Tag Archives: small business

Small Business owners are subsidizing big Insurers during Covid

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By Robert J. Crowder

Special to the Financial Independence Hub

Small owner-managed businesses ravaged by Covid-19 are subsidizing big insurance companies during this pandemic and don’t even know it. In many cases, they have been paying for several months the full cost for employee health and benefits plans while all or most services are no longer provided. And if they are now starting to get a reduction in premiums, it’s not enough.

Since mid-March, dentists and other professional healthcare providers such as chiropractors, physiotherapists and massage therapists have been shut down, with the exception of emergency treatments. But small businesses continued to pay full benefits premiums while their employees didn’t use these services.

The numbers tell the tale

The value of premiums paid during the coronavirus pandemic has been truly staggering. Three-quarters of Canada’s 600,000 small businesses have employee benefits plans and over the past three months they paid out approximately $1.6 billion in premiums for benefits coverage at a time when virtually no services were provided. Keep in mind those same businesses and the business owners were suffering because of Covid.

Using claims data since the pandemic began (representing thousands of Canadian small businesses), it is clear that the number of claims for health and dental services is down 50% with some components of benefits plans, such as dental visits, down as much as 95%!

A real-life example

Let’s take an actual owner-managed small business, a distribution facility with 25 employees. The owner pays $9,500 per month in premiums for an employee benefits plan with a major insurer that includes comprehensive health and dental coverage. As the Covid crisis unfolded in mid-March, company sales plummeted dramatically and customers held back payment, causing an acute cash crunch.

As the crisis deepened, the owner was able to reduce non-essential expenses and negotiate a reduction in rent. Benefits represented a major part of expenses but actual usage came to a halt for dental and paramedical services. The owner asked his insurer to temporarily pause unused coverage in order to conserve cash, which would have meant a savings of over $6,000 per month, but was told it wasn’t possible.

By mid-June the company had paid out almost $20,000 in cash during a crisis when not a single employee had been to visit a dentist, physiotherapist, massage therapist or any other practitioner covered under the benefits plan.

Too little, too late

Thus, most small businesses paid full premium for their benefits plans in March, April and May, and only in June did some start to see any credit from large insurers, some of which are now offering future credits to mitigate lower numbers of claims. More on this in a moment. But still, that is $1.6 billion of unnecessary premiums that small business owners could have used to stabilize their businesses and keep people employed during the height of the crisis when their cash flow was severely impacted. Continue Reading…

Financing Small Business during the Covid-19 pandemic

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The worldwide pandemic has wreaked havoc on a large number of small businesses, leaving many looking for solutions to ease financial strain.

We asked 11 experts to share their financing tips to help small businesses during the Covid-19 Recession.

Here’s what they had to say:

Don’t cut Marketing 

During recessions, the first thing most companies do is cut their marketing budgets. How are you going to stay at the forefront of your customers’ minds with so much going on? Instead of cutting your marketing budget altogether, be more strategic and mindful about what you are spending your money on. Consider marketing efforts you wouldn’t normally try in robust times. Don’t let customers forget about you. John Yardley, Threads

Get creative

Small businesses that sell goods should explore options related to cutting inventory costs without giving up the quality of your products or hurting your customer experience. Some ideas of this would be reducing inventory to accommodate the current and projected demand during this time, negotiating better prices with suppliers or shipping items straight to consumers rather than to a warehouse. Being creative and resourceful when cutting costs will get small businesses through these hard times.  Peter Babichenko, Sahara Case

Cut nonessential costs

Financing tips during a pandemic aren’t easy, but I think it’s important to find what makes your business special and do everything you can to keep that going. The rest you can build back later. For now, focusing on cutting costs and staying afloat should be priority number one. A good number of the largest companies on the planet are going to remote work (Twitter, Facebook). If you’re a small business cutting costs can be tough, but office expenses are a great place to start. William Daniel, Financial Services SEO Company

Diversify your offers

One great way to survive during the COVID-19 recession is to diversify your offerings. Many of my clients have already started working in this direction. Most of them who mainly had a physical product are now developing a digital version of it. We are already seeing so many academic institutes turning their class-based lectures into downloadable online courses. Likewise, many eateries are transforming their traditional phone ordering systems into online food delivery apps. Small businesses need to pivot and think about going digital to weather this crisis. Joe Wilson, MintResume

Monitor your Credit Score

Small business owners should pay close attention to their personal credit score to give themselves the best chance at obtaining reasonable financing in the future. Most banks use personal credit for small business owners when assessing risk. This is especially true for small businesses that haven’t been around long or are too small to establish a business credit score. One tip is to look at your credit utilization, which is the amount of credit available versus the amount being used. A good rule of thumb is to use less than 30% of the total credit you have available. Getting below this number can help quickly improve your credit score. R.J. Weiss, The Ways to Wealth

Consider consolidating

Maybe it’s time to consolidate operations or offer similar non-competing business space in your office to share? Talking to someone facing the same concerns has many other benefits for the mind and soul – not to mention the ideas that may come from collaboration. Alex Pesic, Invoice Quick

Offer discounts to rid stock before tossing

Small businesses are dying, and that’s even without the pandemic coming into effect. However, due to what has happened around the world, more of us are conscious to shop local and use small businesses in order to support the local economy. Continue Reading…

Small Business: 5 tips to help protect your customers’ data and keep their trust

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Photo Credit: Unsplash

By Gloria Martinez

Special to the Financial Independence Hub

When it comes to running a business, trust is key. If a customer cannot trust your company with the information they provide, they will eventually stop coming back, and your reputation will suffer.

Data protection is one of the most essential qualities of any successful company, whether it’s a small online clothing boutique or a Fortune 500 company. Though keeping data safe can be challenging in a time where cyber crime is rampant, there are practices you can implement in your business that will decrease the likelihood of an attack. If you’re a small business owner, these 5 tips will help you protect your customers’ data while ultimately benefiting your profits:

1.) Understand your obligations

While keeping your customers’ data safe is a key element of building and maintaining your company’s success, there’s another important reason you should prioritize it: you could be legally obligated to do so. Take the NYDFS Cybersecurity Regulation, for instance, to which many companies in New York must adhere. One of the requirements of the regulation is that certain businesses operate with an infrastructure that protects customers from cyber security threats. If you’re not sure whether or not your state has regulations like this, this article may provide you with more information.

2.) Use encryption

A lot of cyber attacks happen through emails. This is because a company’s email account is a prime target for hackers, and you need to make sure that any emails that are exchanged between your company and another party (including promotional ads) are protected from these attacks. That’s where encryption comes in. Using a modern email encryption service should work seamlessly into your email platform, and will help keep the business information contained in your emails (including customer data) from getting to anyone but the intended recipient.

3.) Develop a security policy

While software is indispensable in the battle against cyber crime, your efforts can’t stop there. Your business also needs a data security policy in place, whether you have one employee or 1,500. It’s critical that employees become familiar with the policy, as well as the roles played by all people and systems involved. Also, ensure that each employee completes any necessary training with software and/or security professionals. That way, everyone will understand how to adequately handle company data. Continue Reading…

How a Small Business can maximize Invoice Approval and Accounts Payable

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By Darren Wilson

(Sponsored Content)

Accounts payable. Don’t run away yet! Most people don’t like accounts payable or handling invoices. However, they are a necessary evil of any business no matter the industry.

Bills have to be paid after all.

One of the biggest issues companies face with accounts payable is their invoicing process. A slow invoice approval rate can lead to late payments, duplicate invoices, and lost or missing invoices.

Taking time to evaluate and maximize your invoice processing and approval workflow can save not only time but money as well.

Automate wherever possible

One of the best things that a business can do for the accounts payable department is to automate. The benefits of an automated invoicing process seemingly grow by the day.

An automated system reduces the risk of duplicate, lost or missing invoices, as well as providing fraud detection. Where invoices can become misplaced due to trading so many hands, or mistakes could be made during comparisons of shipment orders and invoices because of human error, automation mitigates all of that.

If it’s possible to look to outsource entirely, however, as that may not always be the case, it helps to find similar benefits to automation elsewhere.

Evaluate

Evaluate the current invoice approval and processing workflow for any problem areas. The more transaction and invoice history available the better chance there is of noticing things like invoices that are always late, or get duplicated.

Once the more common and prominent trouble areas have been identified a root cause analysis can be done to determine the cause of the problem. And a solution can begin to develop from there. Continue Reading…

Should you start an E-commerce business?

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Image via Pexels

By Gloria Martinez

Special to the Financial Independence Hub

Do you want a job where you can work from home, set your own hours, and earn a virtually limitless amount of money? If you answered “yes” and you’re decently tech-savvy, e-commerce could be the perfect fit for you. E-commerce can be any type of online business transaction, but most of the time, it refers to online shopping.

Why e-commerce?

Skyrocketing rents and a shift toward online shopping has brought about the demise of many brick-and-mortar businesses. Unable to compete with the low prices of big-box retailers, mom-and-pop shops are shuttering their doors. Even big-box brands are suffering as their limited inventory fails to keep up with ecommerce giants like Amazon.

With e-commerce, entrepreneurs can avoid these small-business pitfalls. It’s no mystery that hosting a website is far cheaper than maintaining a brick-and-mortar store, and the rise of dropshipping has rendered the need for massive warehouse space obsolete.

Is e-commerce profitable?

E-commerce isn’t a guaranteed path to success by any means. Countless online stores open and close without registering a blip on consumers’ radar. However, stores that do well do very well. An analysis from RJMetrics found a typical ecommerce store generates $63,000 in monthly revenue by its third month. By year three, that number jumps to $352,000 a month.

How to make money in e-commerce

Setting up a successful e-commerce site requires three things:

1.) An in-demand product

Every e-commerce store needs a niche, but it can’t be just anything. Your niche needs to be something shoppers actually want to buy. However, it shouldn’t be the hottest thing on the market either or it will impossible to stand out.

Complete keyword research to find what consumers are searching for, then narrow down your search until you find a micro-niche with a profitable market. Make sure it’s a product you’re genuinely interested in. If you’re selling something you know nothing about, you’ll have a hard time making a compelling pitch to potential customers.

Once you’ve found your niche, have a plan to keep your inventory fresh. If your store has limited offerings, shoppers won’t keep coming back for more. Rotate your inventory on a schedule that makes sense. If you’re dropshipping wholesale clothing, change your inventory with the seasons. If you’re selling video games, make sure your site reflects the newest releases. Remember: It’s much easier to sell more stuff to an existing customer than it is to find new ones.

2.) A great website

Nothing kills an e-commerce site faster than a website that’s not user-friendly. Resist the urge to DIY your site to save money. A clunky website will lose you far more money than it saves. A good e-commerce site instills trust in shoppers, makes products incredibly easy to find, and executes an effective sales funnel. Web Designer Depot gives an excellent rundown of what goes into creating a high-quality ecommerce site. Continue Reading…