If you are planning to expand your business from a one man company, to a multi-person organization, you will likely need to start thinking about employee benefits and how you might be spreading the best packages across your employees and staff. As much as I love the concept of being a sole-entrepreneur, if you want to grow and scale your business in size, this is just another process that is required to have in place.
Wondering if you should go the extra mile for your employees?
79% of employees would choose a benefits package over a salary increase. But a small business may have as much to lose as it has to gain by offering a benefits package.
Below, we’re taking a look at the pros and cons of offering a small business benefits package to employees.
Pro: Attracting Quality Employees
The most obvious advantage of offering employee benefits lies in the quality of candidates it helps attract.
A flat salary actually has limited use to the modern worker. It may help pay for basic living costs, but it leaves many of the big stresses of life up in the air. A single look at life insurance quotes will be enough to show you what your employees are up against when they’re trying to cover everything with only a salary.
Add the medley of other life expenses, and it’s clear to see why employees are getting pickier about who they work for. By offering a benefits package, you can attract employees who are more serious and selective about their careers.
Pro: Giving Something Back
“But I already pay a salary!” we hear you cry.
Think of it this way: is a salary enough compensation for the many long hours of their life an employee spends at your company? After all, we only live once. A salary represents the minimum possible compensation for the raw labor an employee provides.
In truth, most employees provide a lot more than that.
Offering benefits can give something back to the people who spend that time bringing success to your company. It also shows them that you value them as individuals with personal lives and circumstances.
Pro: Driving Motivation and Retention
Extra incentives are a great tool to add that extra spark of motivation. Employees with access to benefits feel they’re there for more than the “daily grind”. Not only are they less stressed, but they’re also more positive about the company they work for.
Over time, that means more productivity and less attrition through employees moving on to better opportunities.
One of the benefits of offering company health benefits to employees should be clear: fewer sick days. Your staff might take more days off for smaller problems, but the upshot is that those smaller problems won’t progress into more serious conditions.
Pro: Creating Brand Ambassadors
Even for megacorps that have achieved the status of a household name, marketing makes up a huge percentage of their business spend. For small businesses, it can bleed them dry.
So, the value of free marketing is clear. But free promotion doesn’t begin and end with social media. Have you considered the value your employees have as brand ambassadors?
People expect employees to be a little cynical about the company they work for. It’s a real achievement to turn that cynicism into positivity. A benefits package could lead to your employees singing the praises of your company.
Positive word-of-mouth about your company then starts with your employees – and ripples out through their social circles and online presence.
Con: The Visible Cost
The additional cost of offering benefits isn’t always welcome for a small business.
On top of that, a small business also won’t have a lot of buying power to negotiate cheaper rates. For a small business, benefits might turn out to be a luxury you can’t afford.
Benefits can also obscure your cash flow. The price of insurance can fluctuate over time. Any benefits you offer based on reimbursement are unpredictable.
It’s vital for a small business to control its cash flow. Providing benefits is often undesirable for small businesses, as it introduces uncertainty.
Con: The Hidden Cost
The full cost of offering benefits isn’t obvious at first glance. We’ve outlined the obvious costs, but what about the hidden costs of a benefits package?
Offering benefits sucks up a wealth of administration time. You might even need new hires capable of delivering the details of your benefits scheme. That heaps extra costs on top of the obvious cost of offering benefits.
As you offer more benefits, your administrative time increases. For a small company, those costs can run out of control. This isn’t an option for some small businesses that struggle to control their cash flow.
Con: Legal Pitfalls
When you enter the insurance game, you’re also entering a legal minefield.
Making a misstep along the way could leave you subject to legal action. That could be a deathblow for a business operating on thin margins.
Legal action against your company will soak up time and money. It’ll also drag your reputation through the dirt, making it harder to attract quality employees in the future. It could even damage your brand.
You could take extra care to make sure this doesn’t happen, but that’s yet another expense on top of the cost of providing benefits.
Con: Finding the Benchmark
Information is one of the most powerful weapons you can have against your competition. But it can be hard to figure out what sort of benefits package your competition has on offer.
In contrast to offering a flat salary, that makes it tough to decide where your benefits package should stop. You’ll need to put some serious work into finding out what candidates in your industry are searching for.
If you lowball your benefits package, the accompanying reduction in salary will drive candidates away. Overextend, and you risk bankrupting your business. You need to find the balance that keeps you competitive.
The Small Business Benefits Package: Yea or Nay?
The exact situation of every business is different, so we can’t tell you whether a small business benefits package is right for you. But we’ve given you enough info that you’re now equipped to decide whether it’s the way to go for your business.
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