Ubiquity

Category: Business

Find easy to understand Business Information relating to 401k plans and from Ubiquity Retirement + Savings. Find easy to understand rules and regulations, along with tips and advice from our team of 401k business experts. Call Ubiquity today for a Free Consultation at 855.466.5825.

Small business owners face unique financial challenges.

In addition to managing your own finances, you must also focus on your employee’s financial wellbeing to ensure team success. In fact, according to a 2019 John Hancock study, 55% of workers say they worry about their personal finances more than once a week at work.

A trending benefit in today’s workforce is to offer a financial wellness program as an employee benefit. These programs focus on financial education and help to create a culture of financial literacy and awareness. In turn, this builds a strong foundation for employee happiness and retention.

Focusing on financial wellness at your organization can benefit both employees and business owners in very different ways. Use these tips to help guide the areas you want to improve on and strategies that may make your business financially healthier.

 

Empower your employees with financial wellness and confidence.

Get Started

Monitor Your Finances

Did you know nearly 1 in 4 of small businesses fail because of a lack of strength from the leadership team?

There are so many moving parts when operating a business that you can’t expect to do them all yourself. It’s easy to let your own personal financial health take a back seat while you’re focused on building your business.

Luckily, there are many options that make it convenient to manage personal finances. From personal banking to financial planning, apps are abundant.

Small business banking options reduce the pains and cost of financial management. You can better keep track of your spending and transactions. You can also keep your personal and business finances separate from each other.

As a business owner, you should know where your money is coming from and going. This clarity around your financial basics can strengthen your planning and strategy.

Don’t Neglect Your Salary

Running a small business is no walk in the park. It takes passion and dedication to get a business off the ground.

Unfortunately, small business owners tend to invest all their time and energy into their business. This can result in other areas of their personal life or business getting neglected.

Starting out, small business owners are prepared to work for free to support their growth. What most don’t realize is that they should determine their salary ahead of time. Then, once their business is profitable, they can start paying themselves the salary they deserve.

To determine your salary, take the following into consideration:

  • Your mortgage payments
  • Outstanding debt like student loans, car payments, credit cards, etc.
  • Groceries
  • And other fixed and variable expenses.

While no entrepreneur wants to dwell on it, it’s important to remember that roughly 20% of small businesses fail within their first year. 33% will fail within two years.

By including your salary in your business finances early on, you can protect yourself. Even if your business takes a downturn, your personal finances won’t be affected.

Conduct an ROI Analysis

Small business owners tend to struggle when calculating a return on investment (ROI). ROI is a key performance indicator. It helps measure success over time and to keep their finances in check. Using the right cash flow method is important when determining your profitability with expenditures.

Knowing your ROI, you can make smarter choices for your business. Investing too heavily or lightly can greatly affect your business trajectory.

Investing in technology like financial tools is a business expense. And it often gets pushed down the to-do list from small business owners. However, these tools can provide value and maximize your finances in many ways.

Invest Wisely

Speaking of investing—The best thing that you can do for your business is to invest in it.

The term “investment” often sparks fear in any startup, freelancer, or entrepreneur’s mind. This is because the first thought you’ll likely have is, “What if I fail or lose all my money?” This is especially true when your finances don’t match your business plan and goals. It’s important you do your research and find areas where investing makes sense.

Investing doesn’t only mean buying tools and equipment to help your business grow. It can also mean investing in financial tools and wellness products.

Financial wellness tools can help you make better sense of your own finances. They can also guide your employees to smarter financial decisions.

Financial Wellness for Employees

Your employees also need financial guidance. A majority of Americans are stressed about their personal finances.

Financial wellness programs give employees financial guidance when they need it. This can help them make smarter, more confident financial decisions.

These platforms include education, strategies, and personalized guidance on a variety of financial topics.

As you build your organization, keeping financial wellness top of mind is smart.

A strong financial wellness can reduce stress and create a clearer path to success.

Want to learn more?

We’ve partnered with Edukate to help small business employers and employees plan for their retirements fully. Click here to read our previous conversation with their team about how financial wellness programs can help set your small business apart. 

Small businesses have a big retirement problem.

According to the Bureau of Labor Statistics, at companies with fewer than 50 workers less than half the employees have access to a 401(k) or pension. Compare this against companies with 500 workers or more, 90 percent of employees have access to a retirement plan.

We understand that setting up an employee retirement plan can seem daunting for small business owners—if not impossible. But with pensions disappearing and the social security system growing less reliable, offering a savings vehicle for your team is more important than ever before.

Let’s clear up some misconceptions and review a few of the many reasons why offering an employer-sponsored retirement account is a great idea for small businesses of all types.

Investing in Your Employees Creates An Invested Team

How badly does your team want retirement? According to a 2015 Glassdoor survey, 31 percent of workers valued a workplace retirement account, such as a 401(k) or pension plan, over an increase in pay.

Even your team members who would prefer a wage pump want help preparing for the future. The Employment Benefit Research Institute found that two-thirds of employed workers not currently saving for retirement say they would be likely to start if automatic paycheck deductions ranging from three to siz percent were used by their employer.

If you aren’t providing a retirement benefit, it’s not just your current employees that notice. Offering a retirement plan, especially one with matching, allows small businesses to stay competitive in the hiring market against their larger counterparts.

Cut through the complexity of choosing and customizing the right 401(k) for your small business. Get an instant quote.

How many employees do you have?
Just me and/or my business partner/spouse

Low-Cost, Low-Hassle Plans

There’s a toxic myth floating around that retirement plans have to be clunky, expensive, and require an annual 1.5-2% fee to a provider. That’s a misconception!

Big business 401k plans are designed for businesses with hundreds or thousands of employees. Because they are more complex, they often require in-person enrollment meetings and special human resources training. Those large plans typically do have high fees—including “assets under management,” or AUM fees. AUM fees charge based on a percentage of the money in your account. That means that the more you save, the higher the fees.

Nowadays, there are low-cost defined benefit options, specifically designed for small businesses. (Full disclosure, we think our plans are pretty great. Check them out here)

Besides providing lower costs, choosing a third-party plan provider allows you to delegate certain plan responsibilities to let you focus on what you do best—running your business.

Use Plans to your (Tax) Benefit

Did you know those fees to set up and run a retirement plan may be tax-deductible?

Due to the recently passed SECURE Act, small business owners can claim a credit of up to $5,000 for qualified setup and administration fees, and costs to educate employees about the plan for each of the first three years of the plan.

Combined with this with a new, $500 credit for the first three years of adding auto-enrollment to the plan, small business owners can save up to $16,500 in tax credits. Just keep in mind that whatever plan expenses you use toward this credit, you can’t use as business expense deductions.

In 2017, the Employee Benefit Research Institute found that nearly 73 percent of workers not currently saving for retirement would be at least somewhat likely to start if contributions were matched by their employer. The good news for employers is that the IRS usually allows them to deduct these matches, subject to contribution limits on qualified employee plans (including the employer’s own plan).

Plus, 401k plans aren’t just beneficial for your tax savings–they give your employees tax advantages as well. All deferred employer contributions, including earnings and gains, are tax-free for employees until distributed by the small-business retirement plan. This is part of why employer contributions are so valuable.

Bottom Line: Start Saving Today

As a small-business owner, it makes sense to look into offering an employee retirement savings plan. It’s an easy to implement perk that your team will value, is available through lower cost options, and provides tax breaks to both employees and employers. Sponsoring an employee retirement plan attracts and retains the best talent for your business. Showing your employees you have their interests in mind creates a happier, more engaged, and ultimately more successful team.

Learn More:

Download our Definitive Guide to Small Business 401(k)

3 Ways to Engage a Remote Workforce

Andrew Answers / 7 Aug 2019 / Business

graphic conceptual image of laptop connecting a remote workforce

In today’s digital age, more people than ever are working from home.

In fact, a recent survey revealed that 70 percent of professionals across the globe telecommute at least one day a week.

A remote workforce opens a business up to benefits like finding a wider breadth of talent and experience, not to mention potential cost savings. But with less in-person interaction, how can HR professionals and business owners engage their employees without sacrificing their firm’s unique culture?

The balance doesn’t have to be difficult to navigate and implementing these three concepts can help your business and employees thrive.

1. Set ground rules

When you first consider starting a remote workforce, the road may seem paved with speed bumps. For example, how will you know if your employees are really working and if goals are being met? Setting ground rules can help quantify your employees’ success. Finding a way to measure how and when work is getting done helps ensure your team is being productive and contributing to the bigger picture. Start with establishing objectives and key results with all employees and updating them every six months or so. This allows employees and managers to quantitatively set goals and deadlines, providing concrete results that can be measured and analyzed. While this data is a great start, tracking employee success can’t stop there. Two-thirds of working remote is being qualitatively available. It’s one thing for your employees to accomplish the tasks on their daily checklist, but it is another thing to feel like they are engaged and available throughout the day. The level of communication your employees provide is typically a good indicator of their commitment to the job, so it’s best to encourage an environment of overcommunicating. For instance, knowing that a team member has a doctor’s appointment at 12 p.m. is helpful, but often not enough. Instead, encourage employees to share more detailed information like when they’re planning to leave, how long their commute is and what time they expect to be back online. After all, there’s a big difference between someone being unavailable for three hours versus one or two.

2. Stay connected

Technology is a great way to foster a culture of collaboration for your remote employees. With hundreds of online messaging and organizational platforms available, it is relatively easy to find one that will provide your employees the tools they need to stay connected. When our company, Ubiquity, transitioned toward having a full-time remote workforce, we saw the need for an instant messaging and video conferencing platform that enabled everyone to communicate at the drop of a hat. Email just won’t cut it when you are telecommuting, so it’s helpful to provide several avenues for communication among employees that allow them to quickly and easily access anyone within the company. That way, quick chats can seamlessly transition to full-on video conferences and no one feels left without a way to be seen and heard. Consider making virtual meetings a consistent weekly or monthly priority. Host formal “town hall” meetings where all employees can share their performance progress and accomplishments. Stay connected on a personal level by sharing birthdays, work anniversaries and other notable milestones or by setting up a “virtual break room” where people can talk about their lives outside work and whatever else is on their mind. These outlets can all help spur collaboration and relationship-building among employees who have limited in-person contact.

3. Show appreciation

The first word in “human resource” is human, so it’s crucial to recognize your employees as individuals and ensure they feel celebrated for their unique contributions, even from a distance. To keep a finger on the pulse of your employees, start by introducing an employee engagement survey. These can reveal not only how employees think about their jobs, but how they feel. From there, consider utilizing a digital employee engagement tool to check in on the overall mood of your employees on a regular basis. This presents a great opportunity to start a conversation and hash out any pain points or show appreciation for their hard work. We take employee appreciation very seriously and go even further by doling out virtual “high fives” when we see a job well done, sending small seasonal gifts to all remote employees (tea and honey for the fall, flowers for the spring, etc.) and encouraging random acts of workplace kindness such as offering unsolicited praise or mentorship. These can all be huge motivators and help employees feel noticed during the daily grind.

As the American workforce grows increasingly remote, HR professionals must be ready to keep their employees engaged. You cannot build a company culture overnight, but setting ground rules, staying connected and showing appreciation can foster a workplace culture that is reflective of the people who work there.

Please note: this post originally appeared on Workforce on August 6, 2019.

Read the Definitive Guide to Small Business 401k
Download Your 401k Guide Now

© 2020 Ubiquity Retirement + Savings
Privacy Policy
44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

Facebook Twitter LinkedIn YouTube

© 2020 Ubiquity Retirement + Savings
Privacy Policy
44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

Credit Card Logos