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Employees at small businesses often have more varied responsibilities than their counterparts at large corporations. While corporate employees tend to do highly specialized work, small business employees must wear several hats.
That makes it more important for small businesses to retain valued employees and keep their morale high, because they’re more difficult to replace.
Most employees at American businesses are not engaged in their jobs—in other words, they don’t feel managers value their opinions, or they see no opportunity for professional advancement. In a 2015 survey of more than 80,000 workers at large and small businesses, Gallup found that only 32% described themselves as “engaged” in their jobs; 51.8% said they were not engaged, and 17.2% said they were “actively disengaged.”
For a small business with 100 employees, that means about 17, on average, are “actively disengaged.” Translation: They don’t like their jobs—and they’re probably considering moving on. This is especially true for younger workers.
In another survey, Gallup found that 60% of millennials are thinking about moving on from their current job, and 50% are planning to do so in the next year. Many are dissatisfied with jobs that don’t allow them to telecommute on occasion and lock them into inflexible work schedules.
It’s important for small businesses to administer employee engagement surveys on a regular basis to find out what issues most concern their employees—and to use that information to improve employee satisfaction in the workplace.
Recent surveys indicate that what many workers want is more say in the design of benefits packages, more recognition from their managers, and more say over their work schedules. In an Intuit Quickbooks survey, more than 80% of workers said they wanted more flexibility on their jobs.
For female workers, that means flexible work schedules—more than half in the Gallup survey reported that a flexible work schedule was a major factor in their job choice, and 60% said that “work-life balance” was “very important.” As Julie Urlaub, founder of the sustainability consulting firm, the Taiga Company, explains: “The best-in-class business sustainability cultures can be summarized in two words: open and flexible.” For small businesses that want to retain female and younger employees, the question is whether flexible work schedules make sense for their companies.
The answer, in a word, is “yes” according to Intuit Quickbooks. Flexible work schedules are not only doable—they’re actually beneficial, improving recruitment and retention efforts and boosting productivity.
Here are 4 benefits to small business of offering flexible work schedules:
At first glance, offering flexible work schedules might seem impractical and costly. The fact is that workers who can design their own schedules are more likely to stay in their jobs, call in sick less frequently, and work harder for your small business—all of which add to the bottom line.
Most small businesses don’t know what to do if they experience employee theft. Most don’t even get law enforcement involved when they catch an employee stealing from them.
In fact, FoxBusiness cited a 2014 study from the University of Cincinnati finding that of the 64% of small businesses that have experienced employee theft, only 16% reported the incident!
Internal theft is a significant problem for any small business, and such theft represents a significant financial loss that could put them at risk. The U.S. Chamber of Commerce found that one-third of small business bankruptcies are the result of employee theft.
The business owners weigh the loss of time and trouble of reporting such crimes against the actual amount of loss and feel that firing the employee is enough.
Lawyers agree with that assessment, often advising small business owners that the costs to prosecute an employee who steals, say, $200,000 is not worth the effort. If, after an expensive trial, the employee is convicted, put on probation, and ordered to pay restitution at a rate he or she could afford—let’s say, $50 per month—the small business owner would never recoup the stolen funds.
Another thing that complicates matters is that the thief is often a family member or long-time employee. The business owner usually knows the employee’s family and may see him or her on family occasions. They see these situations as the kind you have to put behind you as fast as possible.
Typically, small business owners perceive the police and criminal justice system as ineffective or incompetent. They feel that police officers don’t know enough about business to do much about employee theft. They are too busy with street crime.
Research shows that cash is the most common target of theft. Cash thefts average $20,000, but can range between $5 to $20 million. Some 40 percent of thefts are of cash; 18 percent are products; 14 percent are theft of tools or equipment; and 12 percent are theft of raw materials.
Small business can obtain Employee Dishonesty Insurance (sometimes called a fidelity bond, crime coverage, or crime fidelity insurance) from many insurers to protect against losses from employee theft. Many small business owners are not aware of this coverage, and are not aware of the fact that costs for this insurance are relatively low.
Employee dishonesty insurance premiums can be added to a commercial crime insurance policy, to a business owner’s package policy (BOP), or purchased separately. The business owner’s lawyer, accountant, and insurance agent can help decide what is the best kind of anti-crime insurance to buy.
Standalone policies are designed to cover:
Insurance companies may offer coverage for employee theft of money, securities, or property. They can be written with a per-loss limit, a per-employee limit, or a per-position limit. Plans can be adjusted to include losses to the employee retirement income plan in compliance with the Employment Retirement Security Act (ERISA).
Coverage may also be extended to protect outside parties, clients, leasees, or others who suffer losses because of crimes committed by those within your company.
Exactly who is covered by these policies is defined in the policy. They should include everyone in a position to redirect resources, namely all current and former employees (including seasonal and temporary employees), partners, members, directors, volunteers, and trustees.
Small business owners often don’t have the right checks and balances in place to avoid employee embezzlement and theft. They often don’t screen new hires sufficiently, and hiring is often done on the basis of trust.
Most small business owners will say, “I trust my bookkeeper.” Yet almost every case of employee theft involves a trusted and unsuspected employee: A lifelong best friend steals from her business partner. A man takes money from his brothers and sisters. A CPA embezzles from his client.
Honest money handlers like bookkeepers will demand that credible financial controls be put in place, removing them from any appearance of temptation. Put all money receipts in a checking account. Withdraw any money that leaves the business out of the checking account. Such accounts keep an independent running record of deposits and withdrawals.
A single employee should not establish vendors, approve the payments, and write the checks. There should be at least two employees involved. In one case, a bookkeeper (currently in prison) was found to have set up a fake employer and funnel money from the small business into his own private account.
You, as the business owner, should review statements regularly. At random and unpredictable times, review all bank statements, business credit cards, and company payroll statements. You should also regularly audit the books. Have an independent third-party audit performed in at least a spot-check manner—the cost is minimal and the audit can reveal an expensive money leaking problem.
At the end of the day, your small business is your primary responsibility. While there is always the risk of an employee, even someone you know, being untrustworthy, there are things you can look out for and insurance policies you can obtain in order to avoid a total financial disaster.
Wondering why you are struggling to bring on more clients, or why contractors don’t want to work with you? It could be because you don’t have a certificate of liability insurance (COI).
It’s not enough to tell prospective clients that you’re trustworthy. It’s not enough to have insurance. You must also have a certificate on hand to meet most contracts’ requirements.
Follow this guide to make sure your business is covered—and that you can prove it!
Small businesses carry a lot of risk, but are also trying to land new contracts to help them grow. For this reason, having insurance is a must! Here are a few types you should consider purchasing:
Once you secure your insurance, make sure you ask for a certificate of liability insurance. It’s simply a one-page description verifying the type of insurance you have and the coverage it provides, including limits, expiration dates, effective dates, and policy numbers. Without this piece of paper, your business associates may question your coverage.
So you made the leap and decided to protect your small business by buying some insurance, and now you are as good as gold, right?
Wrong!
You need a certificate of insurance, also called an ACORD. Having one is especially important for small business owners. You are trying to build your reputation, your credibility, and secure more business.
The best way to do this is by being able to show that you are knowledgeable about eliminating risk. New clients and contractors will want to see this before they sign on to work with you. Plus, you should want to see a subcontractor’s COI every time you strike a new business deal.
If you thought that all you had to do to secure new business contracts was to show them your certificate of liability insurance, you could be wrong. Not only do they want to see proof of the insurance coverage, but sometimes they ask to be listed on your certificate.
When clients asked to be named as a certificate holder, they are essentially wanting to be on the policy so if you are cancelled for any reason, the client listed would be notified. This gives them the security they need to feel comfortable working with your business.
Plus, in the event of an accident, there is no question about who is covered.
Insurance companies are smart, and they want to make sure that the businesses they are insuring are also making ethical business decisions. They will not want you hiring subcontractors who do not have certificates.
Sometimes your insurance company will request this piece of paper from the subcontractor‘s insurer. They might even audit your business and request all certificates. For that reason, you need to make sure you are requesting certificates when making business deals. If they find you don’t have all the proper certificates for subcontractors or are using uninsured contractors, they could potentially raise your insurance rates—or they could drop you!
And because fraud is something your business wants to avoid, instead of printing off the certificate yourself to give to the client requesting, call your insurance agency and have them fax over a copy. When you need theirs, make sure you are requesting one from their insurance as well instead of taking a copy from them. This will make sure no fraud is being committed.
On the morning of February 5, 2016, a worker at Hollywood Presbyterian Medical Center (HPMC) opened a suspicious-looking email. Later, he tried to access a patient’s records on his computer, but couldn’t. He went to his manager, who tried to help, but nothing seemed to work.
Soon, other workers experienced the same problem. Within hours, CEO Allen Stefanek received the dreaded call: Hackers had infected the Medical Center’s computer system with ransomware. They demanded Hollywood Presbyterian pay 40 Bitcoin, or $17,000 in ransom. For 10 days, the company refused to pay—10 strife-filled days without computer access.
Eventually, they paid the money. Stefanek talked to reporters, stating:
“The malware locks systems by encrypting files and demanding ransom to obtain the decryption key. The quickest and most efficient way to restore our systems and administrative functions was to pay the ransom and obtain the decryption key. In the best interest of restoring normal operations, we did this.”
Hollywood Presbyterian could take some small comfort in knowing they were not alone. Of the 27.9 million small businesses in the United States (99.7% of all companies), 43% were the targets of cyber attacks in 2015, up from just 18% five years earlier.
The attacks aren’t limited to desktop computers; as cybercriminals become more sophisticated, they’re attacking smartphones, smart watches, and even smart televisions.
Cyberattacks generally come in two forms: (1) those in which the ransomware is attached to an email; and (2) those which infect the computer directly through the browser. Small businesses need to prepare for both.
Here are 4 steps you can take to protect your small business from a ransomware attack:
Having a robust backup for your files gives you an alternative to paying expensive ransom to cybercriminals. As Philip Casesa, Product Development Strategist for ISC2 explains:
“You have to have some sort of backup, a real backup solution of the assets you’ve determined are essential to your business. Real-time backup or file synch will just back up your encrypted files. You need a robust backup process where you can roll back a few days [to before the ransomware infection], and restore local and server apps and data.”
Because ransomware can infect both primary and backup files, the best strategy is a “tiered or distributed backup solution” in which several copies of backup files are stored in different locations and on different media.
Most ransomware attacks occur through infected emails—either as links within the email, or as email attachments. You need to train employees to never open any email from someone they don’t know.
According to McAfee, you should train employees to be especially suspicious of email subject lines which invite them to connect on LinkedIn, claim to be an “important communication,” or say “mail delivery failed.”
You can educate your employees by hosting training seminars hosted by security professionals, or more informally (and less expensively) through a series of lunches in which your IT people launch a group discussion.
Small businesses in which each computer has its own antivirus security protection are most at risk. According to Casesa, moving to a managed endpoint security solution in which IT maintains security for the entire business dramatically increases the effectiveness of antivirus and anti-malware software solutions.
There’s a good reason the federal government has a policy of never paying terrorists to free hostages—it tells them their strategy worked and encourages them to take more hostages in the future.
The same principle applies to cybercriminals. When you pay, you’re telling criminals that you’re a ripe target for a subsequent attack (you’ve become, in marketing parlance, “a qualified lead”) and encouraging them to attack other businesses.
Small businesses can buy insurance that covers ransomware attacks, but should work closely with their insurer to design the best policy. Some cyberattack policies don’t cover ransomware, and some that do have deductibles so high that paying the ransom is a more attractive option.
The good news is that most cyberattack policies can be customized, which means you need to work closely with your insurance carrier to get the coverage the best fits your business for the best price.
The one thing small businesses shouldn’t do is bury their heads in the sand in the blind hope that they’ll be spared a ransomware attack. In business, the best policy is to hope for the best, but prepare for the worst.
Establish a security policy which assumes you will be a target. Take the appropriate steps to prevent such an attack, and to deal effectively with one if it does occur, and make sure you’re covered with a customized insurance policy.
There are almost 30 million small businesses in the United States—businesses which employ more than half of all American workers and create the vast majority of new jobs. Every month, 543,000 new businesses are created. That’s about 7 million every year!
Unfortunately, according to Bloomberg, about 80% of new small businesses fail within the first 18 months.
Some fail because they offer products or services consumers don’t want, or because competitors offer superior products for less money. Others fail because they don’t take the time to create a viable business plan, or because they don’t secure the financing or insurance they need to be sustainable.
No single set of guidelines can ensure that a new business will succeed, but those that do succeed all have one thing in common: They take the time to create sound business plans that point them in the right direction and anticipate any problems that might crop up.
Here are 5 tips to maximize the chances that your small business will succeed over the long haul.
Before taking your new business to market, you should be able to answer key questions—the kinds of questions a bank might ask you if you attempted to obtain a small business loan or consumers might have when considering purchasing your products or services.
For example:
You wouldn’t drive across the country or try to land a new job without a sound plan. The same is true when it comes to starting your new business.
The Small Business Administration recommends that your business plan have these 8 key components:
You shouldn’t start any business without first ensuring that you have the funds to keep it going. Carefully construct a list of everything you’ll need to effectively run your business, including:
Different kinds of businesses need different kinds of insurance—for example, businesses which maintain a fleet of vehicles will probably need commercial auto insurance—but there are some kinds of insurance every business should have, including general liability insurance, property insurance, and a business owner’s policy.
To find out what types of insurance are right for your business, work with a reputable insurance provider in your area.
If you have keen business skills but don’t know much about marketing or advertising, you might want to team up with an affordable marketing agency. You’ll need to decide the major components of your marketing plan, whether that includes direct mail, email marketing, or social media marketing. You’ll probably want to have a strong internet presence, including a well-designed website and a plan to drive traffic to that site.
Most new businesses fail, but many succeed. The difference between the winners and the losers comes down to due diligence. Take the time to do your homework, creating a detailed plan, anticipating potential problems, putting your finances in order, and making sure you’re properly insured.
One of the biggest challenges facing small businesses is competition from large corporations, bigger businesses with more money for marketing and distribution, and those who offer the same products and services.
For example, if you’re a small startup that makes your own brand of sportswear, how do you compete effectively with Nike?
Adding to the challenge, there have been attempts by internet service providers (ISPs) like Verizon, Time Warner Cable, AT&T, and Comcast to give preference to bigger companies that provide content on the internet. Essentially, those ISPs have tried to block or slow down content from smaller businesses in favor of bigger businesses, some of which they have a financial relationship with.
In other words, ISPs, if free to do so, would favor bigger over smaller content providers to feather their own nest.
Net neutrality is the idea that the internet should remain free and open, that all content providers (large and small) should have an equal shot at putting their content in front of users, and that users have a right to see whatever content they want without corporate interference.
Needless to say, ISPs with a financial incentive to block net neutrality have challenged it in the courts. Their legal argument has been that the internet is a luxury, not a utility like an electric company, and that the Federal Communications Commission (FCC) therefore has no authority to regulate it.
Internet service providers were successful in advancing that argument in a U.S. Court of Appeals decision in 2014. The Court agreed with ISPs that the internet is not a utility, and that it does not therefore fall within the purview of the FCC. That decision essentially gave ISPs the ability to act as internet gatekeepers and make it exceedingly difficult for small businesses to compete fairly.
Fortunately for small business, that decision was overturned in a 2016 court decision. In that case, the FCC prevailed against internet service providers, convincing the court that the internet is, in fact, a utility, not a luxury, and that the FCC can regulate it and enforce net neutrality.
Of course, as is always the case, ISPs are free to challenge this most recent court decision, and some ISPs have already indicated their willingness to take the issue of net neutrality all the way to the Supreme Court.
For the moment, net neutrality is safe, as are the small businesses that benefit from a free and open internet. If, however, a higher court decides in favor of ISPs, small businesses will suffer, and some will disappear.
Without net neutrality, ISPs can charge companies for internet access. If the FCC can’t regulate the internet, ISPs could charge companies for increased access—for example, by giving higher speeds to those willing to pay, or even blocking entirely those who aren’t.
This cost would be borne by all businesses, large and small. By one estimate, a company like Netflix would incur additional annual costs from $75-100 million.
But Netflix can afford to pay those additional charges (perhaps by passing them on to their customers). Small businesses can’t. Having to pay for internet access could put some small companies out of business. Absent net neutrality, the internet playing field would no longer be even.
According to Forbes, 90% of business startups fail. They fail for a variety of reasons, from poor management to weak product/market fit. For many, the cause is lack of sufficient financial resources.
Small businesses need every advantage they can get to succeed, whether that means a business-friendly tax code, help in avoiding legal problems, or the ability to compete fairly with those larger businesses that have been around longer than they have.
Some business owners think risk management is not important just because they are small, but in many ways, risk management can be more important for a smaller business. Small business have fewer resources to help absorb a risk than larger businesses—one substantial event could take down a small business that isn’t prepared.
If you haven’t given risk management any serious consideration, it’s still early enough in the year to re-evaluate your business and its susceptibility to risk.
Risk management is a broad topic that includes nearly every aspect of your business, so finding a risk management professional with the background and track record that suits your needs is important.
There are 2 types of risk that businesses of any size encounter.
Often referred to as weaknesses, these are risks that can occur within your business.
These risks are also called threats and are more difficult to control.
The best way to help manage risk in a broad sense is to create a culture of risk management. The leaders of the organization must make it known that they value risk avoidance and that it is a real priority. Leading by example works well, especially if you have a small staff.
Regarding some of the issues mentioned here, these are more specific examples:
All of these remedies help ensure a business’s cash flow remains undamaged by an event.
If you’re not sure where to start in terms of obtaining these policies or if you just want to make sure you have the right coverage in place, contact us for a free assessment today!
Finding and choosing the right insurance coverage can be tricky for most smaller businesses, but staffing and employment agencies face some unique challenges that other businesses their size do not have to deal with daily.
Traditionally, the workforce of this type of business is fluid and often lacks a good amount of supervisory control. In addition, many employment agencies assume liability for the actions of the off-site employees placed at a business.
Although coverage challenges for staffing companies are inevitable, there are practical steps that can be put into place to lessen the day-to-day impact. Here are some practical steps that employment agency businesses and staffing firms can employ immediately.
Being thorough at this stage of the game may seem costly up front, but can save you a good deal of money and frustration in the long run. Despite the cost associated with background checks, this important step should not be skipped. Your staffing agency could be held liable if it is determined that the candidate presented information that was not true during the hiring process and you failed to perform a background check.
A good screening process will help verify the candidate’s identity, past employment, provide education verification, any professional license verification, motor vehicle reports, and drug testing.
Along with making sure that employees you send to clients are who they say they are, it’s equally important to carefully evaluate potential clients and the risk associated with their business.
Be sure to have a clear understanding of their business operations and specific job roles within the company. Review if they have proper safety precautions in place, obtain OSHA reports if applicable, and look at loss runs from at least the last three years.
Try to resist the temptation to build your client list as quickly as possible. Instead, be diligent to bring in the right clients. Quality over quantity should be the mantra here.
Even if the day-to-day employee supervision is handled by the employer, be sure to keep the communication lines open and nip small issues in the bud quickly before they can snowball into large issues.
Have a plan to get sick and injured employees back to work as soon as possible. Follow up with employees often if they are out sick or injured on the job and unable to perform their current job tasks. If possible, relocate them to a different company that can accommodate any restrictions they may have.
Agencies that are heavy on temporary and contract-type services have a bigger challenge in regards to health insurance requirements today due to high turnover rates, limited time on assignments, and lower pay rates.
The biggest challenges typically stem from the employer-related responsibility rules that are different than other industries. In addition, if the agency can’t or won’t conform to the health care requirements today, they may face a fairly steep penalty. However, in some cases, employers may be able to include Medicare and Medicaid, or coverage under an employer-sponsored plan that can help meet eligibility requirements for these businesses.
New enrollment and waiting period requirements are a challenge to many employers today due to rapid turnover in some categories. Automatic enrollment is another major change with great impact since each employer is expected to automatically enroll full-time employees into an employer health plan.
The challenges seem inevitable, but how these agencies handle these challenges is what will help make or break their success. Understanding the requirements upfront can help alleviate some of the day to day headaches that surround group insurance requirements.
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