Small businesses are trying hard to keep themselves afloat these days. They have to juggle things in their budgeting in order to maximise revenue and minimise overheads.

Small business owners react naturally toward recession: cost-cutting on areas that are not perceived essential for survival. Two of the most severely cut are in small business budgeting is marketing and employee perks.

The former is a wrong thing to do. The latter is even worse.

Of all cut employee perks, health care cut is a major issue. Here’s why.

Your employees are not robot: They do get sick

We small business owners are always dreaming about super employees – those that are hard working, creative, self-starting and will work for you, even if there is no paid overtime in place. We even dream of running a business with employees that don’t need to be managed.

Well, you better stop dreaming and face the reality, as running a small business always has you dealing with human, and human is, indeed, fragile: Human does get complacent; Human does procrastinate; Human can get stressed easily; Human does get unhealthy.

The last human “perk” I mentioned above – about being sick – Is a top issue in small business today. According to an article from The Wall Street Journal, as health insurance premiums rose 74% for small businesses from 2001 to 2008, about 10% of small businesses are considering eliminating the coverage in 2010, up from 3% in 2005 (based on the recent survey by National Small Business Association.)

Some small business owners even decide to let their employees go to work for companies that offer health benefits, and accept the fact that it is “humane” and logical for their employees to do so.

How to cut your business health care spending without eliminating it altogether

Some small business owners do the logical, but wrong, business decision I mentioned above: They cut health benefits of their employees. This is a strategically and tactically weak business decision making, as you don’t have something that could help you in employees retention. And if your better employees are gone, your business will, too, “gone.”

Here are some advice from the WSJ article I referred above that can help you in your business budgeting without eliminating health insurance:

• Consider cost sharing: Share health care spending with your employees at 50/50 split.
• Increase charges: Increase employee co-payments and deductibles.
• Shop around: Shop around for health insurance provider with better offer – Consider the service of a health insurance broker to help you find one.
• Manage Your Prescription Drug Plan: Encourage your employees to generic versions of prescribed drugs.
• Consider wellness plan: Encourage your employees to live healthy through healthy eating and execrising – This will, eventually, bring you healthier workforce, thus reducing medical bills.

Ivan Widjaya
Managing health care benefits
Image by aflcio2008.

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