Business Information for Entrepreneurs by an Entrepreneur

In another recent post, we talked about the cost of hiring employees. However, some of those costs can be given back to your small business in the form of government grants.

The new healthcare bill that was recently signed into law in 2010 by President Obama contains provisions that provide money to small businesses that promote and operate wellness and prevention programs for their employees. About $200 million in grants will be given out over five years, starting in 2011. These grants will be earmarked for small businesses with 100 or fewer employees and will be administered by the US Health and Human Services Department.

How can your business benefit from these grants? First, you must start a new wellness program. Grants are only available to those small businesses who launch new health improvement initiatives after March 23, 2010.

There are plenty of options for promoting a healthy lifestyle to your employees. You could offer to host classes on nutrition, stress management, or even smoking cessation. How about physical fitness? Encourage your employees to get fit with a morning round of jogging or perhaps aerobics at the nearby health club. You could even start an on-site exercise program if your space allows.

Promoting a healthy lifestyle should be a given, but the financial incentives in the form of grants are enticing. Even in addition to being eligible for wellness and prevention grants in 2011, starting in 2014, small business employers may have additional incentives. Beginning in 2014, the healthcare law will allow employers to offer reward payments to their employees who participate in wellness and prevention programs. Up to 30% of the cost of health insurance could be awarded back to employees who meet certain benchmarks through their health incentive programs. For instance, a person who stops smoking or who has lost a target weight could be eligible for this reward.

Though grants will begin until 2011, it is not too late to get started now. Grants will be administered by the Health and Human Services Department. Like any government grant, there will likely be many eligibility requirements. Check what requirements will fit your business needs and get started today in order to be eligible when the grant money is ready to be doled out next year.

Are you ready to expand your small business and start hiring employees to help your business grow? Be ready for the expense shock. The new employee you just agreed to pay $15 per hour will probably cost you about $21.

That's right! Employees are a big investment for any business. It may seem like small change to pay someone $10 or $12 bucks an hour to help you cook your baked goods or assemble your products, but the hidden costs may add up to about 40% above the hourly rate. This extra cost can creep up and surprise many small business owners.

The Cost of Taxes

What are the extra costs? First is the given - employment taxes. Federal IRS code requires that all employees pay 12.4 percent of the first $106,800 as Social Security taxes. Medicare taxes are another 2.9 percent. These are usually split 50/50 between employer and employee. In addition, employers also must pay a 6.2 percent unemployment tax from the first $7,000 in wages.

State taxes vary, but they will add a little more to your employee cost as well. You might find that your state has an unemployment tax in addition to the federal. If your state has an income tax, be prepared to pay a portion of those as well. And don't forget all those little taxes in your city for school district, sewer improvements, etc.

Benefit Expenses

If you hire full-time employees, you may want to consider providing insurance benefits. Employers usually choose to pay from one-half to all of the insurance premiums for health, life, dental, and disability. Research these costs to find out how much it will affect your employee investment.

While taxes and benefits make up the bulk of extra employee costs, don't overlook the small "perks." Little things like paid vacation, free coffee in the break room and donuts every Friday add up too.

The actual costs of hiring an employee are much more than just the hourly wage you set. If you believe you are ready for employees, be sure your business and marketing plans include the extra sales you will need in order to afford employees. In addition, be prepared to keep accurate payroll and tax withholding records for your tax liabilities.

There is a race that every small business owner must run - the 5 year anniversary. Less than 50% of all new small businesses ever make it to their 5th anniversary, and only about 31% make it to their seventh year. So how can a small business owner who is just trying to make the longevity cut make it to a million dollars in sales?

Small business owners have many obstacles after opening a new company. To increase revenues, a business must make more sales. That means hiring more employees, increasing market exposure, and delivering goods while experiencing growth pains. However, a savvy entrepreneur and small business owner can make the 5-year cut and even earn that $1 million sales barrier. Here are a few tips:

Break It Down

First, don't think of earning $1 million in annual sales. Find out what you must earn monthly, weekly, and even daily to reach your goal. That means an income of $83,333 per month, or $19,231 per week, or even just $3,846 per business day. It can be an easier task when you break your income goals into smaller chunks.

Expand By Buying Another Business

How often have you seen the largest corporations make it without acquiring other competitors? You can expand your own sales with another business purchase. Look through the business ads or ask around your network of contacts. Locate a business that is similar to yours. Whether the owners are retiring or simply cannot handle the pressures of small business ownership, your acquisition could mean an exponential jump in your sales.

Break Out of Local Sales

Your small business will likely never reach $1 million in sales in your local neighborhood. You must think nationally or even globally. Build a website to sell online. Consider promoting your business products or services to other countries.

Make Every Customer Happy

How does a viral video on YouTube get 1 million views? Not due to the video owner's efforts, but through word of mouth. You must depend on your customers to spread the good word about your business. Be sure you over-deliver and exceed expectations with your customers. They will repay you the best compliment by recommending your business to others.