By Mark Smiciklas

Employee benefits are an important topic for many small business owners and managers. In the first installment of an ongoing series, I speak with benefits specialist Rachel von Sturmer, Principal at True Benefits Financial, about employee benefits best practices, trends and challenges.

Challenges

What are some of the challenges small businesses face when it comes to providing benefits to their employees?

“The most common challenges are in setting up the plan, cost, and administration. It’s best to work with a broker who can provide a comparison of quotes from several insurers; that way a small business owner can see where they can get the best plan possible for their budget.

Employers also have questions about what their obligations are after their plan has been set up. I’d recommend using the online management portals now provided by most carriers. This will help save time in managing the monthly invoices, downloading forms, and updating employee enrollment information.

Benefit plans renew each year, at which time the insurer has the opportunity to adjust their rates. This can be a challenge for employers if the plan utilization has been very high, and rates are raised. It’s their advisor’s job to negotiate rates on their behalf, and also to design the plan in a way that will help prevent large rate increases.”

Strategies

What are some benefit strategies small businesses can use to compete with larger companies?

“Small businesses don’t always have the deep pockets that large companies do, but they are often able to be more flexible and offer employees a greater variety of hands-on experience.

Some suggestions for becoming more attractive to employees:

• Offer flexible work hours, such as 9-5/10-6, or a 4 day X 10 schedule
• Covering a portion of work related education
• A good benefits plan, which is often more affordable than expected
• Health Spending Accounts that allow employees to cover medical and dental expenses at their discretion”

Trends

What are some new trends within the benefit industry?

“Critical Illness insurance, where if an employee is diagnosed with a covered condition they receive a tax-free lump sum benefit. This is newly available as a group benefit and many small employers are able to offer $10,000 or more at a very reasonable rate.

Health Spending Accounts are becoming incredibly popular, especially as a management benefit or recruiting tool. This benefit is like a bank account for medical and dental expenses for employees. For example, an employer may offer $1,000 a year for each employee to use at their discretion.

Health and wellness has become a major focus also. Insurers have built some very sophisticated online tools for employees. They can perform a health test, or check medication information at a secure personal site.

Employee Assistance Plans (EAPs) are often bundled into benefits plans, and are great for small employers who don’t have a dedicated HR department. EAPs provide confidential 24 hour access for employees who need help with everything from financial counseling to finding a babysitter.“

Selecting a Benefits Provider

What should small business owners look for in a benefit provider? Are there any pitfalls to watch out for?

“Most employers are very interested in the initial rates that they’re quoted and will want to make a decision based on the cost. This is only one aspect of choosing an insurance carrier. I’d be wary of switching carriers only to save 5%, when it’s likely that this cost will be recouped by the insurer at the next renewal.

Business owners should be comfortable that the insurer is reputable, can adjudicate claims quickly, and offer solid administration.

Small business owners should be aware of the Target Loss Ratio. TLR is the break-even point set by the insurer for your plan, and at your renewal time they will be important in determining next year’s rates. The TLR is a ratio of premiums paid to claims paid, and for a small plan different insurers’ TLRs can range from approximately 67-75%.

Also important to look at is the plan design. Although the general description of coverage may look the same from one plan to the next, each insurer has specific clauses that will impact what can be claimed. For example, some carriers will require a minimum of five employees before they offer coverage for dental crowns. Be very clear with your advisor about what you want to cover before setting up your plan, or switching carriers!”

Advisor Services and Fees

How are benefits brokers compensated?

“There are two models: fee-based and commission-based. The majority of advisors are commission-based, in which they’re paid a small percentage of premiums by the insurer; this cost is built into a client’s costs. Fee-based advisors are usually consulting firms that deal with larger client accounts.”

What services should you expect from your benefits advisor?

“Your small business should expect the following primary services:

• Marketing your plan to a variety of carriers and comparing the quotes for you
• Assisting with setting up the plan and online administration
• Negotiating the plan’s renewal rates on your behalf each year, and presenting a report 30 days before the renewal date

Some “above and beyond” services to look for are:

• Training your plan administrator
• Offering assistance with any difficulties that may arise during the year
• Being in touch to let you know how the plan is running
• Setting up employee satisfaction surveys
• Benchmarking your plan against competitors’
• Providing customized benefits promotion materials
• Employee seminars and learning sessions”

About Rachel von Sturmer

Rachel von Sturmer is the Principal at True Benefits, an employee and executive benefits firm that specializes in designing, pricing and implementing benefits programs for small to mid-sized businesses. During her many years as a Benefits Specialist, Rachel von Sturmer has managed plans for a wide variety of clients, ranging from sole proprietors to large companies and university associations. Rachel takes pride in getting the details right, forming relationships with clients and learning about their businesses, and thrives on providing clients with the kind of service she herself would expect: friendly, prompt, and results oriented.

Rachel holds the Certified Financial Planner (CFP) and Group Benefits Associate (GBA) designations, has completed the Canadian Securities and Professional Financial Planning courses through the Canadian Securities Institute, and has a Bachelor’s Degree from the University of British Columbia.

By Mark Smiciklas

Global Edge defines a strategic alliance as a “collaborative agreement between two companies designed to achieve some strategic goal.” Traditionally, strategic alliances take place between larger companies and encompass formal arrangements such as “international licensing agreements, management contracts, and joint ventures” – but more and more small businesses are banding together in less formal ways to form strategic partnerships of their own. What are some of the benefits of forming small business strategic alliances? As a small business owner, how can you reach out to start conversations with potential allies and what should you look for in a strategic partner?

Sharing Resources

Strategic alliances offer an opportunity to pool and share resources. Many small businesses have to operate within a limited capital resource framework – both from an economic and intellectual point of view.  Shortages of cash and certain types of skills make it difficult to build your small business.

“Strategic alliances are extremely useful to small business owners – Many times small business owners have limited resources, one of these is man power; another is money,” says Ross Karp, Chapter President and Founder of My Networking Group Inc. in New York City. “By forming a strategic alliance you have partners to bounce ideas off of to help go after the clients that you are marketing to. Karp goes on to say that strategic alliances help small businesses develop or gain access to different skill sets. “We all have different skill sets that can compliment each other. By working to our strengths and having help with our weaknesses we are maximizing our time and energies.”

Eric King, VP Business Services at Delta Community Credit Union in Atlanta, Georgia, also feels that the right type of strategic alliance can benefit a small business. “Strategic alliances can be highly beneficial – particularly if the partnerships are based on complimentary core competencies and cultures. The concept of cost sharing, especially in start up mode, can be a great balance sheet management tool.”

Expanded Service Offering

Small businesses can also use strategic alliances expand their service offering. Establishing strategic alliances with (like minded) vendors that share the same target market and provide products/services that compliment your brand can help your small business prosper. In the case of my small business, I have used strategic partnerships to offer clients access to a wide variety of marketing related service providers – becoming a conduit to “best of breed” talent for my clients has helped my small business develop a compelling value proposition.

More Benefits

In addition to sharing resources and expanded services, strategic alliances present small business with a number of other benefits. “Businesses that are close geographically (and share a target market) can combine resources to double their advertising efforts,” says Hilary Hamblin, an Independent Marketing and Advertising Professional in Florence, Alabama. “They can share database information and mail information to two or more mailing lists instead of one. Businesses can refer clients to other businesses in the alliance and even get discounts for bulk purchases on certain products.” Guy Timberlake, Chief Visionary and CEO for The American Small Business Coalition (The ASBC) in Washington, D.C., adds “gaining access to competitive intelligence” and access to prospective customers as two more possible benefits associated with forming small business strategic alliances.

Marci Tomascak, an Independent Public Relations and Communications Professional in New York City, shares a story that highlights another benefit – the opportunity to engage in co-marketing programs. “I went into a well known bridal shop to pick up a catalogue for researching purposes. While I was there the “greeters” at the front of the store talked with me for a bit and we got chummy. Before I left the store, catalogue in hand, they had also given me an intuition razor. THAT was a great alliance where there is no competition. Not only does the bridal store have a great give away for prospective brides and bridal parties but the razor company gets new people to try out their product.”

How to Get Started

How do you start the process of creating strategic alliances? In my experience, the best way to reach out to potential strategic partners is to start networking. I like to research other small business in my immediate market area and try to find products or services that compliment my brand and provide solutions for my clients. As a next step, I usually send an email introduction outlining how our small businesses might benefit from working together. What really works for me is a casual meeting over a coffee – I find meeting people face to face in a non-business setting is a great way to quickly find out whether or not you can envision working together.

Ross Karp agrees that forming alliances through networking works best. He also feels it’s important to understand your own target market and to establish what services (offered by potential allies) compliment your product/service offering. “For example, a real estate broker could team up with a mortgage broker, an attorney, insurance planners, etc.” says Karp.

Things to Consider Prior to Forming an Alliance

An important component of any business arrangement, be it formal or casual, is the performance of due diligence. “Like the level of effort required to effectively and efficiently pursue new business, the same research and scrutiny should be leveraged when seeking to develop partnerships,” says Guy Timberlake of The ASBC. “Simply put, consider the business case for developing and utilizing such a relationship.”

Eric King also suggests looking to see “how the partnership impacts the aggregate market share. Is there overlap in target markets? Is the overlap mutually beneficial? Does one part of the alliance stand to benefit more than the other?”

Contributor Links:

The American Small Business Coalition

Momentum Consulting

By Mark Smiciklas

Organizing an educational event such as a seminar or conference is a great way to get out of the office and network with prospective clients and promote your small business within your community. However, a traditional event marketing format presents some challenges to small business owners, including the costs of putting on an event, creating buzz (”Not another breakfast speaker series”), being able to offer attendees value, etc. So how can your small business take advantage of the benefits of educational event marketing while minimizing some of the risks and pressures associated with putting on a successful seminar or conference?

Two of the main challenges associated with event marketing include presenting an interesting topic/speaker and creating a format that holds the attention of attendees. To attract prospects to an educational seminar or conference and, more importantly, to make the experience memorable, your small business will need to present a format that offers the following:

• Variety – different presenters (with different styles) make the seminar experience more interesting and adds value
• Engagement – having attendees become part of the process is a great way to create a memorable experience
• Value – What’s in it for your prospects? Will it be worth their time? Will they be able to learn something that can help them solve a problem?

A New Seminar Format

Instead of following a standard seminar blueprint i.e. one speaker talking “to” the audience, try mixing it up to create excitement and a lasting impression. Paul McMahon, a friend and colleague, introduced me to an excellent event marketing concept that could work for any small business. His one-day “roadshow” format blends an educational seminar with a mini trade show, creating a informative and engaging event for attendees.

To illustrate how this new format might look in practice, I did some research and mocked up a 1/2 day event itinerary that could be used for my small business, Intersection Consulting:

• 8:30am – Complimentary Continental Breakfast
• 9:00am – How to use online marketing to grow your small business (Mark Smiciklas, Small Business Marketing Consultant)
• 9:30am – What is search engine optimization and how does it work? (Jordan Smith, Web Developer and Designer)
• 10:00am – Employee benefit options for small business (Rachel Jones, Small Business Benefits Consultant)
• 10:30am – Coffee Break
• 10:45am – Ask the Expert (Our presenters will be available to help address some of your small business challenges – feel free to drop by their table to ask questions or find out more about their services)
• 11:30am – Closing Remarks

Enlisting 2 strategic partners (offering services/products that compliment your target market) will help you minimize costs while facilitating diversity of content. By investing your time and providing a computer/projector for event presentations, the approximate marketing cost, based on 30 attendees, would be less than $300.00 per company. I know my target market would pay $30.00 each to attend this type of educational event, would yours?

This is just one example of a new way to approach event marketing. Check out Seth’s blog for another great conference idea. Start mixing it up to create something different for all the people attending your events – it will help your small business create a lasting impression.

Other Event Marketing Tips

1. Make your event inexpensive to attend in order to maximize interest. The goal should be to try to cover your costs – look at this type of event marketing as an investment/networking opportunity and a chance to position your small business as a thought leader.
2. Select a small venue for your first event. Limited seating will help you sell out and create scarcity, assisting in the development of a good marketing message – “Only 30 spots available – this event will sell out fast!”.
3. Start promoting 6-8 weeks before the event date – soon enough for prospects to know their schedules and far enough out to minimize possible conflicts.
4. Send clear directions and email a Google Map link so attendees know exactly where the event is taking place.
5. Confirm registrations and send email reminders 2 weeks, 1 week and the night before the event.
6. Follow up with attendees after the event. If possible email an online survey to gain feedback on the speakers and topics and garner suggestions on how to improve future events.

Event marketing is an excellent way to raise the profile of your brand. Embracing new ways to put on educational seminars and conferences can help your small business create sales leads, develop a reputation as a leader in your field, build relationships with prospects and fuel new strategic alliances.