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Small Business Owners Talk
Posted on 2/4/25 at 5:59 pm
Posted on 2/4/25 at 5:59 pm
Hey Everyone,
I’ve been lurking for a while and have really enjoyed some of the insights shared on this board. I have an idea that it’d be helpful to start a thread specifically for small business owners, where we can discuss different topics over time. I've looked for forums like that online and I haven't discovered any worthwhile.
For reference,I am purchasing a manufacturing business in Louisiana with fewer than 10 hourly employees and under $3M in revenue.
To kick things off, let’s talk about healthcare costs—because, holy shite, it’s expensive.
>Do you offer health insurance for your employees?
>What percentage of premiums do you cover?
>Do you cover just the employee or their family as well?
I was considering offering 70% coverage for all plans, but I just got quotes back, and the numbers are eye-opening.
For a 40-year-old male, the cost ranges for the employer(me) at $4K to $12K per year, and for them $2k-$6k per year depending on whether it’s just them or includes their spouse and kids. In other words thats an equivalent $2-$7/hr benefit.
I’ve been lurking for a while and have really enjoyed some of the insights shared on this board. I have an idea that it’d be helpful to start a thread specifically for small business owners, where we can discuss different topics over time. I've looked for forums like that online and I haven't discovered any worthwhile.
For reference,I am purchasing a manufacturing business in Louisiana with fewer than 10 hourly employees and under $3M in revenue.
To kick things off, let’s talk about healthcare costs—because, holy shite, it’s expensive.
>Do you offer health insurance for your employees?
>What percentage of premiums do you cover?
>Do you cover just the employee or their family as well?
I was considering offering 70% coverage for all plans, but I just got quotes back, and the numbers are eye-opening.
For a 40-year-old male, the cost ranges for the employer(me) at $4K to $12K per year, and for them $2k-$6k per year depending on whether it’s just them or includes their spouse and kids. In other words thats an equivalent $2-$7/hr benefit.
This post was edited on 2/5/25 at 9:06 am
9
Posted on 2/4/25 at 6:14 pm to SoLaSMB
much higher revenue company here, same number of employees
We pay 100% health insurance premium on BCBS 80/20 high deductible plan. It’s expensive. We treat it as compensation equivalent
My advice…lower salaries (or keep stagnant) and pay employee expenses (fuel, phone, auto insurance etc). Expense everything legally that you can and avoid escalating payroll and associated payroll taxes
We pay 100% health insurance premium on BCBS 80/20 high deductible plan. It’s expensive. We treat it as compensation equivalent
My advice…lower salaries (or keep stagnant) and pay employee expenses (fuel, phone, auto insurance etc). Expense everything legally that you can and avoid escalating payroll and associated payroll taxes
Posted on 2/4/25 at 6:34 pm to SoLaSMB
I pay 80/20 employer/employee for the employee. Family is on the employee. I cover 100% of the employee after 10 years. 2/3 of my guys are 10+ years.
I'm half manufacturing half construction, and I know it's not the best deal for the employees, but it's the most I can afford and it's miles better than any of my competitors.
We had a 12% increase this year. Not great, but not as bad as some years where it's been 20%+. We have used Cigna for the past couple of years. Used to have BCBS, but they can eat a bag of dicks.
Our broker is A+++. I'm thankful for them. Super easy to deal with and I feel like they genuinely have my best interests in mind when shopping policies for all of my insurance needs.
I'm half manufacturing half construction, and I know it's not the best deal for the employees, but it's the most I can afford and it's miles better than any of my competitors.
We had a 12% increase this year. Not great, but not as bad as some years where it's been 20%+. We have used Cigna for the past couple of years. Used to have BCBS, but they can eat a bag of dicks.
Our broker is A+++. I'm thankful for them. Super easy to deal with and I feel like they genuinely have my best interests in mind when shopping policies for all of my insurance needs.
Posted on 2/4/25 at 7:17 pm to SoLaSMB
Find a good broker and have them shop some options for you. I work with the Gallagher group out of BR and have been happy with my results.
Our revenues are a bit higher and have a little more than double your employees. I cover 100% of the employees medical, and make them cover their dependents. I also offer dental, vision, STD, LTD, term life, while life, critical illness, hospitalization, and accidental coverages; but of course they have to cover those costs.
When I acquired the company, we already had the full gauntlet of options and covered 75% of the employee premiums. So it wasn’t as big of a shock to the budget
Our revenues are a bit higher and have a little more than double your employees. I cover 100% of the employees medical, and make them cover their dependents. I also offer dental, vision, STD, LTD, term life, while life, critical illness, hospitalization, and accidental coverages; but of course they have to cover those costs.
When I acquired the company, we already had the full gauntlet of options and covered 75% of the employee premiums. So it wasn’t as big of a shock to the budget
Posted on 2/4/25 at 8:48 pm to SoLaSMB
I like the idea of your post, but you may want to change the title since it's going to be a "Small Business - Health Insurance" thread. You can just make the subject "SB - whatever" for future threads.
I have nothing to add. I'm much smaller and on my wife's health insurance, but do run a successful small business so may have something to offer in the future. Kudos to the idea.
I have nothing to add. I'm much smaller and on my wife's health insurance, but do run a successful small business so may have something to offer in the future. Kudos to the idea.
Posted on 2/5/25 at 6:33 am to cgrand
quote:
My advice…lower salaries (or keep stagnant) and pay employee expenses (fuel, phone, auto insurance etc). Expense everything legally that you can and avoid escalating payroll and associated payroll taxes
This is a good idea to start, but I’d look deeper first. He’s in manufacturing so likely low skill and lower wage, so I don’t think it’s the same as I think you are an engineering or construction design business?
In a past career I met with the manager of a restaurant on a military base and they were forced to offer benefits being on a federal installation or they could offer the same amount as pay. The rate was something like $3.12 an hour. 100% of the 30 something employees chose the additional pay. 100%.
My point is that I think when you get into the $25+ an hour range you can start making up ground with ‘benefits’ but below $30 or so most people are going to want that hourly pay rate increase on their paycheck. They’ll want to figure out the rest (usually poorly) for themselves.
Posted on 2/5/25 at 7:35 am to baldona
Another thing that helps is to provide total compensation reports for employees. I'll do it once a year for everyone, or upon request at any time, say when someone comes to me for a raise. My payroll system does it at the press of a button. Shows hourly pay plus the value of all your benefits. It doesn't help the dumbest ones, but you can see it click for the smarter employees.
Posted on 2/5/25 at 8:46 am to SoLaSMB
6 person consulting firm
I cover 80% of employee cost and 50% of dependent cost
I cover 80% of employee cost and 50% of dependent cost
Posted on 2/5/25 at 9:02 am to cgrand
Great data points everyone.
For further reference my hourly workers range from $12-25/hr.
Interesting advice here, I'll be sure to look into this.
For further reference my hourly workers range from $12-25/hr.
quote:
My advice…lower salaries (or keep stagnant) and pay employee expenses (fuel, phone, auto insurance etc). Expense everything legally that you can and avoid escalating payroll and associated payroll taxes
Interesting advice here, I'll be sure to look into this.
Posted on 2/5/25 at 9:04 am to baldona
quote:
My point is that I think when you get into the $25+ an hour range you can start making up ground with ‘benefits’ but below $30 or so most people are going to want that hourly pay rate increase on their paycheck. They’ll want to figure out the rest (usually poorly) for themselves.
This is what I would expect is the case. However there are intangible's with having a healthy workforce.
From all these conversations so far I'm leaning 80-90% for employees and 0-50% for their dependents.
Posted on 2/5/25 at 9:05 am to BottomlandBrew
quote:
My payroll system does it at the press of a button.
What system are you using? Does it show the total compensation and value of benefits on a total basis, per hour basis, or both?
The guy that has asked me in the past is an hourly employee and always wants to know his "full hourly rate" as he calls it (I am sure it's when he's interviewed and is trying to use it to negotiate).
Posted on 2/5/25 at 9:09 am to SoLaSMB
quote:
From all these conversations so far I'm leaning 80-90% for employees and 0-50% for their dependents.
One thing I am working through is "rewarding seniority".
I will use your figures as an example, but I am considering doing something like 80-90% of employees, then 0% for the first year a dependent is on your insurance. If that employee covers the first 2 years, you will then do 25% of the dependent in year 3, 50% in year 5, 75% in year 10...
Posted on 2/5/25 at 9:35 am to Weekend Warrior79
I use Paylocity. It does total, but for hourly guys I'll do a quick calculation for them and write it on there.
I do a sort of profit sharing bonus for everyone, which is unusual in my trade (glass/glazing). The report helps my hourly guys see that, yeah, they get paid $24/hr for example, but with bonuses they are paid $31.25/hr, and then with other benefits they are paid $38/hr. I'm making up numbers, but that's the idea.
It also helps in hiring. A guy will come to me from another company and say they're making $28/hr, but I only pay $24/hr. He'll want me to match or exceed that. I'll ask them what benefits they get or what bonuses they get, and they'll typically say no bonuses and minimal benefits (typical in construction). I'll whip out my stats and explain that my hourly pay is less, but with bonuses they could potentially make a lot more. Some guys get it, and some don't, and I'd rather not have the guys that don't. I want the guys that are going to stretch for a cut of the profit.
I do a sort of profit sharing bonus for everyone, which is unusual in my trade (glass/glazing). The report helps my hourly guys see that, yeah, they get paid $24/hr for example, but with bonuses they are paid $31.25/hr, and then with other benefits they are paid $38/hr. I'm making up numbers, but that's the idea.
It also helps in hiring. A guy will come to me from another company and say they're making $28/hr, but I only pay $24/hr. He'll want me to match or exceed that. I'll ask them what benefits they get or what bonuses they get, and they'll typically say no bonuses and minimal benefits (typical in construction). I'll whip out my stats and explain that my hourly pay is less, but with bonuses they could potentially make a lot more. Some guys get it, and some don't, and I'd rather not have the guys that don't. I want the guys that are going to stretch for a cut of the profit.
Posted on 2/5/25 at 9:43 am to BottomlandBrew
quote:
I use Paylocity. It does total, but for hourly guys I'll do a quick calculation for them and write it on there.
Big fan of this idea. Currently the company uses Gusto which I'm looking to continue.I'm not sure if they offer a benefit calculator. Perhaps I'll check out Paylocity later this year.
This post was edited on 2/5/25 at 9:51 am
Posted on 2/5/25 at 10:05 am to BottomlandBrew
i help manage a small manufacturer rep company (20 employees) and we off 75/25 for employees and 50/50 on family. these costs have truly gotten out of control. Yes, as stated before, a broker is the best way to go. Find someone you trust and get into bed with them.
we have also offered, and the employees pay for Colonial (supplemental) insurance. this is the employee's way of managing ever increasing premiums and deductibles.
I love this. May even expand it to include supplemental insurance if the employee reaches a certain tenure. Will bring this up at our next management meeting. Keeping good people is always a challenge, and this can be a help.
we have also offered, and the employees pay for Colonial (supplemental) insurance. this is the employee's way of managing ever increasing premiums and deductibles.
quote:
I cover 100% of the employee after 10 years. 2/3 of my guys are 10+ years.
I love this. May even expand it to include supplemental insurance if the employee reaches a certain tenure. Will bring this up at our next management meeting. Keeping good people is always a challenge, and this can be a help.
Posted on 2/5/25 at 10:09 am to BottomlandBrew
We use workplace solutions, so I will see if they have a similar feature.
For your profit sharing, do you base the share as a percentage of total compensation, total wages, hours worked, some other factor? I think I am 1-2 years from getting to this point, but it is something that I really want to incorporate.
Bought the company in 2024, plan #1 was to increase benefits (done and looking to build on that). Plan for 2025 will be to establish parameters for annual raises, also want to consider basic COLA adjustments.
For 2026 or 2027, I want to get into semi-annual profit sharing, this gives them some bonus money when we are about 1/2 way through our busiest part of the year, and right before we start getting slammed, then another nice chunk before Christmas.
For your profit sharing, do you base the share as a percentage of total compensation, total wages, hours worked, some other factor? I think I am 1-2 years from getting to this point, but it is something that I really want to incorporate.
Bought the company in 2024, plan #1 was to increase benefits (done and looking to build on that). Plan for 2025 will be to establish parameters for annual raises, also want to consider basic COLA adjustments.
For 2026 or 2027, I want to get into semi-annual profit sharing, this gives them some bonus money when we are about 1/2 way through our busiest part of the year, and right before we start getting slammed, then another nice chunk before Christmas.
Posted on 2/5/25 at 10:15 am to Weekend Warrior79
quote:
For your profit sharing, do you base the share as a percentage of total compensation, total wages, hours worked, some other factor?
the company I work for has an owner that is incredibly open with numbers. almost too much so. having said that, we have told employees that we will use 10% of NP split evenly between all employees. managers, sales, A/P(R), yard guys. It is not a massive check, but it is something.
Sales and management have their own separate bonus structurer for reaching certain GP goals set forth at the beginning of the year. we track 11/1 - 10/31, so we can cut checks before Christmas.
Posted on 2/5/25 at 10:42 am to SoLaSMB
we pay our employees portion and they are responsible for their dependents or spouses
Posted on 2/5/25 at 11:57 am to Weekend Warrior79
quote:
When I acquired the company
It's cool to see several acquirers here.I've been looking into ETA(entrepreneurship through acquisition) for several years now. Very excited to be in the seat. For further reference, I'm doing a 10% down, 20% sellers note over 10 years, 70% sba7a loan for 10 years.
My plan for profit sharing is to keep it the same as the current owners for a post busy season bonus of 1-2k and a Christmas bonus of 3-5k per employee depending on profitability. All bonus's being equal to the team.
I don't currently have managers but when I do, would likely up their bonus to 10-20% more.
This post was edited on 2/5/25 at 11:59 am
Posted on 2/5/25 at 12:26 pm to Weekend Warrior79
quote:consider a SEP. we do 25% of salary once a year
For 2026 or 2027, I want to get into semi-annual profit sharing
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