Fall 2010

I had lunch the other day with a successful entrepreneur who I consider to be part of my advisory board. He probably doesn't even know I consider him as such, nor did we ever discuss the issue. He is nonetheless, someone who has achieved a great deal of success and for whom I have tremendous respect. When I started my business he willingly and selflessly shared his experiences in an effort to help me succeed. He wanted nothing in return but the satisfaction of helping another business professional. The other members of my unofficial advisory board have similar profiles each of them having created and developed sustainable business models over several years. Mine is not a big company mired in protocol and process, but I have found it extremely valuable to have a group of colleagues and professionals that I can rely on to be frank and honest and who openly offer their advice and guidance in an effort to help me succeed.

During a recent presentation to a group of aspiring entrepreneurs, I was asked my opinion on the most difficult aspect of being an independent consultant. Was it marketing, business development, work schedule, maintaining client relationships or managing cash flow? For me, none of these issues are as difficult to manage as the loss of regular social interaction one develops with colleagues at work. Many of my projects are short to medium term in nature and personal interaction at the client's site can be limited to just a few people. Other services are provided virtually by phone or email which further isolates me from the general employee population. During these periods my advisors serve as a key connection point to the outside business world.

Without a doubt, the relationships forged during my years in the corporate world helped to shape my values and perspectives. Many of those individuals are still my closest friends and colleagues; but I found that when you stop working together it becomes difficult for those folks to offer you objective opinions about your business matters, particularly if they have not chosen to go the entrepreneurial route. Similarly, I have found that family members often find it difficult to offer advice and guidance on business matters unless they are fully engaged in the work itself and, even then, being able to look at things objectively becomes difficult. Fortunately, I was able to meet a select group of professionals who not only had experience and knowledge in building a successful practice but were willing to openly share their experience with a fledgling business owner like me. I am deeply grateful for their help, and even when their comments sting a bit I always recognize that they are doing this because they want me to succeed.

So thank you to my trusted advisors for sharing your wisdom and knowledge. I would strongly recommend anyone reading this article to consider establishing your own advisory board to help you through the difficult times we share both in business and in life. If I can help along the way, please don't hesitate to call. Have great fall season!

Phil


Healthcare Reform and the Small Business Owner
If you haven't yet renewed your healthcare plan for next year get ready for some bad news. Virtually all of the major insurance providers in this area have made continuing the conventional HMO's offered by many employers unaffordable. Some of my clients have experienced as much as a 49% increase in premium primarily due to the provisions of the Healthcare Reform Act officially known as the Patient Protection and Affordable Care Act (PPACA) scheduled to take full effect in 2014. Under the new law, children can remain on their parents plan to age 26 and certain preventative services must be provided free of charge. The insurance companies recognize the additional expense associated with these changes and have proactively raised premiums to offset their pending losses.

This turn of events has forced many small business owners to reassess their benefit plan design, as well as their contribution and cost sharing rates. The most popular option appears to be a high deductible plan that places a higher cost burden on those employees who require more medical care. These plans typically have no co-pays but the first $500-$1500 dollars of out of pocket expense are paid by the employee. After the deductible amount is met, many services are covered at 100% for in-network care. However, educating employees on these new plans is challenging. Many of us old enough to remember the healthcare plan offerings prior to HMO's recall our insurance having a "major medical" provision which is similar to how the high deductible plans work. But over the last 25 years most employees have become comfortable with the practice of a primary care doctor and co-pays and find the new plans confusing and frustrating.

The news isn't all bad. The new law does provide small businesses with less than 25 employees a premium tax credit of 35% of premiums until 2014. In order to be eligible the employer must contribute at least 50% of the total premium cost and the average salary must be $50,000 (owner income exempted). These are just a few of the provisions that took effect this year. Many portions of the law are still undefined and require further clarification but one thing is certain: the benefit strategy of the small business owner will have to change. If we can help along the way please give us a call at 610-287-1162