Time and MoneyEntrepreneurs are busy. Whether bootstrapping or angel-funded, entrepreneurs play a lot of roles. Sometimes, being a one-person HR department is one of those roles. Entrepreneurs don't have to enjoy the HR aspects of their job; entrepreneurs just want to get it done - easily and affordably. This series will show entrepreneurs how.

Scaling

Scaling your business is the same as growing your business, except faster, more efficiently, and without limit.  In order to scale, entrepreneurs need to streamline processes and reduce potential barriers to growth, with the goal being rapid, expansive growth without negatively affecting marginal revenues.

Entrepreneurs looking to scale want two things from their employee benefits package:

  1. Quality, comprehensive coverage that will attract and retain top talent.
  2. Affordable, easy to implement benefits that won't drag on personnel or finances.

In my last post about health insurance for sole-proprietors and partnerships I advised small business owners to seek individual coverage when securing health insurance. For entrepreneurs looking to scale and seamlessly add employees to its benefits package, avoid individual coverage and secure group coverage instead.

How to establish group health insurance (and what to avoid).

  • Work with a licensed broker.

    Working with a licensed insurance professional will save hours, even days, and thousands of dollars. Your broker will provide you with quotes, help you select policies, facilitate the application process, and provide ongoing support and expertise.
  • Consider HSA plans (health savings accounts).

    HSA plans provide low-cost, comprehensive coverage as an alternative to traditional PPO coverage. They also allow you to open up HSA accounts for your employees. Any contributions the business makes to the acounts is a tax-deductible; any contributions the employees make are pre-taxed. So all contributions will lower the company's tax-liablity.
  • Don't forget about dependents.

    While employers are typically required to pay 50 percent of employee premiums, they aren't required to contribute towards dependents (spouses and children). Still, you may want to contribute towards dependent premiums if you are leveraging your benefits package to attract talent. Keep in mind that dependent premiums are higher than employee premiums. One employee with a spouse and children could cost three to four times more than a single employee. So plan contributions for dependents accordingly.
  • Take advantage of tax-savings.

    Employer contributions towards health insurance premiums are tax-deductible. Premium payments by employee can be pre-taxed with a section 125 (POP) plan. Also, there is a tax-credit available for businesses, within certain guidelines. Speak with a tax professional to ensure you are taking advantage of these potential savings.
  • Think long term: Project future costs to protect employee moral.

    Health insurance premiums are constantly increasing; often 10 percent to 20 percent per year, sometimes more. An affordable price today may not be so affordable two to three years from now, especially if your company has grown. Be aware of future cost increases when selecting coverage. You want coverage the company can maintain. Otherwise, unsustainable costs will force you to decrease contributions or decrease the coverage (or both) - both of which can negatively affect employee morale.

In summary:

If scaling is a priority, establish and maintain a rich benefits package to attract and retain talent. Use a licensed insurance broker to advise and support your HR department. Consider low-cost options such as HSA's, and evaluate coverage options and contribution levels with the future in mind.

Image credit: morgueFile.