Friday, April 10, 2009

New COBRA Policy And Cash-Strapped Small Firms

I had a conversation with a client about the new Obama administration and small business owners. I was telling my client about a recent poll by NFIB (National Federation of Independent Business) that showed 60% of business owners feel Obama doesn't understand their needs.
He was shocked and surprised the number was this high.
He wanted some examples. Well, here's one, pointed out in Entrepreneur Magazine by writer Dennis Romero: the recent COBRA policy in The American Reocovery and Reinvestment Act.
The American Recovery and Reinvestment Act reduces the amount laid-off workers have to pay in order to extend optional healthcare coverage under federally mandated COBRA (Consolidated Omnibus Budget Reconciliation Act) rules. Instead of writing monthly checks for 102 percent (the extra 2 percent for administrative costs) of the healthcare premium they enjoyed on-the-job, they now have to front only 35 percent. The caveat: The remaining 65 percent must be paid, up-front, by employers, which can then withhold the amount of the payments from their next federal payroll-tax contributions.
As one expert pointed out in the article, "At a firm with 10 people on COBRA at $1,000 per person, the employer would be laying out $650 each, which would be $6,500 per month. If that firm only has limited revenue, the $6,500 a month could be significant."
Let's hope this doesn't cause more people to lose their jobs. If I remember correctly, this bill was about creating jobs. Now, don't get me wrong, I want to help folks get COBRA coverage more than anyone. However, I don't want to see more people out of work needing COBRA coverage either.
--Ron Ameln, SBM

Thursday, April 09, 2009

Do You Have A Strategic Plan?

No matter how small, businesses need to prepare a strategic plan on a routine basis, according to SCORE, "Counselors to America's Small Businesses."
A business owner needs to look into the future to determine the best way to grow his or her business after determining how competition, the economy, new product introductions, changing prices and changes in internal operations might impact the business. Business owners routinely think about day to day operations on an ongoing basis. It is a good idea, at least once a year, to take time to step back and look at the big picture—including both external and internal variables and how these variables might impact the business.
The annual strategic review can be as simple or as complicated as the business owner might wish to make it. Taking a look at the mission statement of the business, updating a SWOT (Strengths Weaknesses Opportunities Threats) analysis, revisiting Critical Success Factors, goals and objectives can confirm that the business is on track or going in the wrong direction. If the business is moving off course, the business owner can make corrective changes in direction before a disaster happens.
The strategic plan for the business is the “game plan” for positioning the business and for managing its activities. Strategies serve as guidelines for how the business will get where it wants to go. As important as developing the strategic plan is, implementation is everything! A strategic planning exercise can be a great way for the management of a small business to determine where they’re going and how they’re going to get there.
-Ron Ameln, SBM