Small business owners face innumerable challenges every day, but the biggest obstacles to success are how well they manage money, people, and time.
Many small business owners are working with small budgets, which means they have minimal resources available to pay for unexpected expenses, marketing initiatives, salaries, and even save for their own retirement. It can also limit their ability to qualify for a loan. Having enough money to effectively grow their business is an ongoing concern for small business owners and affects their ability to offer employee benefits.
A second challenge is people. In small businesses, every employee plays an important role and is critical to the operation. Many small business owners may be too busy to motivate and reward employees, or spend time recruiting new people. This leads to high turnover which can slow production and diminish quality.
Perhaps the most important challenge for a small business owner is time. Few owners seem to have enough of it, even if they are working 80 hours a week. There are so many things to worry about, it’s like the business is running them, instead of the other way around. Finding ways to prioritize, eliminate, and simply get things done faster is always top of mind.
Group benefits for small business help solve problems
The good news is that a comprehensive group benefits program can help small business owners solve the challenges of people, money, and time.
Employee benefits coverage are insurance plans available to employees through their employer. The advantage is employees pay lower premiums and, in some cases, receive better coverage than if they purchase insurance on their own. In return, employers can use their benefits package to attract and retain quality employees.
When evaluating prospective employers, people are focusing more on what benefits are offered. For some, it may even be more important than salary. A sound group benefits package keeps employees happy, productive, and less likely to leave. In fact, over half of employees who keep working at a company do so because of the benefits1.
Solid small business insurance plans can save employers money in the long run by reducing the cost of hiring and training new employees. It can also bring down costs by fostering preventive care that identifies health issues early, reduces the need for expensive treatment, and keeps employees on the job.
Effective group benefits can also help small business owners save time. With less turnover, happier employees, and more available funds, employers can spend less time on human resource issues, and more time on important things like growing the business.
What should small businesses do?
Many small business owners would like to offer quality benefits, but they think they can’t afford them. While it’s true that some benefits packages are more suitable for larger employers, there are ways for small businesses to design cost-effective group benefits packages that are appropriate and helpful to their employees.
Voluntary benefits are a great way to offer comprehensive coverage to employees at a reasonable cost. They’re priced at a group rate, so employees get access to a variety of benefits at a lower price than if they purchased them as an individual, and employers don’t have to pay any of the premium.
Voluntary benefits help employers increase employee retention, attract new employees, save money, and keep the company healthier for both the short and long term. Small employers can also use these benefits to better compete with larger organizations' benefits programs.
With over $7 billion in sales in 20152, voluntary benefits are becoming more popular. In fact, 70% of employers offer voluntary benefits to improve morale and attract new talent3. Nearly 50 percent of employers say they’re interested in using voluntary benefits to reduce costs3.
In addition to voluntary benefits plans, small businesses should also consider offering a high deductible health plan (HDHP). These plans have a higher deductible than a traditional group insurance plan, but the monthly premium is usually lower.
A high deductible plan (HDHP) can be combined with a health savings account (HSA), enabling employees to pay for certain medical expenses with tax-free money. The lower an employee expects healthcare costs to be, the more attractive an HDHP becomes relative to a copay plan.
Supplemental health plans are another good alternative for smaller employers. These plans are made up of accident, cancer, critical illness, and hospital indemnity coverages, and help employees pay for out-of-pocket costs associated with serious accidents or illnesses. Supplemental health plans can help employees cover costs not paid for by major medical insurance.
What should large companies do?
While small businesses worry about not having enough funds to offer group benefits coverage, large employers are more concerned with improving efficiency, reducing administrative burdens, and containing costs. Providing a suite of coverage to satisfy and motivate employees isn’t so much of a problem as managing the sheer volume and overall operation of the benefits program.
Large employers are best served with a comprehensive benefits program that encompasses medical, dental, disability, life, vision, absence management, and other ancillary coverages, supported by account management and customer service teams as well as innovative enrollment and plan administration technology