John Mariotti’s Small Business Employment Tips for 2007

By Allan Pulga

In a recent guest column for Smallbiztrends.com, CEO of The Enterprise Group and business consultant John Mariotti identified a number of important employment trends for 2007. He also offers tips on how each trend can be addressed/capitalized upon by small business owners.

1. U.S. Government statistics continue to undercount small business employment: “Government statistics fail to recognize the levels of small business employment,” says Mariotti. “The U.S. Department of Labor’s Bureau of Labor Statistics won’t (or can’t) explain its flaws. This is a critical issue for small business owners since it influences access to benefits, distorts rules for self-funded retirement plans and complicates tax reporting.”

Tip: Seek help to save money on taxes. “A good tax accountant is a must-have so that your small business does not leave money on the table. For instance, there are obscure provisions of the IRS code, like section 105, that provide very small firms with a tax-favored status on health related expenses.”

2. Benefits challenge small employers and self-employed: “Traditional benefits (healthcare insurance, life insurance, disability and retirement/pension plans) continue to be a problem for small business,” says Mariotti. “An employee normally relies on the employer’s human resource function to provide information and many businesses lack this expertise.”

Tip: Get H/R Expertise. Mariotti suggests consulting a small firm to help manage H/R issues. Health insurance providers can also provide additional information about plans, as can local Chambers of Commerce.

3. Job market continues to tighten for small employers: “Recruiting and keeping people when there is fierce competition is a big challenge as the job market tightens up,” says Mariotti. “The keys to retention are job satisfaction, competitive pay and benefits – in that order.”

Tip: Treat people as part of the business. “Make them partners in behaviour; give them insight into the business’ goals, progress and plans. The more involved they feel, the more likely they’ll stay.”

4. Legal requirements challenge small employers: “Anti-discrimination provisions have grown substantially in recent years, limiting what can be asked, and what employment tests can be used,” says Mariotti. “Impending changes in minimum wage laws (which vary by state) can be yet another challenge. Illegal immigrants are a particular problem in Border States and a handful of other states (Utah, Illinois and New York, for example).”

5. Tip: Educate yourself to know which laws apply. “Identify the laws that apply to your business – get help on this and/or refer to Web resources. Temp agencies can be good sources of employees, since agencies can screen the people professionally – but make sure they DO.”

6. Business insurance gets more expensive: “One way to provide security for your employees is to insure your business, so that you can get back to business quickly should a disaster hit,” adds Mariotti. “Although this was a benign hurricane season in the Southeast U.S., insurers’ actuaries have long memories and last year’s disasters are still fresh in the financial statements. Small businesses especially will have difficulty insuring many typical risks like business interruption, products liability, disaster relief and a plethora of personal injury types of claims.”

Tip: Use of power of numbers. Mariotti suggests joining with other small businesses (e.g. under a franchiser’s plan) to improve the potential of finding insurance or getting better rates. Also, if you are buying a business, assume any insurance possible from previous owners.

7. Baby Boomers provide a qualified talent pool for small businesses. “The demographic impact of retiring Baby Boomers will be an overriding issue for employers of all sizes,” says Mariotti. “Not only are Baby Boomers starting their own businesses, they are being employed by small businesses too.”

Tip: Fit the need to the person (or vice-versa). “Many early retires are willing to work for less than they used to earn, provided the schedule is less demanding and/or more flexible. This permits a small business owner to employ several part-time, highly qualified, mature people in place of a full-time employee.”