Business owners are looking for solutions to rising costs of employing and managing their staff. Throughout the country many businesses have experienced increases in workers’ compensation, health care, and employee administration. Those rising costs have, unfortunately, put them at a disadvantage in the marketplace. In addition to the time spent on payroll, the cost of taxes, human resource compliance, safety programs, offering employee benefits, managing employee issues, and fighting unemployment claims is increasing every year. Business owners need solutions to many of these challenges.
Challenge #1: Workers’ Compensation
The workers’ compensation system for small business owners is broken in many ways. Small employers may receive discounts on workers’ compensation insurance, but one bad claims year and their company is dramatically penalized. Those discounts go away quickly and now they see large percentage increases. For example I ran into a small transportation company with 15 employees who was paying $ 25,000 to $ 30,000 a year for workers’ compensation insurance, but with one bad claims year they were non-renewed and now are paying $ 75,000 to $ 80,000 in premium a year. How can small businesses withstand that kind of increase? This is one example of how the system is not set up to help small businesses succeed. Small businesses need large group purchasing power not only for the up-front discounts but for long term rate stabilization. Those same claims in a larger company will not drive the rates up as dramatically because the claims are spread out over more premium dollars.
Challenge #2: Health care and Employee Benefits
Throughout the country, cost for providing health insurance is rising so drastically that many small businesses have started to drop coverage for their employees. Double-digit increases are common. If the employers keep coverage then many times these increases are passed on to the employees through higher contributions from their paychecks, higher deductibles, and increased out-of-pocket expenses. Again, small businesses have a distinct disadvantage over large organizations because of a lack of purchasing power and expertise in finding solutions. There is a better way for small business owners to solve this huge business challenge.
Challenge #3: Employee Administration
The ever-increasing burden of employee administration has put an unfair and undo burden on small businesses. Payroll, payroll taxes, human resources, employee benefits, risk of employment law suits, unemployment claims, fraudulent workers’ compensation claims, and adherence to OSHA regulations can be overwhelming for a business owner. One wrong move could cost him his business. Small business owners are at a disadvantage because many times they lack the time or ability to manage all of these areas proactively resulting in fines, laws suit settlements, and increased costs.
Many Small Business Owners Have Found Their Solution in a Professional Employer Organization (PEO)
A PEO joins many small and medium-sized business owners and their employees together to gain economies of scale and expertise. Utilizing outsourcing strategies to solve these three main business challenges, a PEO creates win-win solutions that can lead to lower costs, reduced liability, increased productivity and more time to focus on growing your business.
To learn more about how a PEO can improve your current business challenges, please contact Mark Lichty at mark@EmployerBusinessSolutions.com or http://www.EmployerBusinessSolutions.com. Mark is a small business owner and has 12 years experience in helping other small business owners meet the challenges of having and managing employees.