Ohio Job Growth, Outsourcing, and Health Costs


Many small business paying for health insurance coverage for their employees have seen an increase in their premiums year after year, and they expect 2016 will not be any different. And although paying for health insurance coverage for their employees is an expense that keeps increasing, the alternative is not something they are considering doing.  To retain or attract top workers for their companies, the incentives they offer are as important as the salaries they promise.

For more about this and other news follow the links below.

Should your small business outsource IT?

Depends on how small a business it is.

To outsource or not to outsource, that is the question many small businesses struggle with.

For certain support tasks, like payroll, outsourcing is universally considered the small business protein shake: without it there’s no way to compete with the big guys. But for other business functions, outsourcing is more like the candy bar: it’s tasty at first, but in the end, there’s little real benefit.

IT was once considered a no-brainer for small business to outsource. After all, good IT is expensive and hard to find. Why further stress a fragile revenue stream with another salary?

But in more recent years, IT evolved from a purely supportive department to an integrated revenue driver. For companies who rely on their IT for innovation, outsourcing IT is not a no-brainer; it’s unthinkable.

So what is right for small business: outsourced IT or an internal department? Let’s examine what they need to consider.

Small business health costs: Up this year and next?

The vast majority of small businesses are paying more for health insurance for their employees under the health care law, and many expect their costs to keep going up next year, according to a survey by the advocacy group National Small Business Association.

Ninety percent of the 810 owners surveyed said their costs are up in 2015 over last year, and 84 percent expect to pay more in 2016.

The number of companies that offer health benefits to their employees fell 5 percent to 65 percent this year from 2014, the survey found. The largest decline came in companies with 10 to 20 staffers; 73 percent are offering benefits versus 86 percent last year.

But nearly half the owners provide health insurance to more than 80 percent of their workers. Almost all the owners — 94 percent — believe offering health insurance is important to recruit or retain top workers.

Local entrepreneurs report growth, job gains

COLUMBUS — The Columbus chapter of the Entrepreneurs’ Organization’s annual EO Global Entrepreneur Indicator shows overall growth and opportunity in central Ohio.

The indicator is intended to reflect top Columbus entrepreneurs’ economic experience during the past six months and their outlook for the coming six months.

Seventy-five percent of those involved in the Columbus survey say employment rose in the past six months; the numbers were 70 percent in Cleveland, 56.8 percent in Cincinnati and 58.3 percent globally.

However, only 60.7 percent of those surveyed locally expect an increase in hiring over the coming six months. That’s in contrast to 80 percent in Cleveland, 67.6 percent in Cincinnati and 62.8 percent globally.

Those surveyed in Columbus reported strong profit and revenue numbers both in the past six months and in their outlook for the coming months, besting the percentages of the other Ohio cities’ entrepreneurs in most cases.

Learning to “Do the Math” May Save Your Business

business (5)Remember when you were in high school and complaining about math class?  What was it you said, “I’ll never need this stuff in the real world?”  Well, now that you’re the owner of a small business, depending on your product or service, when it comes to geometry you still might be right.  But, when it comes to other types of math, and the need for them, you were mistaken.

Being able to “do the math” matters.  So much so, that it can be the difference between having a successful or unsuccessful company.  The stories of seemly successful businesses — ones with good products or services, clients and a well known brand — closing because of bad financial management are legion.

One of the biggest mistakes 90% of owners make is not knowing or understanding the importance of their numbers.  They don’t know if or which of their customers generate a profit, nor do they know how much a profit it is.  They don’t understand a fundamental concept — if you don’t have a profit margin, you can’t sustain a business.

The margin is simply how much out of every dollar a business earns it actually gets to keep.  For example: $1.00 (earned) minus $.90 (expenses) equals $.10 (profit).  The profit margin is 10%.  Many owners keep investing money, not understanding this straightforward tenet, hoping to “get the company on its feet”.  However, there’s no reasonable, mathematical way for that to happen if there’s no profit (margins can be either positive or negative). 

Owners should always know their margins, if they’re positive or negative at the very least, because the volume of a business doesn’t give an accurate picture of its financial health.  A company with $5 million in revenue can actually be losing money if it has a negative margin.  Let’s do the math for the fictional ABC Company.

In 2012 ABC had a net income (money they got to keep) of $500,000 from sales of $5 million, which gave it a profit margin of 10% ($500,000 divided by $5 million).  In 2013 they got a new customer, which increased costs.  But, because they ball parked the bid instead of doing the math, they made $500,000 again, only it was on sales of $5.5 million, resulting in a 9% margin. 

In 2014 the client offered ABC more business, which they took once more without running the numbers.  Again, expenses increased resulting in the same net income of $500,000 on $6 million, about an 8% profit.  So while the company increased its volume by a million dollars over 2 years, it actually reduced its returns.  Some businesses become so upside down they can’t get out of the hole they’ve dug, because selling more puts them further in the red.

Unfortunately, thousands of businesses have closed due to this phenomenon — even though they had customers and money coming in their margins weren’t good enough to sustain them.  The math is irrefutable, your product or service can’t cost more to produce than what you’re charging for it, and the only way to know that is to figure it out.

Minority Owned Businesses and Gov. Kasich’s Budget

54642287Minority owned businesses have increased over recent years, and the US government knows the important growth these businesses provide to their local economies, and the nation’s economy  overall.  The increased in minority owned businesses have more than double compared to those of non-minorities nationally, and the City of Cincinnati, Ohio is now looking into promoting the inclusion of minority owned businesses for the State.  To read more about this and other topics follow the links below.

Ohio House Markedly Improves On Gov. Kasich’s Budget Plan

Last week, Ohio House leadership introduced a substitute bill to Governor Kasich’s proposed budget that would make many notable improvements to the tax plan. This is good news, because the proposed tax plan that came from the Kasich administration was deeply in conflict with itself.

The central element of the governor’s proposal was to reduce the individual income tax, which Kasich argues has “sucked the vitality out of this state.” The internal conflict, however, came from the revenue offsets the governor chose, which would have placed greater hindrances on, well, economic vitality. When first details emerged, I wrote on Forbes that the governor’s plan may be a tax cut overall, but that doesn’t make it good policy.

The governor’s proposed hikes included an increase in the state’s unique Commercial Activity Tax (arguably the most distortive tax in Ohio’s code), a hike to cigarette taxes, new taxes on electronic vapor cigarettes, hikes in the severance tax, and a hike to the sales tax. When done correctly, tax swaps can reduce highly harmful taxes while offsetting revenue losses by leaning on less distortive taxes. The Kasich proposal, by contrast, leaned on economically distortive, nontransparent taxes to make the ledger balance.

Here’s how Cincinnati is pushing for minority-business inclusion (Video)

Sorry, small business: Middle-market companies create most net new jobs

Companies with revenue between $10 million and $1 billion created 2.1 million out of the net 2.3 million new jobs added over the past seven years, according to an American Express/Dun & Bradstreet analysis.

Maybe it’s time for politicians to drop their rhetoric about small businesses creating most of America’s new jobs — since 2008, it’s actually been middle-market companies that have driven job growth.

That’s according to a new analysis from American Express and Dun & Bradstreet. It found that middle-market companies — businesses with revenue between $10 million and $1 billion — created 2.1 million of the 2.3 million net new jobs added over the past seven years.

Middle-market companies “have been the unsung heroes of employment growth,” said Susan Sobbott, president of global corporate payments for American Express.

The State of the Small Business in the U.S

business (5)We are past the point of expressing as a nation, any shock to the news that the United States is trailing behind other developed nations in terms of education. But, when one starts talking about business, we believed that we are a nation to be emulated and look up to what other developed nations should be doing, or trying to achieve.  It is with trepidation to find out that the United States now ranks 12th – Yes, you have read it correctly – among developed nations concerning business start up activity.  So, what is the government doing to fix this? Can they fix it? Or better yet, do they want to do anything about it? Follow the links below for more information about this and other topics.

Is the estate tax killing small farms and businesses?

“Here in South Dakota, we are land rich and cash poor, leaving roughly one-third of South Dakota farms vulnerable to the death tax, based on cropland values provided by the U.S. Department of Agriculture. The death tax imposes a tax rate as high as 40 percent on family farms, ranches and small businesses, which hurts economic growth by discouraging savings and development.”

–Sen. John Thune (R-S.D.), opinion article in the Rapid City Journal, April 13, 2015

“This tax doesn’t just hit the big guy. It hits the little guy—like the small business and the family farm. It is both unwise and unfair, and it needs to go.”

–Rep. Paul Ryan (R-Wis.), hearing at the House Ways & Means Committee, March 25, 2015

“I believe that the estate tax is politically misguided, morally unjustified and downright un-American. It undermines the life work and the life savings of farmers and small- and medium-sized businesses in Georgia and across the nation.”

Small business tax concerns with SHOP

Initially created with the goal of helping small businesses comply with the requirements of the Patient Protection and Affordable Care Act (PPACA), the Small Business Health Options Program (SHOP) has not been meeting expectations.

According to Don Donner, CEO and president of the National Federation of Independent Business (NFIB), “Almost no one is using the SHOP exchange, according to the government’s own enrollment data, and to the extent that there are subsidies available in the form of tax credits, they are complicated, temporary, and too small to offset the costs.”

A February 26, 2015, letter from Steve Chabot (R-Ohio), chair of the U.S. House of Representatives Committee on Small Business, to Sylvia Burwell, secretary of the U.S. Department of Health and Human Services, highlights these concerns, with a focus on problems associated with incorrect SHOP tax forms that were recently sent out by HHS.

Policy Points: How Tax Inversions Hurt Smaller Businesses

Everyone’s “favorite” day of the year is less than 24 hours away – Tax Day. And the big question is: Have you filed your return yet? (If you haven’t, stop reading this and go take care of that. This will still be here when you’re done.)

By now, most people have (hopefully, anyway) sent in their returns. Some have probably gotten a pretty decent refund; others might be a little disappointed at their bill.

One thing you can always count on come April 15 is some griping about how much Americans pay in taxes. Nobody likes paying them, after all. But as Oliver Wendell Holmes once wrote, “Taxes are the price we pay for a civilized society.” Everything people rely on the government for, from public safety to infrastructure, health care and education, is paid for with your tax dollars.

It’s easy for this to get lost in the mix – especially when you find out you owe more than you thought you would – but paying taxes is one of the most important things Americans do for their country. Name a program that matters to you, and your tax dollars — and those paid by businesses — help make it possible. What makes it work is that everyone recognizes the burden is not only on them: Everyone has taxes to pay, and everyone has to chip in for the services we all rely on.

Small Business News

59948705At the beginning of starting a new venture, an entrepreneur or small business owner forgoes many of the financially crippling costs of starting the new business, sometimes with disastrous consequences. Hiring an accountant or a small business coach may seem financially impossible in the beginning, but as you travel the business road ahead you realize how important having the right people helping you is for your business.

Follow more business news below.

Ohio repeats as No. 2 in ‘Site Selection’ rankings 

Ohio came in second in the country in Site Selection magazine’s annual economic-development rankings. Ohio cities big and small also fared well in the rankings released yesterday.

Site Selection magazine Governor’s Cup Competition issues rankings based on economic-development projects per capita and total projects.

Ohio repeated its 2013 performance by coming in second in both competitions among the states.

Corporate tax reform will hurt small business, unless 

Corporate tax reform will pose a big problem for America’s small businesses unless Congress tackles the ‘pass-through’ problem. By letting firms deduct dividends distributions, lawmakers could erase many of the tax complications business owners currently face.

Tax reformers agree the United States needs a more competitive corporate tax system. To be competitive the 35 percent corporate tax rate must come down. But the trade-off for a lower corporate tax rate – the elimination or reduction of deductions and credits – will cause big problems for America’s small businesses.

Their taxes will go up with no offsetting reduction in their individual tax rate.

That’s because most small businesses – and 94 percent of all US businesses – organize themselves as pass-through entities. Sole proprietorships, S corporations, partnerships, and limited liability corporations taxed as partnerships are called pass-through businesses because their profits, gains, deductions, and credits are not taxed at the corporate level and instead pass through to the owners’ individual tax returns. This makes the owners’ returns mind-numbingly complex, but they put up with it because it’s cheaper than paying corporate tax.

The Essential Small Business Resource Is Already Working for You

As a small business owner, you’re probably paying a monthly fee for a bookkeeper, accountant or a CPA. Most likely, you’re turning to these professionals for standard tax, bookkeeping and auditing services only, but your accountant is probably knows your financials as well as you, if not better. Your accountant can be your partner to build a solid financial strategy.

Here’s what to look for in an accountant to get the most out of the relationship:

A trusted advisor.

Ohio Small Business News and other Stories

54640451There may be small businesses that believe social media or marketing will be the answer to some of their financial woes, when in fact, having a quality product that consumers want and need may be the answer to all of our problems. Marketing and social media can help a business promote their products and services, but they cannot sell them. Knowing how to use social media, and knowing what to expect from their use is crucial to any small business owner. Follow the links below for more information about Ohio small business news.

Success Story: Ohio

By Dan O’Brien

Police Officer Invents ‘Bolo Stick’ to Protect Schools.

YOUNGSTOWN, Ohio — The device is remarkably simple: a steel bracket and anchor pin that affixes to the base of a door, preventing an intruder from opening or forcing that door open.

What’s even more remarkable is that no one else has thought of it until now.

“I’ve been a police officer for 28 years, I’m an instructor at the police academy,” says William Barna, inventor and owner of the Bolo Stick, a security tool that he is marketing to local schools and hopes to sell across the country. The name of the product is derived from a common police term, “Bolo,” short for “be on the lookout.”

Over the last several years, Barna, a resident of Howland, became interested in how school systems responded to security threats, such as a potential gunman in the building. All followed the “Alice” plan, an acronym for alert, lockdown, inform, counter and evacuate. “They would shut the doors, lock them, shut the lights and pile desks and chairs in front of the door to make it harder for an intruder to come in.”

Should Ohio’s minimum wage be increased to $10.10?

CLEVELAND, Ohio – The low-wage workers’ movement, which successfully lobbied last year for minimum wage hikes throughout the country, could rally to increase Ohio’s minimum wage to $10.10.

Last week, state Sen. Kenny Yuko, Democrat of Richmond Heights, introduced Senate Bill 25 that would give minimum wage workers in Ohio a $2-an-hour raise in January 2016. The state’s minimum wage is currently $8.10.

Artheta Peters of Cleveland, who earns the current minimum wage after 13 years as a home health care worker, said she is underpaid for providing one-on-one care to the sick and elderly. She is among the home health care workers who demonstrated locally last year as part of the national fast-food workers’ strikes. Peters and her fellow home health care workers rallied, not only in solidarity with fast-food workers, but also to demand a $15 minimum wage in their field.

Beware Of Small Business Wire Transfer Scam

Late last week, the Federal Bureau of Investigation (FBI) issued a wire transfer scam alert for all small businesses in the United States. According to the FBI alert, between October 2013 and December 2014 a total of 1,198 complaints from U.S.- based companies were received dealing with wire transfer scams. Losses from these incidents totaled more than $179 million. The FBI also reports that the scams can follow a Ransomware incident, and may involve a fraudster contacting a vendor and requesting a change of payment to an alternate fraudster-controlled bank account.

How To Mitigate This Type of Scam

If you’re a small business owner, you may be at risk for this kind of scam. The FBI recommends the following mitigation steps for these types of scams:

  • Keep all of your anti-virus software up-to-date.
  • Educate your workforce about security best practices.
    • Be sure that any changes to payments via electronic transfer are verified with an employee of the bank and at a phone number that you utilize for assistance.

Now is a Good Time to Reflect and Direct

business (10) The company party was a success, clients were feted, venders gave you more liquor than you will drink in all of 2015, vacations are over and people are settling back into their work routines.  If you have not already done so, now is an excellent time to think about and set your company goals for the coming year.  In addition, this is a good point in time to get input and by-in from your advisors, key people and employees.

This time of year is a window of opportunity, because, it is human nature to use milestones (i.e. the New Year, birthdays, anniversaries, holidays) as an occasion for people to look at themselves.  They reflect on where they have been and set goals for where they want to go.  They see these recognized, fixed points in time as a place to start anew, wipe the slate clean or correct past mistakes.

An effective manager will utilize this knowledge of their employee’s behavior and mindset.  He will use this insight to create focal points and manage the employees towards the company’s goals.  He takes advantage of people’s natural inclination to use a milestone as a starting place and rallying point.

Concerned that you missed the 1st?   Don’t be, it doesn’t matter; there are other milestones to use instead.  While the focus is usually on the New Year it does not have to be then – people can and do reflect, start fresh and commit to a goal at any time.  What matters is that it has a defining starting point.

Therefore, launching a new set of goals can be at the beginning of the fiscal year, the company’s anniversary, the July 4th picnic or Labor Day.  Monday is the most popular day of the week for people starting new goals and is shown to be the best day for kick-off, and benchmarking, meetings.

A successful manger will learn about and use his knowledge of human nature to reflect and direct.  He will use people’s natural proclivities for milestones (and benchmarks) to set and meet goals for the business.  As Warren Bennis (a pioneer in the field of leadership) once said, “Leadership is the capacity to translate vision into reality”.

Are You Stressed Running Your Business?

business (10)More than half of the businesses that start each moth are home based businesses, and more than 500,000 new businesses start each month.  Unfortunately, more employer businesses shut down each month, and not surprisingly as a small business owner you can understand why.  The stress of running a business-regardless of the size- are numerous, and for a business owner, he or she has to deal with the issues and find a solution anytime they come up. Time constraints, cash flow issues, worker related issues have to be dealt in a timely manner, and the business owner finds himself doing the job of several people in a daily basis.

For more information about small business news, follow the links below.

Common Stresses – and Reliefs – of Small Business Owners

Being a small business owner doesn’t come with a job description, and more often than not it includes unforeseen stresses and challenges that are out of the business owner’s control. As a result, more and more entrepreneurs are finding ways to balance the demands of business in both practical and surprising ways.

Common Stress #1: Lack of Control 

While being your own boss may appear to put you in the driver’s seat, working with external business partners, clients, investors and other outside parties puts you in a position where you lack control. Sure, you may have influence… but that’s isn’t the same as identifying all end results. This can cause many small business to gain stress and seek resolution. Unfortunately, guaranteeing the results or even the answers you want to happen are not always possible.

Doing Small Business Better: Is the customer king?

Welcome to ZDNet’s second panel discussion in the Doing Small Business Better video series. This week, our discussion will focus on the concept of being a customer-centric business.

This is a term that is used a lot, but what does it really mean? When it comes to building stronger relationships, it all revolves around managing customer expectations, which sounds simple enough.

Where do businesses go wrong when it comes to customer service? And what are the most important factors to consider to get it right?

The concept of delivering great customer service, and being customer centric, should be a priority for every business, but sometimes it can get a little lost in the day-to-day pressure of doing business. This panel discussion provides some insights on getting it right.

Hosted by Andrew Griffiths, taking part in the panel is Troy Eggins, managing director of Trojan TechGroup; Bob Greenup, managing director of BNI Sydney central and south; Peter “Ziggy” Tsiglopoulos, director and owner of 3P Financial Pty; and Lisa Conway, owner of Zing Business Coaching.

Small-business Contracting on the Rise, Official Says

WASHINGTON, Oct. 14, 2014 – For the first time, the Pentagon has exceeded departmental goals for small-business contracting, a senior Defense Department official said last week.

Small businesses made up 23 percent of the Defense Department’s prime contracts in fiscal year 2014, receiving about $53 billion in work, said Andre Gudger, director of the office of small business programs, in a DoD News interview.

“This year, the Department of Defense not only exceeded its goal, but it also is on course to exceed the federalwide goal. … That’s significant — that’s historical, in fact,” he said.

The department also exceeded its goal of 3 percent for contracts with small businesses owned by service-disabled veterans — about $9 billion in contract value — Gudger said. “There’s no one better than that group of people to know what we need and how fast we need it, and help us to reduce the barriers in acquiring it,” he said.

Prime contracts are contracts in which the department contracts directly with the business, as opposed to subcontracting, where a second company is hired by a defense contractor to accomplish some part of the work.

Critical to battlefield dominance

This is an important accomplishment, Gudger said, because small businesses are critical to dominance on the battlefield.

A Customer-Centric Culture is Everyone’s Job

business (7)Jim was making a large purchase of electronic equipment, add-ons and accessories.  He did his research on-line and was planning to buy it all on-line.  However, he wanted to see some of the components, so he went to a big box store.  The salesman was attentive, informative and offered discounts on various items.  Jim made a several thousand dollar purchase in the store due to the salesman’s help, knowledge and flexible pricing.

Jim was so impressed with the customer service that he asked to talk to a manager, to compliment the salesman.  After some time the manager showed up complaining that he was on a break and was unhappy with being interrupted.  As Jim tried to praise the salesman the manager was impatient and uninterested.

He even tried to take credit for the sale, arrogantly saying “I taught him everything he knows.  I should be the one you’re thanking”.  Jim walked away still happy with the salesman, but dissatisfied with the company “who should know better than to promote such an oblivious jerk to a management position”.

In a customer-centric culture it’s everybody’s responsibility to understand and uphold the company’s clearly communicated principles.  These succinct and focused set of values and norms guide how employees think and act, day in and day out.  It’s a culture where the customer’s perspective and experience is embedded into the company’s DNA.

Establishing and maintaining this culture is an on-going project which requires discipline and commitment at all levels.  All of the employees are responsible for monitoring, supporting and mentoring each other.  The best customer-centric cultures flow from top to bottom and bottom to top.

When the principles are at the center of every action, decision, conversation and strategy it becomes harder for a company to lose its way.   The company’s purpose becomes the companies “why and how”.  Why are we doing this?  How will it help the customer?  It helps a company stay focused on the reason why they’re doing what they’re doing – their purpose for being in business in the first place.

Then everything they do to design the customer’s experience will be aligned with this purpose.  Remember, customers buy from and return to the brands that they feel committed to, ones with which they feel aligned.  Many companies lose their purpose and then lose their focus, which weakens their customer’s commitment, leading to the business faltering and eventually failing.

It Doesn’t Stop at Adolescence – Negative Peer Pressure in the Workplace

business (1)Peer pressure.  Everyone knows what peer pressure is, they’ve seen the afterschool specials, heard the lectures in 9th grade health class and had multiple adults in their life say, “If _____ jumped off a cliff would you do it too?”  When people talk about it they’re often talking about it in terms of children and teens. But, peer pressure is an issue which never goes away.  This is especially true in the workplace.

Millions of people have been known to say, “This job is just like being in high school again”.  Peer pressure is one of the reasons they say this, yet it’s not addressed with adults in the workplace nearly as well as it is with children and teens in school.  There’s an erroneous assumption that people grow out of their susceptibility to it as they age or mature.

Unfortunately, many people struggle with it throughout their lives, particularly in their employment.  Countless have identified it as their reason for quitting or getting fired from a job.  Almost 80% of people report having been negatively influenced by – or doing the influencing themselves – their co-workers into doing something they didn’t want to do.

There are 2 main categories which employees identify as having been negatively affected by peer pressure.  First, is drinking on the job and/or drinking too much at a company function, which resulted in personal and professional consequences.  The second category is being influenced to steal company resources: time, money, property or services.

Peer pressure, both negative and positive, is important for a company to be aware of and address.  It’s the way corporate culture is formed and maintained.  Employees develop shared ideas, assumptions and ways of behaving, which determine how they perceive and perform their jobs.  It’s how people think and act on a daily basis that most affects the bottom line.   As Nathaniel Banks said, “We have more to fear from the opinions of our friends than the bayonets of our enemies.”