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Friday, January 10, 2014

3 challenges for small businesses in 2014 and how to manage them

By Ian Daniel

Moving into 2014, small business owners and entrepreneurs have a few challenges confronting them as they attempt to build their business and lift up the greater economy out of its multi-year malaise.

Slower economic growth, limitations of the labor force, and increasingly complex government regulation threaten to impact companies with fewer resources moreso than the big corporations.

2014 presents three particular challenges to small business owners, but they can be overcome through careful planning and awareness. 

   The Affordable Care Act 

The main changes for small businesses coming from the Affordable Care Act will take effect in the year 2015 to allow business owners to carefully plan for how to respond to the law. The main challenge is the requirement to provide insurance to employees for businesses of 50 full time employees. The stronger requirements for care benefits offered by any company that wishes to provide healthcare also complicate planning for smaller companies.

There’s no denying that these changes will carry costs for the business owner, the employee, or the customer. Businesses that want to offer benefits to their employees will face challenges in meeting the costs and managing the risks of differing costs or choosing options. Some employers will cut full-time employees to part-time in order to fit below the “employer mandate” and not be required to pay for health benefits.

Small businesses have to balance healthcare costs with wage expenses
Healthcare expenditures put downward pressure on net employee compensation
Every company will have different choices to make, but for employers who want to offer a good package and keep good employees have a few options. One is to bite the bullet and pay the extra costs of offering insurance of the quality required by the ACA.

Another is to give employees a raise and send them to the insurance exchanges to purchase policies. This might prove to be cheaper for the company but it does shift burden to the employees.

Smaller companies will receive tax benefits and opportunities as a part of the new healthcare policy that larger companies won’t receive, which will help entrepreneurs. Finally, these changes are mandatory for everyone, so the businesses that take the time to make the best adaptations will have a competitive advantage over those who don’t.

Remember, you have an entire year to monitor continuing changes and adjustments to the healthcare bill and determine ways to turn the new environment to your advantage. 

   The labor market

There is a shortage of high-skilled labor within the US despite the massive increase in education within the nation’s younger generations. While employers wait for educators and older generations to finally inform and train students in the opportunities available to them due to the demand gap in skilled labor jobs, small business owners have to deal with the here and now.

One solution to the challenge of finding skilled labor and beating larger companies for the hires is to network and build relationships with universities and graduating workers. Since workers don’t have to look hard to find the obvious corporate opportunities, you have to do the legwork to put your opportunities out there for young workers. Remember that many youths aren’t aware of the well-paying jobs available if they pursue a career in skilled labor, so you can assume that those who have the skills aren’t terribly well aware of all the local opportunities with small businesses.

Another solution is to hire unskilled workers at lower levels, pick the most promising ones that have a great relationship with the company, and pay for their education in the needed skill. If you train a worker at your own expense and have them sign a contract to fulfill a certain requirement working within the company you can invest in a worker and a relationship that could have dividends for the company for years to come.
Business competitive positioning benefits from retaining employee talent
A personalized touch helps retain talent

   Keeping talent 

The demand gap of skilled labor and raising expenses of healthcare exacerbate a classic problem for small businesses in competing against the bigger companies, that of keeping the best talent. 

How do you match a big company that can offer ACA-approved benefits, large salary, and stability in a tough economic climate?
The solutions are consistent with the solutions small businesses have in competing with bigger companies for customers; offering a personalized touch.

The larger corporations in your field are typically not going to offer the same kind of relationships with their employees that a small business can offer. For instance, encouraging feedback from the workers and collaboration on strategies and policies. It’s easier for an employee’s voice to be heard in a room with fewer people and it’s essential that small business owners make sure that their best employees have a voice, interest, and personal ownership over the company.

Smaller companies are also wise to take the time to offer a personalized schedule, package, and opportunities for their best employees rather than the cookie-cutter policies of a large organization. The goal of a small business should be to make their prized employees feel comfortable, looked after, and deeply invested in the future of the company.

Even as Washington’s regulations complicate benefit policies for businesses and the economy slowly grows and adapts to the changes of the 21stcentury, the lack of massive size still allows small businesses to adapt quickly and precisely to gain advantages over both small competitors and the larger companies.

About the author: Ian Daniel writes for Insureon, a world class small business insurance company. You can read more at Insureon.com.

Image licensing:  1. PD-USGov-POTUS  2.  Msgsun, CC BY-SA 3.0