How the Obamacare Decision Could Impact Small Business Owners
There are always three June events that keep Americans entertained: The Stanley Cup series, the NBA championship playoffs, and the release of Supreme Court decisions. This year the decision in King v. Burwell, with its potentially profound effect on the Affordable Care Act (Obamacare) is giving the NHL and NBA a run for their money in terms of capturing the attention of the media. Simply put, if the administration loses this challenge, some 5 million Americans will lose the subsidies that underwrite a major portion of their health insurance costs. If it wins, those 5 million Americans won’t see any changes. As written, the law provides subsidies for lower income individuals who sign up through state-run exchanges. Thirty-six states refused to create exchanges, so residents in those states signed up through the federal exchange. However, the language of the bill passed by Congress and signed by the president does not explicitly allow for subsidies to individuals who sign up for health insurance through the federal exchange. The potential impacts for small businesses fall into three general categories: The health insurance status of their employees if the court rules against the administration, The guiding hourly employment regulations and penalties if the court rules against the administration, and The new regulations if the court rules in favor of the administration. It’s safe to assume that a fair share of small business workers used the federal exchange and received subsidies to get health insurance. It’s highly likely that most of them will drop their coverage if the court declares the subsidies illegal. This will put many small businesses in the position of deciding whether or not they should include health insurance as a benefit of employment. However, there is another wrinkle to consider here. Obamacare declared employees to be full-time when they worked 30 hours or more, and businesses with more than 50 full-time employees are required to provide health insurance for those employees or face a stiff penalty. This is why we saw many employers reduce hours to less than 30 per week in the run-up to the law’s implementation The interesting point is that the penalty is tied to the availability of subsidies. If the subsidies go away, so does the penalty and the motivation to keep employees at fewer than 30 hours. In other words, some employees may find themselves working more hours and earning more money than before Obamacare went into effect. This point relates to what will happen to some small businesses if the administration’s argument carries the day. The “employer mandate” which requires businesses with 50 or more full-time employees to provide health insurance or suffer a steep penalty has been delayed several times. We’re now in the first year where it will be fully in effect. So if the Supreme Court upholds this provision of Obamacare, this will be the first year that some small businesses will be facing the penalty. (By the way, the federal government runs a Small Business Health Options Program (SHOP) exchange to help small businesses get coverage. However, aside from Congressional staffers, so few people used the exchange that it is fairly inconsequential to this discussion.) In terms of overall policy going forward, it’s impossible to know exactly what will happen if the court strikes down this major provision in...
read moreHow To Handle Vacation Scheduling So Everyone Can Relax
Closed Gone fishin’. Probably every small business owner would like to hang out a sign like this on his or her business at some point during the summer and get away somewhere to relax. I hope it’s on your schedule, but I also know that your employees will want to get away as well. What are the best ways to handle the scheduling and logistics of accommodating vacation time during the summer? (As a side note, with schools expanding the length of their school year, for many families the summer “vacation” time is getting pinched.) Is closing an option? Some years ago, I knew a family-owned and mostly operated restaurant that just closed its doors for a week or two in the summer. It was run by two brothers whose families were close and they often enjoyed vacationing together, so shutting the doors was their solution to the problem. If you have some dead slow weeks during the summer, consider this approach. However, it’s not a strategy that works for many small businesses. The first step in solving almost every problem that involves personnel decisions, is to have a policy in place and stick to it. Any vacation, or time-off policy, should cover these basic points: The procedure for requesting time off. The person who approves time off requests. The amount of advance notice that is required. Blackout days or weeks. How requests are prioritized and conflicts resolved. In practice, be sure that employees know which dates have already been granted to someone – keep a vacation calendar posted where everyone can see it. When two employees want the same time off, often they are able to work it out between themselves. If they can’t, be sure you are fair and stick to your policy. Consider business needs In terms of managing your business during times when employees are likely to put in for vacation time, consider the needs of your business. Avoid scheduling new projects that require the presence of certain employees when they may be out of town. Meet with your small business team before vacation season is in full swing and discuss any issues like these and encourage them to get their vacation requests in early. As a small business owner you want vacations to be a time when members of your crew can get their batteries recharged. You don’t want to drain them with conflicts and snags in their plans before they even get out of town – let the airlines and long lines at the theme parks do that! Well, that’s enough on the subject. I think I’ll start checking my calendar to see when we can get away this...
read moreLearn This Jeff Bezos Cash Flow Lesson
Jeff Bezos’ Amazon almost never reports a profit, yet the company is on solid financial ground, still popular with investors, and considered the leader in e-commerce and a variety of other tech sectors. Further, Bezos brushes aside any questions or criticism of Amazon’s lack of profitability by touting the company’s incredible cash flow. And this is where there’s a lesson for every small business owner. Mint green with envy Amazon’s ability to generate cash makes the US Mint jealous. How is your small business doing in this regard? If it seems to you like you’re doing well, but you’re having problems making payroll or keeping up with your accounts payable, you need to take a serious look at your cash flow. It’s is an area where even good businesses can improve. Let me give you a metric that will help you gauge where you’re at today. It will also help you target the areas where you need to improve. The ability of your small business to generate cash is captured in something called the cash conversion cycle (CCC). The formula for the CCC is three basic steps: Start with the number of days of inventory that you have on hand, Add how long it takes customers to pay you, Subtract how many days it takes you to pay your suppliers. When this number is low, it means that you have a good cash flow. You won’t believe what Amazon’s CCC number was recently. (I’ll share that in just a few moments). If you consider that formula, you’ll see that it’s a bad thing to have a lot of cash tied up in inventory and accounts receivable and that it’s a good thing to delay paying your bills for as long as possible – not rocket science, but important to know and control. Here’s an online calculator you can use. How low can you go? Writing on this topic for the Harvard Business Review, Justin Fox said that efficient retailers like WalMart and Costco have CCCs in the single digits. However, that’s nothing compared to Amazon, which had a CCC of negative 30.6 days back in 2013. Apple is another star, scoring a negative 44.5. In other words, they don’t carry much inventory, get paid with lightning speed – should we call this Apple Pay? – and are able to hold off their creditors rather well. This is a simple formula to remember and use in your small business. But aside from measuring cold hard cash, it’s more important to consider it as a measurement of how well you are managing your business. Frankly, sales are not always completely in your control, but every element in the CCC formula is generally in your control. You should be able to control your inventory, how long you’re kept waiting for payment and how long you’re able to stretch out payments to your supplier. Your goal should be to drive down your CCC as far as possible. Further, always keep your eye on it. It’s easy to let some of these elements slide. If you take your eyes off these metrics, inventory can build up and client payments can slip. Suddenly, you’re in a cash flow...
read moreDIY Marketing Month: Time for Small Businesses To Break Down Walls!
June is do-it-yourself (DIY) marketing month, so let me toss an idea out to you: How about putting on your classiest office attire – suits for guys, dresses for gals – printing out some flyers for your business, attaching the flyers to your clothes and then go running in a local race. Make the race a marathon and not only will you be promoting your small business, you’ll be getting yourself in fantastic shape! Sound crazy? Well, a guy in East Northport, New York is pretty much doing just that, except he’s selling out the ad space on his clothing. The crazy idea got him a major write-up in Runner’s World, plus he’s making some extra money through the ad sales. A much more common variation of this is to outfit your car with branding that promotes your small business. At the high end, you have car wrappers and at the low end you have magnetic signs. Turning your car into a rolling advertisement for your small business can be very cost effective. According to the Outdoor Advertising Association of America, one vehicle wrap can generate as many as 30,000 to 70,000 impressions a day. Of course that is highly dependent on how much driving is done and the roads traveled. In any case, when compared to the cost of impressions generated through other advertising media, wrapping your car has the lowest cost. I’m tossing this idea out there because as a small business owner you need to leverage the areas where you have a potential advantage over – or equality with – big businesses. Thinking a little “outside the box” is one of those areas. Big business likes more conservative marketing plays. Social media is truly the great equalizer between big and small business. You can devise DIY social media campaigns that resonate with your prospects just as easily as any major corporation. In 2014 Constant Contact sponsored the Small Business Online Marketing Contest hosted by the City of Chicago Treasurer’s Office. The winning entry was designed to boost Nut Health’s followers and likes on Facebook, Twitter and Pinterest. People could win a $100 Whole Foods gift card if they “liked” the Facebook page and pledged to add 1.5 ounces of nuts to their diets. Nut Health boosted its Facebook likes for 129 to 2,433 and generated 729,000 impressions with 6,400 interactions by 5,700 unique users. The women’s clothing boutique, Milk Handmade, moved inventory, rewarded its best customers and booked $1,000 in sales with a “Secret Sale” that allowed customers to take half off everything in the sales rack. The offer only went out to its email list and it used the simple subject line, “Our Little Secret.” It got a 43 percent open rate and 10 percent click-through rate. These are just a few of the kinds of ideas small businesses can try during DIY marketing month. I would only add one cautionary note: Don’t let June be the only month when you work hard to come up with creative DIY marketing ideas! Image: The Model Mill (Reeve 062828), ©2006 National Museum of Health and Medicine, used under a Creative Commons Attribution-ShareAlike...
read moreThis Week in Small Business: The graves of failed startups, Facebook’s new local marketing and rockin’ but humble women entrepreneurs
Leadership, management and productivity Whistle through the graveyard of epic startup fails at autopsy.io. Learn from the mistakes of others…before it’s too late! General Stanley McChrystal knows what’s required of leadership if you want people to go to war with you. He gives good advice in this short video. Bosses like to play it safe – leaders practice taking risks. Discover seven ways to go from boss to leader. There wouldn’t be a company if you didn’t start it, but are you the best person to lead it into its next stage of growth? Brains can be bought, but hearts and minds have to be won. Leadership lessons from Caroline Lim. Ron Karr poses some questions for us to answer so we can change our attitudes and find ways to succeed even with limited resources. Marketing and sales Email marketing still rules. Here are 10 simple tips that will make yours more effective in your small business. Not everyone has the talent or knowledge to be a social media manager. This article runs down five must-have skills. Are you planning to stage an event? Check out these five ways to use Twitter to get the publicity and signups you need. And speaking of Twitter, everything you wanted to know about growing your Twitter following but were afraid to ask will probably be in this extensive curated guide. Recycle. Reuse: How to Optimize Your Older Blog Content for Long Tail Conversion. Find out where small business is headed in the world of social media marketing in this article with graphs and everything. With its “Place Tips,” Facebook is making a huge play in mobile local marketing. Can it benefit your small business? Believe it or not, there is power in hashtags. They propelled one Twitter chat to reaching 49,993,695 people in one year. They’re calling the under 35 group “Generation C” for “creation, curation, connection, and community.” Learn how to reach them with your YouTube content. How important is mobile marketing? It now accounts for 45 percent of all email clicks and 22 percent of all email-generated revenue. And this MarketingLand article puts the global mobile movement into some telling statistics. Entrepreneurship, startups and innovation Emily Weiss is one of the women who was unhappy with the beauty industry. When she started her skincare and beauty products line, Glossier, she did it differently. Is the ideal person to help you with your startup not someone you particularly like? If so, you need to check out these four tips. Knowledge is power. Here are five reasons many small businesses fail in their first year. And continuing with the numbered list motif, here are seven myths entrepreneurs should walk away from. Okay ladies, are you ready to turn your side hustle into your official small business? Here’s a checklist to consider. Creative ideas are the coin of the realm today. Josh Linker shares his perspectives on how to nurture and grow them. Female entrepreneurs are too modest, according to a new study by Cambridge University, despite beating their male counterparts on most entrepreneurial traits! Politics, government and the economy Small business owners are reporting sales up over the last three months. Let’s keep the forward momentum. The good news was echoed by job opening numbers – they hit a record high. Travis...
read moreAre You Ready if Obama Redefines ‘Exempt’ Employees?
If you watch any of the true crime shows, you’ll notice that when the bad guys gain entry to a home, they usually break in through the back door. Politicians operate the same way. We’re seeing that right now with President Obama giving marching orders to his regulators and administrators with the hopes of achieving goals that he cannot accomplish through democratic, constitutional means. One of these that’s coming up soon could severely reduce the profitability of many small businesses. It all has to do with employees who are classified as “exempt.” These are salaried workers who are categorized as either administrative, executive or professional, and make a minimum of $455 per week, or $23,660 per year. When those requirements are met, these employees need not be paid overtime when they work more than 40 hours per week. Minimum salary could more than double President Obama wants to increase the minimum salary requirement in this equation. The numbers being discussed range from $50,000 per year to as high as $56,000 per year. (Can you tell that most of the advocates for a much higher salary threshold live and work in the Washington D.C. area, where the salary-reality is out of whack compared to most areas of the nation?) Unable to push through a wholesale raise in the federal minimum wage, President Obama is using the regulatory authority of the Department of Labor in an attempt to force employers to raise wages. Small business, big business and workers in both realms would feel the effects of this change. I don’t have a crystal ball to accurately predict what the outcome will be if the DOL is able to double the salary threshold. However, I don’t think I’m going out on a limb when I say that most employers will simply reassign workers or reclassify these positions as hourly and cap hours below 40 to avoid overtime costs. (Ironically, many employees have already had their hours reduced to less than 30 to avoid Obamacare mandates. The president must realize that these measures end up hurting workers more than helping them. Right?) Flexibility may be lost Generally, these kinds of salaried positions give greater flexibility to both employers and employees. One week, extra hours may be required. The next week, fewer hours may be necessary. At every place where I’ve worked, employers understand this and allow their exempt employees to take time off after they have pulled long shifts. Further, some states have already set a higher salary threshold and this is how our republic is supposed to work. In the same way, many states have set a higher minimum wage than the federal minimum wage. Again, this is the way framers envisioned the US Constitution functioning, and if allowed to work, it works! I think the entire debate reflects how poorly politicians understand business, economics and management. Most business leaders know that iron-fist, top-down management is counter productive. However, our elected officials in Washington operate under the misguided belief that they know what is best for everyone: Anything deemed bad must be outlawed, anything deemed good must be...
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