morning, this is an easy headache to avoid for your staff.

The basis of mindful scheduling, however, is to more fully understand your employees and managers’ needs when making their hours. For that to happen, employees and managers need to be confident enough to even speak to you about these matters in the first place. Either through your new, regular meetings with staff or new dedicated times/avenues, invest thought and effort into giving your staff the space to build schedules that reduce toxicity and stress.

Avoid Nepotism and Hiring Friends at All Costs

This is another seemingly obvious tip, but one that bears infinite repeating. Sniffs and hints of nepotism will have blowbacks no matter what industry or business size. This is both dangerous for the reputation of yourself, the business owner, and the friend or family member who you bring on board. Friends or family hired even through entirely legitimate procedures will near-always be seen as having received special treatment; the trick is, just about no employee or manager would feel comfortable saying this outright. This means that the gossip culture that breeds toxicity will only be exacerbated as a result of hiring a family member or friend.

Be an Example for Your Staff

It is well documented that change comes best from the top down in companies. If you want your staff to act and feel happy at work, you ought to do the same. Sit down and genuinely consider how you, the business owner, act in your workplace. Another business trope easy to fall into is the ghostly owner: owners who don’t spend very much time with their staff (even for legitimate reasons) risk becoming the catchall of things gone wrong in a toxic work environment. For the same reason that regular meetings are important, it is essential that owners are regularly present and available for staff and managers. Owners aren’t kings and ought not rule their businesses like one. Defeat the image of hierarchy by being open and transparent with your staff. Be present during the workday; simple tricks like knowing the names and hobbies of your staff are more than enough to help you lead by example.

Don’t Get Tied Up Trying to Change Yourself

Just as well as it is important to lead by example, don’t lead by fake example. Your employees and managers are smart enough to know when you aren’t being genuinely yourself. If you truly want to weed out a toxic work environment, your heart must be in it as well as your mind.

Don’t put on a fake version of yourself to please staff; they’ll know. Don’t put on appearances that you care about your staff without backing it up; they’ll know. Worse than a ghostly owner is a fake owner. Don’t put on a new face before you walk into your workplace, put on your best face. Your staff won’t take well to the feeling they are being patronized or treated like variables. Curing a toxic work environment comes not to those who see the productivity advantages of alleviating one but rather to those who understand the importance of the mental health and happiness of their staff.

Know the Signs and Run Your Business

Not every business is toxic, and not every business is healthy. Being that toxic thoughts are rooted deep in the subconscious of your staff, it’s not as simple as reading a label to see if your business is “toxic or “nontoxic.” You must then operate on the mindset that your business can always be run better. And that, perhaps, you can run your business better. You can always be more mindful of your staffs’ needs. The businesses least likely to become toxic, however, are those who know the signs and meaningfully implement countermeasures. If the entire concept of toxicity were a spell with a magic word to underdo the curse, that word would be “communication.” At the root of every one of these tips is the guiding light that you must speak candidly and regularly with your staff. As departments become more distant and staff begin to spread into cliques, it is up to owners and managers to break the trend and reintroduce open, healthy communication.

Hands shake

Where and How to Find Employees Who Value More than Pay

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One of the more frustrating rituals small business owners know all too well is putting out a job listing and finding no suitable candidates. Worse is finding a perfect candidate but not aligning on payment. Hiring has become a frustration, especially for small businesses who may not be able to compete dollar-for-dollar with corporate neighbors or other local competition. Instead of conceding to unrealistic rates for your business, consider that there are more than a few methods and strategies to pulling in competent and enthusiastic candidates. An essential element to “hiring around pay rates” is indeed, finding people to hire, so consider this collection of tips and inspirations to galvanize your hiring game and bring in staff who see your business as more than a paycheck.

Would You Work Here?

Before even considering how to attract enthusiastic candidates, you must ask if your business – in its current state – is worth getting excited about. No, this doesn’t mean you have to run a party rental company full of bouncy castles and clown makeup to have an exciting business. Instead, put yourself in the shoes of the candidate and determine if your business in its current state exudes an energy of Valuable Experience, Genuine Interest, or any tangible value add for the employee’s personal growth.

Employees who value more than pay value themselves, so while you may not be able to pay them competitively, there must be something else there. Or more specifically, candidates and employees must feel that something else is there. Industrious younger candidates are generally interested in jobs that continue their education in a certain field or could lead to more specialized work in the future; think hard about how your business can represent a prideful step on a young person’s employment journey.

Career Fairs

Speaking of young people, one of the most meaningful avenues to meeting young candidates are career fairs and employment fairs at educational institutions. Most career fairs allow you to spend longer amounts of time getting to know your potential candidates; this window of time is more so for you to sell the merits of your company to them rather than the other way around. Schools and college campuses are perhaps one of the greatest places to find enthusiastic, young candidates; and by having a physical presence as well as physical staff at the event, you can make an immediate and more positive impression than if those same people had simply seen your business on an Internet job listing. As the name says, a career fair is just that; a place for hopefuls to connect with a career. Be certain that your messaging and materials sufficiently reflect that candidates who choose to work for your business will find everything that comes with a fulfilling career and more.

Another unorthodox location to seek out candidates are rehabilitation centers and reentering the workforce centers. Both regularly offer job training programs for those within the centers. Reentering the work world with a criminal record or simply on the wrong foot due to past addiction and rehab is exceedingly difficult. By giving these unlucky people another chance, you are more than likely to find several people enthusiastic to work at your business.

City Hall & Community Boards

Many cities and townships would be enthusiastic to mention your business in community messaging if you approach them. Consider making a meeting with your local community board to see, first, how your business can get involved in the local community, and second, how they can help connect with other service-minded and industrious candidates. Make your business’s name known at charity events or local clean-ups. Making your name known, however, does not mean cutting a check and putting up a sign. If you are looking to convince people that working for your company will benefit the common good, you’ll need boots on the ground and ammunition to back those claims. By spending time at community service events, you’ll meet people who are personally driven and interested in communal good; these are the exact same people who will likely work at a business for its merits rather than its paychecks.

Assert Your Humanitarian Interests

As an extension of the previous point, meaningfully intertwine your business with one or several charitable organizations. Here’s an essential caveat, however: attach yourself to the charities you are already enthusiastic about. Don’t Google “charities to convince people my company is worth working for” because true humanitarians– as well the people who are likely to seek out a job on merit – can smell inauthenticity like sulfur. If people think you are using charities to pull in new enthusiastic staff, you’re sunk. This section, instead, is a reminder to remain authentic to yourself when making changes for recruitment. Wear your own interests on your sleeve and be your authentic self, good candidates will likely see this as a plus in itself.

They’re Out There, But Not for Long

Ponce de Leon would have done well if there was an article out there called “How to Find the Fountain of Youth,” and that can sometimes feel frightfully similar to “Where to Find Employees Who Value More than Pay.” Like good old Ponce, though, both answers are within you, the business owner. Employees value themselves and their happiness. In short, if your business can contribute to their satisfaction or overall happiness, you are more than likely to make a meaningful connection. So while the number of candidates seeking more than cash may seem slim, the reality is that those candidates are, instead, wildly driven and don’t stay unemployed for long. By making your business known and making connections with the right crowds, it is more than likely that your small business will be recognized for its merits over its ability to cut big checks.

Looking glass seeks the perfect candidate

Dos and Don’ts of Online Job Listings for Small Business Owners

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You’re likely familiar with the structure of modern job boards. Indeed, LinkedIn, and the several other major players in connecting employers with candidates have streamlined and centralized the hiring process but, in its wake, has created an incredibly competitive space… for employers. Prospective employees may scroll through thousands of job listings and only glance at yours for a few seconds before moving on. And beyond that, attracting the right talent is another battle all on its own. Job listings can be driven by more than just dollar signs; consider the following collection of “Dos and Don’ts” when putting together your future job listings to see if there is more you can do to pull in talent driven by a will to sow rather than reap.

Dos

Create a Specific, Tangible Job Title

This may sound obvious, but more times than not, listings titled “Part-Time Help” or other nonspecific labels find their way onto job boards because of the nature of smaller businesses. While the justification for a more handyman-ish title may make sense to a business owner, consider the people scrolling through job listings. It is much more difficult to picture yourself as “Part-Time Help” or “Front of House Worker” compared to “Cashier,” or “Houseman.” Consider, as well, that there is a fair amount of anxiety that comes with working an unspecified job; a job with a vague title has vague responsibilities.

If you genuinely need a “Jack of all Trades” type for your business, there are more than a few means to make that selling point. Phrases like “wearing many hats” are so corny that your prospective employees will certainly read that as “overworked and underpaid.” Consider instead asking for a “Front of House specialist” or  specifically explain what experience would best help that candidate if they were to get the job.

Keep your Descriptions Brief, but Detailed Where it Counts

There is a fair amount of research that says there is something of a sweet spot for job listing word count. This ranges between 300 and 800 words; listings should only ever reach that high point for technical or highly specialized positions. As to what those words should say, that’s a whole different question. Here is a good rule of thumb: get as specific as possible when describing job responsibilities and be as concise (but complete) as possible when describing other aspects like performance expectations. When building your listing, ask yourself “what exactly do you want potential employees to know about the job and about your business?”

Be Upfront About Pay

There is intense debate about whether online job listings should show compensation outright (and in some states, it has been made a requirement to show compensation in a listing). While listing pay may draw candidates away from the opportunities at hand in a listing, this guide is about attracting the right candidates for your business. Trust your candidates to know how much money they require to live their lives; if you interview a candidate and find a perfect match only for them to turn you down for the pay, you’ve both wasted time.

Focus on Skill Requirements Over Education Where Possible

Once again, this article is about finding the best candidates for your business. If you want to find an employee who can confidently do the work you need done, find someone who has done it before. If you need someone with electrical engineering experience, ask for it. Request portfolios for creative roles and experience-based references from fields that justify it.

If you find a candidate that checks all the boxes except the one for a college degree or even a high school equivalent, ask yourself how genuinely important that box is in the first place. Plus, you’re even less likely to reach that stage if you turn perfectly acceptable candidates away before they have the chance to impress you simply because they haven’t gone to college.

Don’ts

Don’t Let Your Writing Get Away from You

Ask trusted employees and managers to proofread and edit your listing for language. Especially for smaller businesses who don’t have on-call writing teams, getting a second opinion is the basis to making a compelling job listing. Just as well, creating listings in the first place ought to be a collaborative process between you, the business owner, as well as staff who may have insight into the prospective listing’s requirements. And who better to write up the language of your company and its culture than the employees and managers who embody that culture.

Don’t Bury the Lead for Job Responsibilities

Being that whomever you will eventually hire isn’t even being interviewed yet, it is more than possible that that eventual employee’s responsibilities are only about 90% clear. That’s fine but be certain that the language you use to describe responsibilities in your listing doesn’t alienate prospective employees. Here’s an example of a weak responsibility description: “Will oversee multiple departments during special projects.” While that may be true, this means nothing to a prospective employee. In that case, it is far less important to focus on the departments at hand and more important to explain “special projects,” as language like this doesn’t explain what that employee will be doing day-to-day, nor whether they have the experience to tackle that responsibility. This example would read better as: “Manage inter-department brand awareness initiative.”. The point of your listing isn’t to trick your prospective employees. If you want them to know how to use Microsoft Excel, say it outright; the same can be said for any given skill.

Don’t Overlook the Importance of Company Culture

If you truly want to attract candidates who see your business as more than a dollar sign, prove to them that it is through detailed and poignant descriptions of your company culture. This, as well, is likely an exercise in brand and marketplace awareness. Defining a company culture doesn’t happen by decree, but rather through paying attention. Before you can concisely explain your company culture, you have to know what it is.

If you don’t feel capable of defining your company culture, this is a great example of where consultants can help quite a bit. Being that consultants work from outside your company structure, their unbiased view of your company from inside and out is more likely to reflect the view of job candidates. Consider working with a marketing or brand specialist to better understand and investigate what makes your company yours. Better yet, make the self-discovery a group experience for your existing team. Perhaps ask your current staff to define your company culture in their own words, even anonymously if that makes employees more comfortable.

Don’t Leave Candidates in the Dark About Application Process Timelines

Candidates expect to have multiple interviews, but the difficult part of a job listing is explaining to candidates how long it will take from the first interview to a potential offer. This number of days isn’t likely to be a certainty, as business owners have no means to know how many qualified candidates will apply for each position, but giving a general timetable for a best-case scenario can be extremely helpful in expediting the process for both business owners and candidates. Imagine this: you find a candidate that matches your needs seemingly well and impresses you on the first interview. Interviewing the remaining candidates and conferring with relevant staff takes perhaps 30 days to pick that first candidate but, in that time, they have already picked a new job, as they fully intended to find work before 30 days. Generously calculate how long it will take for you to potentially evaluate all potential candidates and advertise this number prominently on your job listing, it may save you from having to pick a second-best down the line.

Convincing the Perfect Candidate

Connecting your business with the right staff is increasingly difficult in the digital world. While, of course, it is easier than ever to show your listing to hundreds if not thousands of candidates through major job boards, this also means that you, the business owner, will have to sift through an ungodly mound of irrelevant applications. There are, however, still genuine, quality employees searching for work online; it’s up to you and your business to prove that you can offer what they need to not only pay the bills, but be a source of their pride as well.

Over 200 Small Businesses Told Us How They’re Attracting Workers, and Gave Some Surprising Answers

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How can small businesses compete for talent with large corporations that can afford to pay workers higher wages? The question has been plaguing SMB owners ever since Texas A&M business school professor Anthony Klotz coined the term “The Great Resignation” last year. 

Since then, the quit rate measured by the Bureau of Labor Statistics showed that nearly 4.4 million workers quit their jobs last month and attracting new workers is still a major concern. Additionally, US small businesses – especially those with 19 or fewer employees – saw a total decrease of 96,000 employees between January 2022 and February 2022, according to a report from payroll services provider ADP.

In an informal poll, Kapitus asked 213 small businesses across the US that very question, and the most popular response, unsurprisingly, was that they are offering workers more flexibility in when and where they work. The second most popular method of attracting workers was the somewhat opaque answer of offering a strong company culture. 

The third most popular answer may come as a bit of a surprise: many small business owners – especially in the eCommerce space – said that improving the way they interview job candidates has had a high degree of success (10 out of 11 responding eCommerce companies emphasized this), although many of them took different approaches in doing this. 

Overall Responses

Kapitus collected responses from 213 small business owners in various industries after asking the open-ended question of “How are you hiring workers when you can’t afford to pay those workers more than larger companies can?” The question was posed on Cision’s Help a Reporter Out (HARO) platform, and responses were collected between March 23 through March 25. 

Of course, a pool of 213 responses is not large enough to quantify as an official survey. Rather, this article is meant to provide a casual, overall snapshot of how small businesses are dealing with the challenge of hiring workers when they don’t have the resources to offer substantially higher pay to workers than larger companies.

 

Great Resignation Small Businesses

The responses given were broken down into eight different categories, each defined by what small businesses are doing to attract workers:

Small Business Owners say…

While some responses require little explanation, others are vague. Small business owners that responded to our query defined areas such as “Improved company culture” and “Greater candidate evaluation” in detail, while with some of the obvious categories such as “Flexible Schedules/Remote Work” are being practiced in different ways by different small businesses. 

Here are explanations from actual small business owners on what these categories mean. 

#1 Offer Flexible Scheduling – Four-Day Work Week? 

Many small businesses emphasized that allowing workers to set their own schedules or work from home is the number one key to attracting employees, especially if you can’t afford to match what larger competitors may be offering them. Some small businesses, such as Electrician Mentor, have even begun offering four-day work weeks to entice applicants.

“You can go to this company and make a six-figure salary or come to us and have a four-day work week, unlimited vacations, and the freedom to work on the projects you desire the most,” said David Welter, Electrician Mentor’s owner. “You can go somewhere with a great 401(k) program, but we’ll pay for your career advancement training. So far, this strategy has served us well because now, we’re staffed with a happy and loyal workforce.” 

Dan Skaggs, CEO of One Thing Marketing, said that allowing employees to work from home has improved his hiring process.

Dan Skaggs, CEO of One Thing Marketing, said that allowing his employees to work from home saved his company on rent, and he was therefore able to provide them with a comprehensive health insurance plan, which further attracted workers.

“Our employees preferred to work from home because they could save money on commuting and food at the workplace. This helped me cut back on the costs of renting the building and utilities,” said Skaggs. “This gave me the perfect opportunity to introduce a comprehensive health insurance plan for the existing and new employees. Due to the upgrade, a lot of applicants agreed to work for me.” 

#2 Offer an Inclusive, Friendly Culture

Although the “Offering a Strong Company Culture” is a bit vague, many respondents who gave this answer generally defined this category as making the workplace more pleasant for workers through various means. 

One such business owner who believes in offering a great workplace culture is Daniel Rubenstein, founder of healthcare company Reset IV. 

“People are recognizing that life is too short, and they don’t want to spend it in some boring office,” said Rubenstein. “Make your office culture-friendly, inclusive, and fun. Do employee features on social media, offer awesome employee perks, and show job candidates that people enjoy working at your company.”

Mark McShane, owner of Skills Training Group, emphasized inclusion, empathy for employees and a supportive environment in his company’s culture. He also emphasized that it’s important to advertise that on social media, where most potential applicants now are hunting for jobs. 

“Building a social media presence that amplifies your team culture will pay dividends in the long run,” he said. “You need to lead with transparency and show people what it’s like to work in your office.”

Company culture is key ot hiring and retaining employees, said Kathryn McDonald, CEO of Editor’s Pick.

Kathryn McDonald, CEO of beauty and fashion eCommerce company Editor’s Pick, defined a positive company culture as one that promotes an entrepreneurial environment.

“It essentially entails creating a climate that encourages people to experiment, create and take measured risks,” she said. “It provides employees with freedom, flexibility, and reduces the necessity for work/life balance discussions” because employees will be enjoying their work.

#3 Improve Your Hiring Process

Improving your business’ hiring process by carefully vetting candidates and not putting them through long, labor-intense interview processes should give your small business a hiring advantage over your larger counterparts, said many respondents. 

“Today, people are trying to find their next job whether to start, as a stepping stone or to pivot,” said Erik Wright, owner of New Horizon Home Buyers. “It takes almost three months, sometimes longer from applying to hiring. That can weigh heavily on people and even discourage them from looking further. Having a quick turnaround could turn a talented and seemingly out-of-reach individual into a skilled employee.”

Rohit Bimbra, founder of Home Healthcare Shoppe, emphasized that SMB owners should probe candidates during the interview process to determine whether they share similar values and beliefs as the company, and then describe to them all of the aspects of your business that may appeal to them. 

“During the interview, inquire about their objectives,” said Bimbra. “What do they hope to get from this job? Hire people who can work toward their own goals while helping you reach yours. Then assist them in becoming successful.”

#4 Emphasize Career Growth Opportunities

Obviously, few employees want to work a “dead-end” job that has little prospect for advancement, and therefore, it’s crucial that you let candidates know that there is room for growth in the position you are offering. 

“Explain to employees and candidates the plan for their career development and advancement in your company and establish a system of regular feedback, on a weekly or monthly basis, ” said Mike Sheety, owner of That Shirt, adding that growth opportunities also encourage employee referrals. “In practice, we have been convinced several times that hiring through referrals is a very good idea.”

#5 Perks Work

If you can’t match the salaries being offered by your larger competition, you may find success in attracting talent by offering company perks such as sign-on bonuses, social activities and workplace wellness programs as a way of saying thank you to your employees, said several respondents. 

“Some great perks would be allowing your workers to work flexible hours, surprise company trips, mental health days, and a free lunch buffet every month,” said Marty Spango, owner of Bia Coffee. 

Offering desirable benefits packages goes a long way in attracting good employees, said Maria Flores, COO of Media Peanut.

Maria Flores, COO of marketing firm Media Peanut, said it’s important to work with your business’ HR department (if you have one) to lure talent by providing greater benefits. 

“We offer care packages, allowances, and additional health benefits, as we value the physical and mental health of our employees,” she said. “We also offer free education or skills development training, and allow them to take additional skills training classes whenever possible. 

#6 A Piece of Ownership Goes a Long Way

Some small businesses suggested offering employees equity in the company can go a long way, and if it’s not possible to offer equity, then offer performance-based bonuses to attract and retain talent. 

“When it comes to hiring and maintaining key team members, sharing ownership or company stock can help,” said David Reid, sales director at VEM Tooling. “Senior team members and recruits may be encouraged to stay and see their shares grow. Generally, flexible schedules, bonuses, extra vacation time and pieces of equity can help us attract talent for hard-to-fill roles.”

Performance-based bonuses also go a long way in retaining and motivating current and prospective employees. 

“When small businesses can provide performance bonuses, flexible work schedules and complimentary lunches, they stand out,” said David Wurst, owner of cybersecurity firm WebCitz. “An ambitious individual looking for autonomy, flexibility and advancement will definitely value your offer.”

#7 Show Some Respect

One of the major keys to recruiting is treating your employees with respect, said some of the respondents. This means showing empathy, genuinely caring about their well-being and recognizing their accomplishments. 

“Treating current employees with respect enhances referrals to top talent when an opportunity arises,” said Leslie Radka, founder of Great People Search. “Training, advice and experience enhance the attraction of potential employees.”

Brad Hall, founder of Sonu Sleep, added, “Paychecks come and go, but things like respect and recognition are harder to come by when it comes to the corporate world. Be competitive in not just your salary offer, but your treatment towards your employees.”

#8 Outsource; Hire Them Young

A somewhat surprising response category was small businesses resorting to hiring recent college graduates or employees with little experience as a relatively affordable and effective way to woo job candidates – if you are willing to invest in and train them.

“The pandemic brought many negatives with it, one of them being the lack of employment opportunities for college grads,” said Lauren Proctor, marketing director at BenchmadeModern. “The fact that I started hiring this young, raw talent was a win-win for both parties. After all, these young individuals had a job, and I had an efficient team of employees. The best part was that these young people were full of energy and determination to perform well.”

Outsourcing work to outside contractors has also helped alleviate the hiring dilemma, according to Aaron Traub, owner of HVAC Marketing Engine. “We have been utilizing Upwork frequently lately,” he said. “We’ve been able to hire quality freelancers affordably for content strategy, data entry, content production and more.”

Responses by Industry

Kapitus broke down small respondents into 16 general industry types, with retail (non eCommerce) being the most popular with 39. Some of the categories, such as construction, are self-explanatory, while some need to be defined. A basic definition of some of the categories is as follows:

  • Retail companies (18.3%) are businesses that primarily sell products from a physical location but can still have an eCommerce presence as well.
  • Online services (17.4%) companies are web-based companies that provide tangible services – but not physical products – to customers.  
  • Business Services (14.6%) are companies that provide services to large companies, although we separated out branding/marketing and law firms from this group to offer a more exact analysis.
  • eCommerce businesses (6.1%) are companies that only sell their products through eCommerce platforms.
  • Food Services (6.1%companies comprise restaurant owners and companies that sell food-related products and services, such as one of the respondents, Kitchen Community.
  • Technology companies (2.4%) are companies that produce technology not related to the Internet.
  • Educational support providers (1.9%) are companies that provide learning services to both students and adults such as becomeanything.com.

Conclusion

While this is not an official survey, the small business owners who responded have made it clear that the way companies searched for talent before the Great Resignation have been quickly outdated, much in part due to the COVID-19 pandemic where many workers got a taste of working from home. It’s clear from the results that attracting workers is more than just offering a fat paycheck. Offering flexible hours and remote working situations have become critical in attracting workers. 

SMB owners can’t treat their employees like numbers and must concentrate more on providing a robust and empathetic workplace that offers a plethora of perks if they are to survive the continuing worker shortage.

One ponders and one points at a gargantuan book

Is Your Employee Handbook Compliant?

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Your company’s employee handbook is one of the most important tools in your business bandolier. An effective employee handbook is the last word on company policies, employee code of conduct, and even new-hire onboarding; it constantly lays out the most updated legal guidelines put forth by the federal and your state and local governments.  

Considering its importance, staying on top of your employee handbook should always be a top priority. When was the last time you checked to ensure your handbook is up to date — does it reflect current laws and guidelines? Is it articulating all process and policy changes that you have implemented in the world of COVID-19? 

If it’s been a while since your last review, take some time to go through your handbook and use this guide to ensure that you’ve got everything covered.

 

The Compliance Baseline

There are several items an employer must inform their employees of in one way or another. These essential concepts are the basics of compliance. Adding these items to your employee handbook is the first step to becoming fully compliant with federal, state, and local laws.

  1.  You must affirm your compliance with the Equal Employment Opportunity Commission (EEOC). This means that your company is an equal opportunity employer. By being compliant with the EEOC, you affirm to not discriminate against a job applicant or employee, according to the EEOC website, “because of the person’s race, color, religion, sex (including pregnancy, transgender status, and sexual orientation), national origin, age (40 or older), disability or genetic information.”
  2. You must outline your company’s breast-feeding policy. Lactation accommodation laws vary widely between states, so be certain to refer to your local laws when drafting your own company policy.
  3. You must inform employees about your Family and Medical Leave Act policy. The Family and Medical Leave Act affirms that employers must give at least 12 weeks of unpaid maternal or paternal leave; leave spurred by a debilitating health condition; and leave based on several other serious reasons. Employees who take maternal or paternal leave are in a job-protected state during their leave, meaning they cannot be replaced during or due to the leave. This, however, is the federal baseline; almost every state has their own rules regarding leave from work, so make sure those rules are also displayed clearly.

 

Is Your Employee Onboarding Compliant?

Beyond getting employees acquainted with their new jobs, onboarding is an essential moment for informing employees of their rights at your company. Onboarding in your employee handbook is a great time to remind new hires of their tax and healthcare requirements.  Here are a few things to consider including in your onboarding process and in your handbook:

  1. Begin every onboarding with the almighty I-9. All new employees at every company in the United States, D.C. and Puerto Rico must fill out and submit an I-9 tax form before they begin working. 
  2. If you plan to run a credit check on your new hires, you must collect a written consent, or signature, before you do.
  3. Healthcare is confusing enough, so save your employees some headaches and be upfront and deadly serious when explaining your company’s healthcare options. Many employers require that new hires choose a plan within 90 days of their hire, so be certain to lay out your company’s policy in your handbook.
  4. During the onboarding process, you’re collecting a lot of personal information. In your employee handbook, assert your company’s seriousness about data protection and privacy. Several states have data protection laws which restrict how long and in what capacity employers may keep employee personal information on file, so be certain to inform employees of their rights to data security.

 

Is Your Harassment Policy Compliant?

Your employee handbook must have an unambiguous and detailed harassment policy. Harassment is any form of coercion, threat, or intimidation made against a person. Harassment can be verbal or nonverbal, direct, and indirect. Employees who are being harassed may naturally feel isolated and without recourse, so it is paramount that your employee handbook have a sound, effective harassment policy.

Your harassment policy should read like a tree of “if, then” statements with the goal of assuring employees that if they report harassment, it will be acted on seriously and quickly. Be certain to lay out key details of what happens when an employee files a harassment complaint.

Be certain to also explain that if harassment occurs on the basis of an EEOC protected quality, the harassment is also discrimination. The EEOC also requires employers to include a “no retaliation” statement which affirms that employees that report harassment are fully insulated from retaliation by their harasser or anyone from the company at large

 

Is Your At-Will Policy Compliant?

All 50 states, Washington D.C. and Puerto Rico are under at-will employment guidelines. This means that an employer can fire an employee for any reason as long as the firing is not discriminatory, i.e.: firing anyone for a reason connected to an EEOC protected quality. At-will, however, goes both ways. The same policy means that employees also can quit their jobs or start strikes for any reason and at any time.

When drafting your at-will statement, check your state guidelines to see if you live in an area with either public policy exceptions or implied contract exceptions, as these two changes can affect how at-will works.

The public policy exception affirms that an employer cannot fire an employee if the firing breaks a state or municipal-level law. The most common example of the public policy exception at work is firing an employee in retaliation for their following of a state law. The only states that do not have a public policy exception for at-will employment are Alabama, Florida, Georgia, Louisiana, Maine, Nebraska, New York, and Rhode Island.

The implied contract exception prohibits an employer from firing an employee after oral, written or otherwise assurances of continued employment. If an employer makes a statement regarding an employee’s job security and then counters those claims, the employer has broken an implied contract between them and the employee. By the nature of implied contracts, it can be difficult to enforce these rules in court, but most states have implied contract exceptions.  The only states that do not are Arizona, Delaware, Florida, Georgia, Indiana, Louisiana, Massachusetts, Missouri, Montana, North Carolina, Pennsylvania, Rhode Island, Texas, and Virginia.

 

COVID-19 & Americans with Disabilities Policy

As much as we all would have liked COVID-19 to stay in the “19,” the EEOC now has guidelines that employers ought to include in their handbooks.  Many of the EEOC’s guidelines, however, refer to existing discrimination restrictions as well as federal rules from the ADA (Americans with Disabilities Act). The EEOC requires that employers who see employees display visible COVID-19 symptoms may exclude those employees from the workplace. Employers may also ask employees entering a physical workplace if they have COVID-19 or any symptoms. These actions would traditionally count as discrimination under the ADA or discrimination guidelines but both are currently allowed.

 

The Compliancy Balance and the Ever-Expanding Employee Handbook

Remember that your employee handbook is meant to be used as a reference resource. If your handbook is written like a law school textbook, it will be treated like one and be used sparingly as possible. An employee handbook should have a personality that reflects your brand and company culture. Employees should close their handbooks after reading and feel closer and more connected to their company — whether they’re reading it on their first day or after several years of working with your company. Maintaining a handbook that is fully compliant requires a business owner or human resources specialists to vigilantly watch admittedly dry government bodies and their actions like the EEOC and ADA. As much as the work can be draining, the result is universally worth it: a staff informed of their rights and fully prepared to integrate into your company.

Female HR Professional at laptop choosing health insurance carrier for company

Best Health Insurance Carriers for Small Businesses

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American healthcare is famously obtuse and legendarily difficult to navigate.  It is no small feat to organize your personal healthcare in America, let alone healthcare for your small business and its employees. When selecting a group health insurance plan for your small business, the number of options are often staggering, and it can be incredibly difficult to know if you are getting the best quality for the price package.  As much as we would like there to be a quick and easy answer to health insurance, there isn’t. The best thing you can do as a small business owner is to educate yourself on the types of health plans on the market today and the most reputable providers.  Once you’ve armed yourself with the key details, it may be easier to make a choice to address the unique needs of your small business.

What Health Plans are out There?

There are six main types of health insurance plans, all of which are available for small business group coverage.  It is important to be well-versed in all plan types as even the most straightforward low-premium plan may end up costing more in the end if chosen for the wrong person.

Health Maintenance Organization (HMO)

Health Maintenance Organizations are plans that generally advise members to stay within networks to keep costs low. Even with network limitations, HMOs generally allow members to access more specialists and preventative care than with other plan types. Key things to know about HMOs:

  •       High out of network costs
  •       Generally lower premiums than most other plan types
  •       Primary Care Physician (PCP) almost always must recommend in order for members to see specialists

Preferred Provider Organization (PPO)

A preferred provider organization lets members go out-of-network much easier than HMOs but often in exchange for higher premiums. PPOs generally offer members more independence in picking their doctors and choosing what care they would like to receive. Key things to know about PPOs:

  •       Much larger provider network compared to HMOs
  •       Referrals not required to see specialists
  •       High premiums for group plans

High Deductible Health Plan (HDHP)

High Deductible Health Plans are a type of either HMO or PPO that often only begins to contribute after a high deductible is paid by the member. Unlike PPOs and HMOs copays do not apply; the insurance will only begin to pay in once a given deductible is reached. Key things to know about HDHPs

  •       Lowest HDHPs requires members to pay at least $1,300 before any level of contribution from insurance
  •       Can function either as HMO or PPO, so network size will vary depending on carrier
  •       After deductible is paid, insurance usually pays similarly to an HMO

Point of Service Plan (POS)

Point of service plans generally offer less choices to members in exchange for lower costs even compared to HMOs. Unlike HMOs, however, POS members can often still get out of network service. Key things to know about POS Plans:

  •       Very low deductible if service is in-network
  •       In-network procedures’ paperwork is handled by provider
  •       Sometimes requires referral from PCP in order to see specialists (varies by plan)

Flexible Spending Account (FSA)

Flexible Spending Accounts function differently from all above plans. FSAs are amounts of money set aside by an employee that is sometimes supplemented by the employer. The money in this account  is then set aside for healthcare spending throughout a calendar year. Employees choose how much money to set aside at the beginning of each year.

  •       Limited to $2,750 per year
  •       Money is FSAs may be used for deductibles, copays and even prescriptions but not premiums
  •   For the most part, there is a use it or lose it component to this plan; however,  $550 may be carried over each calendar year

Health Savings Account (HSA)

Health Savings Accounts are a type of HDHP that lets employees use untaxed money towards medical expenses. Since HSAs only apply to HDHPs, the money in employees’ accounts can be used for nearly every type of medical expense with the exception of  premiums. Key things to know about HSAs:

  •       Contribution limit of $3,600
  •       Does not reset like FSAs (there is no use it or lost it component)
  •       Employees can open HSAs independent of employers
  •       Funds used for non-medical expenses are both taxed and likely to compound a penalty

 

Best Healthcare Providers for Small Businesses

 

UnitedHealthcare (UHC)

UnitedHealthcare has the largest network of providers in the United States with individual plans for every state as well as Washington D.C. and Puerto Rico. UHC also has one of the most robust presences both in-person and online allowing plan-holders to select their PCP and specialists directly from their website. UHC offers several plans specifically for small businesses catering to companies with as low as 2 employees and as many as 5,000.

Most Popular Plans for Small Businesses

UnitedHealthcare Choice: UHC Choice is a classic HMO with competitive copays and great discounts for in-network care. Choice members, however, do not need a PCP to see a specialist, making the plan superior to most HMOs.

UnitedHealthcare Choice Plus: At a higher cost to employers, UHC Choice Plus allows employees to leave the already-massive UHC network at lower out-of-pocket costs and generally offers lower copays than standard UnitedHealthcare Choice.

Options PPO: UHC’s Options PPO allows members to use any doctor inside or out-of-network. When using out of network doctors, members often have to submit claims themselves in order to be reimbursed.

Bottom Line on UnitedHealthcare

As a business owner, UnitedHealthcare is likely the easiest provider to work with when it comes to organizing your group account as well as choosing a plan type. Because of UHC’s massive network size, your employees will have a great choice of provider as well. Compared to other providers on this list, however, UHC is likely to cost more for a group plan.

 

Blue Cross Blue Shield (BCBS)

Blue Cross Blue Shield is another massive health provider operating in all 50 states as well as D.C. and Puerto Rico. BCBS generally operates on a state-by-state basis meaning that the key points of health plans are likely to vary along those state lines. Within the BCBS network, however, are several effective group plans that are competitively priced and cater to all sizes of business.

Most Popular Plans for Small Businesses

Blue Select: Blue Select is a family of health plans that partner low-cost doctors and practitioners with equally low pay-in prices for employers. Blue Select functions like an HMO, rewarding in-network care with low copays and out-of-pocket expenses.

BlueCard PPO: The BlueCard PPO is available in the entire contiguous United States and allows members to access out-of-state care at no added charge. BCBS’s PPO plans allow members access to as many as 600,000 network doctors and 6,000 hospitals making the plan especially lucrative for small businesses with traveling employees who may seek out-of-state care.

Bottom Line on Blue Cross Blue Shield

Blue Cross Blue Shield generally costs less than other big-name providers like UnitedHealthcare while offering comparable care. Setting up a group plan, however, is notably more difficult because of BCBS’s lesser web presence. The varying quality of plans on a state-by-state basis means that business owners will often need to do quite a bit of research to see if BCBS is the right choice in their area.

 

Aetna

With a multi-century history of operation in the United States, Aetna is recognized as a reliable and high-value healthcare provider. Aetna is often cited as being the preferred choice of small businesses with less than 50 employees because of unique savings opportunities.

Most Popular Plans for Small Businesses

Aetna Funding Advantage (AFA): Aetna Funding Advantage functions like a Health Savings Account in that employers pay a maximum claim amount from which employees can then use for insurance. Once that claim amount is spent, stop-loss insurance begins. Also similar to an HSA, 50% of surplus money still in the account after a calendar year is returned to the business owner.

Aetna Open Access HMO: Unlike traditional HMOs, members do not need a PCP’s referral to see a specialist on Aetna’s Open Access HMO.

Bottom Line on Aetna

Aetna is a great lower-cost health insurance provider, but Aetha network of hospitals and providers tends to be spotty. Before signing up, be certain that your PCP and hospital of choice are still in-network. Compared to carriers above, Aetna has the granular information on their websites that small business owners are likely looking for, but you’ll likely have to get on the phone with a representative to find out if their plans work well in your area.

Humana

As their name implies, Humana puts an especially human spin on the sometimes-mechanical health insurance selection process. Humana is widely regarded to have one of the best customer service teams in the healthcare industry. Similar in scope to Aetna, research is likely necessary to see if Humana’s well-priced plans will apply in your state. Humana group plans for small businesses traditionally cap at 50 employees, but plan guidelines vary state-by-state.

Most Popular Plans for Small Businesses

Humana Canopy: Humana Canopy is a great option for employees who do little more than annual physical check-ups. Preventative care is also fully covered on Canopy, but out-of-network and especially out-of-state care is often not covered.

Humana Efficiency: Humana Efficiency has the lowest premiums compared to any other Humana plans and one of the lowest in the industry. Low premiums, however, equate to high out-of-network costs.

Bottom Line on Humana

If your small business has less than 50 employees, Humana is likely a great economic choice. Even Humana’s least comprehensive plans still cover preventative care, and their more inclusive plans are great for in-state care.

Kaiser Permanente

If you are lucky enough to be in one of the eight states (Hawaii, Washington, Oregon, California, Colorado, Maryland, Virginia, Georgia and Washington D.C.) which offer Kaiser Permanente health plans, it is well-worth looking into their offerings for small business-oriented group plans. All Kaiser plans offer extremely competitive premiums for often identical or even superior care. Since Kaiser plans vary so much by state, our overview will focus on the general details of their most common plans.

Kaiser Traditional HMO Plans: No matter which state, Kaiser Traditional HMO plans offer competitive copays and $0 deductibles making them especially helpful for employees that may face chronic health issues or regular non-PCP visits. Almost all Kaiser HMO plans require members to get referrals from PCPs to see specialists.

Kaiser Deductible HMO Plans: Deductible HMO plans from Kaiser function in a way similar to most other carriers’ own traditional HMOs. This style of plan has lower premiums but requires members to pay into a deductible when not seeing a PCP or specialist.

Kaiser PPO Plans: Being that PPO plans are especially useful for out-of-network visits and Kaiser is a very localized provider, PPO plans from Kaiser are likely only helpful for small businesses with very specific needs. If you have a company in a Kaiser-supported state, it is very likely a majority of that state’s providers are within their HMO network. A good example of a Kaiser PPO plan being helpful is if you have employees who split time between Kaiser-supported and not Kaiser-supported states.

Kaiser Point of Service Plans: Kaiser’s POS plans are a great middle ground between HMO and PPO that allows more care options than HMO plans and a deductible often costing between Traditional and Deductible plans. Compared to Kaiser PPO plans, Kaiser POS plans often have lower premiums and offer similar service.

 

Untangling the Knot of Group Health Insurance

It would be fantastic if there was a “number one” choice for group health care that worked for every small business; but, like small businesses themselves, all plans and packages are different. Finding the best health care plan for your small business requires a business owner to consider three key factors: which state your company is based in, how many employees you have and most importantly, the overall costs. Depending on any of these factors, the answer of the “best provider” could be completely different for two companies. Knowing the key plan types as well as the most reputable providers, however, gives any business owner the tools to choose the best provider and plan type for their employees.

 

Joe Biden speaking at the conference about employment changes.

SMBs Should Expect and Prepare for Employment Changes Under Biden 

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The policy differences between the Trump and Biden administrations may be night and day, and if President Joseph Biden has his way – especially with Democrats holding a slim majority in Congress for roughly the next year – small businesses may have to make significant changes in the way they manage employees. 

As if running a small business wasn’t complicated enough – if you own and operate a small business, whether you also serve as the human resources manager or have an on-staff HR executive, you can expect legislative change in areas such as wages, diversity training, dealing with unionized employees and offering more paid time off. 

Tracking and implementing potential changes may seem like an overwhelming task as debate continues on the American Infrastructure and Jobs Act and the American Families Plan (AFP), which will usher in sweeping changes if passed. If you don’t have an internal HR executive, you may want to consider hiring an outside HR consultant or business attorney to make sure you are in compliance with upcoming potential changes.

Some HR issues to consider under the Biden administration are: 

An Expansion of the Family and Medical Leave Act (FMLA)

Under the current FMLA, employers must provide workers with up to 12 weeks of unpaid leave per year for illness or injury, or to care for a sick family member. Employees must be allowed to return to their same or an equivalent job at the end of their leave.

According to the fact sheet for the AFP, if Biden’s plan is enacted, you should expect to be required to give your employees paid time off for family matters and medical leave. The proposed changes would essentially create a sweeping increased paid family and medical leave program.

In short, the Biden administration is proposing that, over a 10-year period, employers guarantee 12 weeks of paid parental, family illness, personal illness or safety-related leave. Workers would receive three days of bereavement leave per year starting in year one. Congress is still debating the bill, but it is expected to be voted upon before the end of the year. 

Protecting the Right to Organize (PRO) Bill

The PRO bill narrowly passed the US House of Representatives on March 9 and is currently being debated in the Senate. If passed, the PRO Act would present a potentially significant disadvantage to small business owners in that it would expand workers’ rights to organize and form unions. 

The PRO Act, which would be enforced by the National Labor Relations Board, would also:

  • Prohibit mandatory arbitration agreements in employment contracts. An arbitration agreement is typically a clause in an employment contract which obligates employees to arbitrate all disputes with his/her employee and prevents an employee from organizing a class action suit against an employer. Historically, such a process has favored large corporations, but prohibiting such clauses could work against a small business in that it would make small businesses susceptible to frivolous lawsuits. 
  • The Act would reverse the US Supreme Court’s previous decision that mandatory arbitration agreements were enforceable.
  • It would also potentially change the ABC Test – a test used in some states to determine whether a person is an independent contractor or full-time employee – by imposing stricter requirements for an employer on how to classify a worker. This is important because, unlike a contractor, a full-time employee is entitled to overtime pay, collective bargaining power and health insurance benefits. The Senate is still hashing out what the line will be that separates an independent contractor from a full-time employee.
  • Create new civil penalties and make SMB owners vulnerable to personal legal liability.

An Increase to the Minimum Wage

As we continue to navigate the ups and downs of the COVID-19 pandemic. labor groups and unions have been adamant about raising the current $7.25/hour federal minimum wage, which Democratic Vermont Senator Bernie Sanders has repeatedly referred to as a “starvation wage.” 

 

A national increase to minimum wage is one of the sweeping labor proposals from the Biden Administration.

Biden has spoken about raising the wage a number of times since his 2020 campaign, and ordered the minimum for federal contractors to be raised to $15/hour in April. Various states and private corporations such as Amazon and Target have already raised hourly wages to $15 to $20/hour. 

While Congress has yet to hash out a plan to raise the wage, small businesses should already be considering a raise in pay to their hourly employees due to another concern: the current worker shortage. 

People who were furloughed or laid off during the pandemic and are now re-entering the workforce are demanding more than the minimum wage and better working conditions. Small businesses need to comply with that despite the hit to their bottom lines.

The Incorporation of a Diversity, Equity and Inclusion (DEI) Policies

One of Biden’s first acts as president was to reverse President Trump’s executive order 13950 forbidding diversity-inclusion training and education in federal agencies, the military, federally-contracted companies (a large percentage of which are small businesses), and for federal grant recipients. 

The revocation of the order affects small businesses – even ones that have 10 or less employees – in that it makes them more susceptible to legal action for discrimination, especially if they do not have a DEI training plan in place. The intent of the revocation was to encourage companies to put DEI training programs in place, but with such a policy in place, it may be possible for employees to prove unconscious bias or systemic racism in a lawsuit against an employer. 

“A company’s unilateral decision to enforce DEI policies regarding bias/systemic racism is an employee’s only protection while at work,” said Andrew Lacy, founding Attorney of The Lacy Employment Law Firm, a labor rights and employment firm, in an interview with HR consulting firm Zenefits. 

An Increase in Immigrants and Foreign Visa Workers

The US workforce, on average, relies on 1 million foreign temporary workers and 8 million undocumented immigrants. Under the Trump administration, most new temporary work visas were suspended under the decree that those temporary workers competed with Americans for jobs. 

Additionally, Trump rejected new applications for the President Obama-era program of Deferred Action for Childhood Arrivals (DACA), a program that provided a 2-year period of deferred action from deportation and granted a work permit, among other protections, and temporarily suspended a variety of work visas in his attempt to limit immigration. Trump’s attempts to limit immigration arguably disrupted the workforce in the US, since undocumented immigrants often fill low-paying jobs and are always in need by both big and small businesses alike.

Under Biden’s proposed U.S. Citizenship Act of 2021, roughly 11 million undocumented immigrants will have extended legal rights as well as an eight-year pathway to citizenship. Additionally, the act will limit workplace raids by the Immigration and Customs Enforcement (ICE), thus presenting less disruption to small businesses. 

Anyway You Slice it, Change is Likely Coming

Whether you call yourself liberal or conservative, the fact is that now is the first time Democrats have controlled the executive and legislative branches of the federal government since 2015, and this will be the case until after the midterm elections in January 2023. 

With a little more than a year to go, you can bet Democrats will push for as much of the Biden Administration’s agenda as possible, so if you’re an SMB owner or an HR executive at an SMB, you can most definitely expect change between now and 2022, and now is the time to start preparing for it.

Couple sitting in beach chairs facing the water and sunrise.

Preparing Your Small Business for Retirement

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Thinking about an exit strategy may be the last item on your priority list as you work hard to successfully run your small business. But no matter how young you are or how new your business is, life moves fast. It’s never too early to think about retirement, because being old and broke is the last place you want to be in a few decades (or a few years) from now. 

To prepare for retirement, the first item on your agenda should be to determine what you want to do with your business when it’s your turn to ride off into the sunset. Do you want to sell your business and use the proceeds to fund part of your retirement, or do you dream of passing along your business to your children or other close relatives? 

Planning For Retirement

No matter what you plan to do with your business once you’re ready to retire, saving money for retirement throughout your career is still your best bet. To do this, you’ll need to ask yourself some important retirement lifestyle questions, including:

  • What will your source of retirement income be?
  • How much money will you need to retire? 
  • What age do you want to retire, and how much will you need to save each month to make it happen?

Easily determine how much you need to save for retirement with the help of free online retirement calculators.

Online retirement calculators, such as this one from Bankrate, can be used for free online. If there is a place where you dream of spending your golden years, try to get an idea of what the cost of living is there. Also factor into the equation that as you get older, medical bills may pile up. If necessary, speak to a financial advisor about these factors. You can find a financial advisor online for free on various personal financial websites, such as SmartAsset.com. 

If You’re Starting Late

If you’re a bit late in the game when it comes to saving for retirement, not to worry. According to a great article from the American Association of Retired People (AARP), there are steps you can take, such as refining your personal budget to eliminate any excesses; setting up automatic savings deposits; maxing out contributions to any individual retirement account (IRA) you may have, and working as long as you can. The fact is, even if you’re starting to save in your 40s or 50s, you can still save enough to retire. 

Saving vs. Selling For Retirement

Selling your business to fund your retirement is an extremely risky proposition because small business owners tend to overestimate the value of their business and often mistakenly believe that selling it will bring in enough income to comfortably retire. Don’t count on it. A business is only worth what a buyer is willing to pay for it, and if you own a mom-and-pop shop with relatively low profit margins, chances are that selling your business will not pull in enough funds for you to retire.

The answer is to save early and often for retirement by setting up a retirement plan for yourself and your employees. Whether you have two or 20 employees, there is a retirement investment plan out there for your business. 

Retirement Investments

You can open a simple IRA which allows employees to contribute money to the plan. Another option is a SEP IRA, in which only the owners can make contributions. You can also fund a solo 401(k), which covers a business owner with no employees, or a 401(k) plan for small businesses.

You may want to seek help from a financial advisor to choose your investment options. The advisor can help you build a diversified investment portfolio that will automatically adjust the financial risk of your portfolio accordingly as you get older, and keep your retirement assets safe and allow them to grow.

Most retirement investment vehicles – be it a 401(k) plan or an IRA – allow you to contribute pre-tax dollars and will not charge you capital gains taxes until you retire or if you take an early withdrawal from it. Even saving just $100 pre-tax dollars per paycheck can add up over the years, so start saving early.

Always Know How Much Your Business is Worth

If you plan to sell your business to fund at least part of your retirement, you should always have a rough idea of what your business is worth. Finding out is a bit of a complicated process, so you may want to work with your accountant or an M&A advisor that specializes in small- to medium-size businesses (SMBs). 

  • The first step is to determine your cash flow by calculating your assets and deducting your liabilities from them. Your assets include current and outstanding invoices, equipment and inventory. If you own the land that your business resides on, that’s an asset as well. Then, subtract any outstanding debt and expenses you have from that figure. This is your cash flow and will at least give you a good starting point in determining the value of your business. 
  • Second, determine how much gross annual earnings your business makes through sales. This is often referred to by large corporations as earnings before interest, taxes, depreciation and amortization (EBIDTA). A company’s rough value is often calculated by a multiple of gross annual sales or cash flow. 
  • Third, consult with an M&A advisor or accountant on what multiples are used in your specific industry and location. For example, if you own a small tool manufacturing and supply shop in a wealthy location such as New York City, the average multiple of earnings that your business may sell for in the area could be five. Therefore, if your business’ gross annual sales are $500,000, it could sell for $2.5 million. 
  • Fourth, consider your client base. If you’re an accounting or law firm or an independent medical practice and have a base of long-time clients or patients, that should be a negotiating point when you go to sell your business. Typically, companies with long-time clients fetch higher multiples than smaller businesses such a retail store or restaurant. 

Now that you have a rough idea of the value of your business, you should factor that into the amount you are saving and investing for retirement, especially if you are planning to sell your business to fund your retirement.

Passing Your Business to Your Heirs

If you’ve saved enough for retirement and want your child or another close relative to inherit your business, there are several logistical and financial considerations you need to examine:

  • First, make sure your child is properly educated, trained and willing to run your business. It is probably best to introduce your child to the business as early as possible.
  • Second, if you have more than one child and they all want to inherit a piece of your business, make sure you speak with your accountant and your kids about how they will divvy up your business and what tax consequences, if any, each of them will face once you decide to retire.
  • Work with your accountant to avoid paying the gift tax. The gift tax taxes the transfer of property from one person to another. The property does include a business, and this tax applies while you are still alive (this is not to be confused with the inheritance tax, which is what your heirs will owe to the IRS on whatever property you leave to them after you are deceased). 
  • Keep in mind that there is a $15,000 annual exclusion from the gift tax in 2020 and 2021, and a $11.7  million lifetime exclusion. If the amount you are giving to your heirs stays below those amounts, you can avoid having to pay the gift tax altogether..

When it comes to planning your retirement, do not listen to the old Rolling Stones song, “Time is on my Side” (notice that Mick Jagger and Keith Richards haven’t retired yet!). Start saving early, because you do not want to be financially struggling in your golden years, and you certainly want your children to be fully prepared for the day when they take over your business. The earlier you start, the better off you will be.

Health insurance forms

Tips on Lowering the Cost of Healthcare For Your Business

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It’s no secret that healthcare plans represent a dilemma for many small businesses: on one hand, offering comprehensive, all-inclusive health insurance is often crucial to attracting and retaining talented employees, but on the other, setting up and maintaining a healthcare plan is expensive, confusing and time consuming. 

According to a recent survey of 827 small businesses from Small Business for America’s Future, more businesses (55%) are worried about the costs of providing health insurance to their employees than they are about the dangers of COVID-19 (37%). The study also found that 76% of small business owners do not provide coverage because the cost is too high, while 53% of small business owners said they do offer insurance but are considering dropping it because of rising costs. 

Roughly 90% of small business owners said their health insurance costs increased over the past four years, with 40% responding that costs have risen by 10% or more a year. 

What to Do?

There are several ways to reduce the cost of health insurance while at the same time providing your full-time employees with the health coverage that they need for both themselves and their family members. 

#1 Shop Around for a New Plan

If your insurance provider keeps increasing costs at an unreasonable rate, then simply shop around with a health insurance broker, such as eHealth, for a new plan that offers modest increases in prices. If you have a preferred provider organization (PPO) plan, keep in mind that with the rise of value-based health care – new types of medical care systems that are meant to drive the cost of care down – those types of plans are a thing of the past. You may consider switching to types of plans that are generally cheaper, such as:

  • Exclusive provider organization (EPO) plan, which have a curated number of doctors but don’t require referrals;
  • Health Maintenance Organizations (HMOs), which restrict patients to a particular set of doctors, but often charge higher co-pays if the patient sees an out-of-network physician, and
  • A tiered plan – a plan that offers multiple tiers of physicians under the in-network umbrella. The first tier of doctors already have arrangements with the insurance carrier to offer financial discounts for services, and those savings are passed on to you and your employees.

#2 Offer a Plan With an FSA Option

Flexible spending accounts (FSAs) allow employees to set aside pre-tax dollars to spend on major medical events, such as surgery, teeth replacement, high-cost prescription drugs, or any other future medical need. Insurance plans that offer FSAs typically will offer you, the business owner, high annual deductibles but also a discount on premium contributions while still providing health insurance to your employees. 

#3 Look for Insurance Plans That Emphasize Value-Based Care

Value-based health care is the new trend in medicine today, and there are several ways insurance companies can offer it and pass the savings along to your business in the form of lower monthly costs. Look for plans that include:

  • Wellness plans rewards;
  • Telemedicine;
  • Free annual physicals and flu (and COVID-19) vaccination shots, and 
  • Prescription drug coverage that requires pharmacy benefit managers (PBMs) to automatically offer cheaper, generic versions of prescription drugs before selling patients the more expensive brand name ones, and
  • Dedicated service experts.

#4 Shifting Healthcare Costs to Employees When Applicable

While not ideal, you may want to choose a cheaper insurance plan that places a greater burden of healthcare costs on employees. Some plans can save you money by raising the deductibles and copayments for medical services, and raising the costs of using out-of-network doctors. Be warned, however, that employers must balance this approach with affordability requirements under the ACA.

As a benchmark: A 2020 Kaiser Family Foundation health benefits survey found that full-time employees paid on average 17% of the premiums for single coverage, and 27% of the cost for family coverage. The survey also showed that employers are shifting costs to employees through increased deductibles and out-of-network copays.

You also may want to add “working-spouse” provision to your health coverage plan. These provisions limit an employee’s spouse’s access to a plan when the spouse works for another employer that offers health insurance, thus saving you time and administrative costs.

#5 Educate Yourself and Your Employees

If you and your employees don’t have a solid grasp of the ins and outs of medical insurance, know that you’re not alone. The more your employees are educated on their health benefits, the better and lower-costing choices they will make. You may want to consult with a health insurance brokerage firm such as eHealth or your current insurance carrier to:

 

  • Provide training on open enrollment;
  • Give a simplified summary of benefits from your insurer, as well as explanations on deductibles and in-network doctors, and 
  • Provide access to a health insurance expert, either through your own HR manager (if you have one) or an agent from your insurance carrier.

Which Insurance Companies Are the Most Popular?

Whether you have two employees or 200, there are insurance companies that have a reputation for offering generally lower costs and specialize in providing coverage for small businesses. The most popular seven companies are:

  1. UnitedHealthcare, which has a reputation for providing one of the most extensive network of physicians and emphasizes the use of modern technology for virtual healthcare;
  2. Blue Cross Blue Shield, which operates through 36 local, independent doctor networks and is known for affordable tiered plans;
  3. Anthem, which has the largest network of doctors and takes an integrated approach to medical care through combined health plans, which connect patient data in order to more effectively manage care;
  4. Humana, which offers a diverse array of tiered plans and emphasizes preventative care, and wellness programs;
  5. Kaiser Permanente, the largest managed care organization in the U.S. and offers one of the widest array of plans specialized for small businesses;
  6. Health Care Services Corp., the largest customer-owned health insurance company in the nation that emphasizes affordable plans for small businesses through value-based care, and
  7. Oscar Health, a company that emphasizes cheaper insurance plans for small businesses by utilizing healthcare technology such as telehealth, electronic appointments and automatic wellness checks.  

While setting up a health insurance plan is time consuming and often painfully expensive, we all want to see everyone have access to the healthcare that they need, especially our employees. The good news is that employer health care costs have not risen as sharply as it has in recent years. There is an affordable, well-priced plan out there that is right for your business and employees, it just may take some time to find the right one, but in the end, it will be time well spent.  

Several people sitting at their desks in the office.

Overcoming The Challenges of Hiring Office Workers

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The process of finding and hiring qualified, full-time employees has always created headaches for small businesses that operate out of an office, but as we near the end of the COVID-19 pandemic, those challenges have become amplified. 

As businesses try to recoup their staff to pre-pandemic levels, it’s no secret that there is a plethora of openings for office workers, yet the number of applicants available to fill those roles is far smaller. According to recent data from the Bureau of Labor Statistics, the seasonally adjusted number of job openings in the U.S. far outpaced the number of new hires and voluntary quit rate at the end of April 2021.

You Need Them More Than They Need You

To put it bluntly, the reality of the hiring landscape right now is that as a small business owner, you need employees more than they need you. No matter what type of small business you are, be it a small law, medical or accounting practice; a public relations/advertising agency or a marketing or an IT or web design firm, hiring the right candidates for an office has become more difficult than ever. 

Here are some tips on how to hire the right candidate:

Don’t Fight the New Normal

Frontline hourly wage workers obviously must show up to their place of employment, but for office workers, the pandemic has shown us the future: it is remote/hybrid work. Nobody, especially millennials, wants to shave off hours of their lives everyday by commuting to and from work on a packed train or through rush hour traffic anymore, only then to be confined to a cubicle for eight hours a day. The pandemic has taught us that most office jobs can be successfully performed from the comfort of one’s home. 

If you’re a small business owner and believe that people should be working in the office full time, then you need to seriously reconsider that view if you expect to attract and retain good talent. Even financial services giants such as UBS and Synchrony Financial recently announced that they are offering hybrid work situations. Plus, survey after survey has revealed that large swaths of workers would rather quit their jobs than return to the office. 

The times are-a-changin’, and you need to as well by offering a remote or hybrid work situation. 

Be Concise in Your Job Ads

If you placed a job ad and you find yourself having to sift through hundreds of resumes from candidates who aren’t quite qualified, then you probably were not exact enough in wording your ad. Whether you place the ad on Indeed, Glassdoor, ZipRecruiter or LinkedIn Jobs, be succinct in what you’re looking for, and try using “knock-out” statements or questions to narrow down the list of qualified candidates. Some easy knockout questions include:

  • Did you graduate college?
  • What are your salary expectations?
  • We are seeking someone with at least X years of relevant experience.
  • Are you willing to undergo a background and credit check?
  • Do you have experience using X software or apps?
  • Can you provide samples of your work that are relevant to this position?

Questions such as these in the job ads can significantly narrow down the list of qualified candidates.

Also, try to avoid asking classic-yet-pointless abstract interview questions such as “where do you see yourself in five years from now” or “why do you want to work here?” Obviously, the applicant is seeking a job to make a living. These questions contribute little to the process and will only waste your valuable time having to read the answers. 

Take Advantage of ATS

An applicant tracking system, or ATS, is software that allows you to manage the applicant hiring process and keep track of strong candidates. It can help you organize the interview process and send automated alerts to you on the statuses of candidates. They are not expensive, and are offered by companies such as HRCornerstone and Jobvite.

You can store data and export helpful reports using systems like an ATS, Google Analytics or recruitment marketing software. You don’t need to track every recruiting metric there is. 

Communicate With Candidates

Good candidates will carefully note how you treat them during the interview process when evaluating whether to accept your offer. In this regard, it is important to give them a timeline of when you’re going to get back to them and where they are in the process. When you do interview a good candidate via Zoom or in-person, give them a general idea of where they are in the process. For example, tell them that “I really enjoyed our conversation” or “I have some other candidates I have to interview, but you seem very well-suited for the job.”

Also, act fast with an offer when you do get a good candidate. Remember, if a candidate impresses you during an interview, then he/she is probably impressing other recruiters as well. 

Loosen the Purse Strings

Always keep in mind that you have very strong competition for employees, especially from larger companies. No matter how nice of a person you were during the interview, nothing talks like money. Research what the going rate is for the position you are offering (this can easily be done on Glassdoor or Indeed) and offer them more. Remember that the millennial generation values work/life balance above all else, so offer candidates flexible hours and additional paid time off days as a way of getting an edge on your competition.

Respond to Negative Reviews

You may not know it, but your small business may have bad employee reviews on Indeed, Glassdoor and other web-based job sites, which have become something like the Rotten Tomatoes of workplace reviews. 

You want your brand to come across as strong and your work environment appealing, so it’s important to find any bad reviews of your company (perhaps left by disgruntled former employees) and adequately respond to them. 

This may mean the difference between an acceptance or rejection of your offer. If you’re not reading your company’s employee reviews, you can bet that strong candidates are. 

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