5 Reasons To Forget About Venture Capital Funding

In the startup world, venture capital funding from a big firm has become the Holy Grail. But, of course, there are other ways to launch a successful business. Bootstrapping, borrowing money from friends and family, using funds from an existing business or leveraging personal assets are all certainly options.

Below are five reasons you may want to seek another way to start your business without big VC money.

Very Few Companies Receive Venture Capital Funding

Believe it or not, for all the talk, venture capital funding is actually a rare thing. In fact, Forbes.com reports that currently VCs fund only about one to two startups out of every 100 business plans they see. And only about 300 of the 600,000 businesses started in the U.S. every year receive venture capital. Simply put, 99.5% of entrepreneurs will not get VC funding, at least not at the startup level.

So, if venture capital funding is so rare, isn’t it practical to seek an alternative for your business? Here are five reasons venture capital funding may not be right for your business.

Your Idea May Not Be Big Enough

You’ve heard how successful small businesses or startups should look to small niche markets. However, VC investors are generally looking for an idea that can pay off in the billions. Venture capitalists are in the business of making money, of course. But just how much money may surprise you.

Even medium-sized VCs will look only at businesses targeting a market in the $1 billion range, says Mark Peter Davis, founder of Interplay Ventures and a venture partner at High Peaks Venture Partners. Larger VCs will want businesses with a potential $5 to $10 billion market. Unless you’re launching a startup with this kind of potential, venture capital funding probably isn’t for you.

You Won’t Get the Deal You Want

In a post based on a talk he once gave to perspective entrepreneurs, Paul Graham, co-founder of the Y-Combinator, explained the venture capital ecosystem this way:

VCs and corporate development guys are professional negotiators. They’re trained to take advantage of weakness. So while they’re often nice guys, they just can’t help it. And as pros they do this more than you. So don’t even try to bluff them. The only way a startup can have any leverage in a deal is genuinely not to need it. And if you don’t believe in a deal, you’ll be less likely to depend on it.

So one of the best reasons not too seek venture capital from the beginning in your startup is that needing the funds puts you in a vulnerable negotiating position. Instead, try to figure out how to get your business running on your own and when you prove your product or service, funding may pursue you on more favorable terms.

You’ll No Longer be Focused on the Customer

In the beginning, an entrepreneur’s focus is on problem solving, creating value for customers, and delivering an incredible product or service. While, in theory, the same goal remains after beginning to pursue funding, the realities can be quite different. Entrepreneurs can instead become preoccupied with raising money and focusing on the demands or needs of VC firms and other big potential investors before the needs of their clients or customers. Assuming they receive the investment they seek, they will potentially end up loosing control of their companies as well. Satisfying those investors can begin to take priority over satisfying the customer bases their business models were built upon in the first place.

Your Success May Not Be a Priority

After all the time spent chasing that elusive venture capital funding, it still doesn’t guarantee your success. Part of the reason is that to VC firms you are only one investment among many. It may be hard to believe anyone would put so much money in your startup without a firm commitment to its success. But as entrepreneur and author Erika Hal explains:

To be blunt: Many VCs don’t care whether any one particular investment enjoys long-term success. They only care that a percentage of companies in their portfolio nets them a high return.

Compare this to the dedication you have to your startup. It’s a dedication to your customers, to your employees and to your own and your family’s financial future. Still think you need venture capital to launch your next business?

Forget About It Photo via Shutterstock

September is National Preparedness Month: 4 Steps To Creating a Data Disaster Preparedness Plan (Infographic)

Most small business owners have so much to think about that disaster preparedness falls somewhere at the bottom of the long list. But when you think of all the things that could compromise your business and it’s data - earthquakes, blizzards, hurricanes, fire and human error - it’s surprising that only 13 percent of small businesses think a data disaster could happen to them. What would you do if your company’s emails, billing records, customer files, inventory reports and tax information suddenly disappeared? If you are unsure, then it’s time to create a data disaster preparedness plan!

Carbonite, a leading provider of cloud solutions, has offered us a few simple tips to help small business owners get started creating a data disaster plan and in interesting infographic on how a disaster can affect your business.

Develop a written plan: Think of your disaster plan as a business plan you can turn to when the worst happens. Your written plan should contain emergency contact information for employees and key external partners, outline the processes that should take place if something happens to your office, and tell everyone how they will be contacted. Print out copies for employees to keep offsite, because the plan won’t do any good sitting on a desk if no one can get to the office!

Designate an alternative site of operation (or two!): Once you’ve figured out who you will contact in an emergency, it’s time to figure out where you can all work if something happens to your primary location. This could be a coffee shop an hour away, an external partners office, or it may make sense for everyone to stay home and work remotely from their living rooms. Let your employees know how you’ll get a hold of them so no one ends up heading into work in an unsafe situation. Email might not be the best option if your server is damaged too, so think about communicating by phone tree or text message.

Review your data protection plan: A Carbonite study found that 81 percent of small businesses say data is their most valuable asset; so make sure your files are included in your disaster plan! Choosing an automatic backup solution that is constantly backing up your most recent files and showing your employees how to access and recover their data will help decrease downtime and losses. In the case of Doug Duncan, a human resources consultant in New Jersey, backing up with Carbonite  allowed him to stay in business when Superstorm Sandy ravaged his town in 2012. In spite of not having power for weeks, Doug was able to use Carbonite’s Anytime, Anywhere Access to retrieve all of his files from another computer, and even completed payroll on time!

Do a dry run: All-company meetings can be a drag, but practice makes perfect (and a pizza delivery can help cut down on the eye rolls!). Walk employees through a simulation so everyone has the right contact information, knows where to show up if they can’t get to the office, and can access their important files when they’re away from the office.

When Superstorm Sandy hit the east coast, many small businesses (mine included) learned the hard way how devastating a disaster can be to a business (physically and financially). Being prepared and having a plan in place will give you peace of mind and keep you running without missing a beat.

September is National Preparedness Month: 4 Steps To Creating a Data Disaster Preparedness Plan (Infographic)

Most small business owners have so much to think about that disaster preparedness falls somewhere at the bottom of the long list. But when you think of all the things that could compromise your business and it’s data - earthquakes, blizzards, hurricanes, fire and human error - it’s surprising that only 13 percent of small businesses think a data disaster could happen to them. What would you do if your company’s emails, billing records, customer files, inventory reports and tax information suddenly disappeared? If you are unsure, then it’s time to create a data disaster preparedness plan!

Carbonite, a leading provider of cloud solutions, has offered us a few simple tips to help small business owners get started creating a data disaster plan and in interesting infographic on how a disaster can affect your business.

Develop a written plan: Think of your disaster plan as a business plan you can turn to when the worst happens. Your written plan should contain emergency contact information for employees and key external partners, outline the processes that should take place if something happens to your office, and tell everyone how they will be contacted. Print out copies for employees to keep offsite, because the plan won’t do any good sitting on a desk if no one can get to the office!

Designate an alternative site of operation (or two!): Once you’ve figured out who you will contact in an emergency, it’s time to figure out where you can all work if something happens to your primary location. This could be a coffee shop an hour away, an external partners office, or it may make sense for everyone to stay home and work remotely from their living rooms. Let your employees know how you’ll get a hold of them so no one ends up heading into work in an unsafe situation. Email might not be the best option if your server is damaged too, so think about communicating by phone tree or text message.

Review your data protection plan: A Carbonite study found that 81 percent of small businesses say data is their most valuable asset; so make sure your files are included in your disaster plan! Choosing an automatic backup solution that is constantly backing up your most recent files and showing your employees how to access and recover their data will help decrease downtime and losses. In the case of Doug Duncan, a human resources consultant in New Jersey, backing up with Carbonite  allowed him to stay in business when Superstorm Sandy ravaged his town in 2012. In spite of not having power for weeks, Doug was able to use Carbonite’s Anytime, Anywhere Access to retrieve all of his files from another computer, and even completed payroll on time!

Do a dry run: All-company meetings can be a drag, but practice makes perfect (and a pizza delivery can help cut down on the eye rolls!). Walk employees through a simulation so everyone has the right contact information, knows where to show up if they can’t get to the office, and can access their important files when they’re away from the office.

When Superstorm Sandy hit the east coast, many small businesses (mine included) learned the hard way how devastating a disaster can be to a business (physically and financially). Being prepared and having a plan in place will give you peace of mind and keep you running without missing a beat.

September is National Preparedness Month: 4 Steps To Creating a Data Disaster Preparedness Plan (Infographic)

Most small business owners have so much to think about that disaster preparedness falls somewhere at the bottom of the long list. But when you think of all the things that could compromise your business and it’s data - earthquakes, blizzards, hurricanes, fire and human error - it’s surprising that only 13 percent of small businesses think a data disaster could happen to them. What would you do if your company’s emails, billing records, customer files, inventory reports and tax information suddenly disappeared? If you are unsure, then it’s time to create a data disaster preparedness plan!

Carbonite, a leading provider of cloud solutions, has offered us a few simple tips to help small business owners get started creating a data disaster plan and in interesting infographic on how a disaster can affect your business.

Develop a written plan: Think of your disaster plan as a business plan you can turn to when the worst happens. Your written plan should contain emergency contact information for employees and key external partners, outline the processes that should take place if something happens to your office, and tell everyone how they will be contacted. Print out copies for employees to keep offsite, because the plan won’t do any good sitting on a desk if no one can get to the office!

Designate an alternative site of operation (or two!): Once you’ve figured out who you will contact in an emergency, it’s time to figure out where you can all work if something happens to your primary location. This could be a coffee shop an hour away, an external partners office, or it may make sense for everyone to stay home and work remotely from their living rooms. Let your employees know how you’ll get a hold of them so no one ends up heading into work in an unsafe situation. Email might not be the best option if your server is damaged too, so think about communicating by phone tree or text message.

Review your data protection plan: A Carbonite study found that 81 percent of small businesses say data is their most valuable asset; so make sure your files are included in your disaster plan! Choosing an automatic backup solution that is constantly backing up your most recent files and showing your employees how to access and recover their data will help decrease downtime and losses. In the case of Doug Duncan, a human resources consultant in New Jersey, backing up with Carbonite  allowed him to stay in business when Superstorm Sandy ravaged his town in 2012. In spite of not having power for weeks, Doug was able to use Carbonite’s Anytime, Anywhere Access to retrieve all of his files from another computer, and even completed payroll on time!

Do a dry run: All-company meetings can be a drag, but practice makes perfect (and a pizza delivery can help cut down on the eye rolls!). Walk employees through a simulation so everyone has the right contact information, knows where to show up if they can’t get to the office, and can access their important files when they’re away from the office.

When Superstorm Sandy hit the east coast, many small businesses (mine included) learned the hard way how devastating a disaster can be to a business (physically and financially). Being prepared and having a plan in place will give you peace of mind and keep you running without missing a beat.

Is Etsy Still About Handmade Goods - Or Mass Produced Stuff?

When it was founded back in 2005, Etsy was created for a special kind of small business owner. The platform promoted itself as a place for the artisan or craftsman specializing in homemade goods.

The rules still call for handmade products, but critics say some have managed to skirt them essentially becoming resellers of mass produced items on the site.

New Etsy Rules Open Door for Mass Produced Items

Etsy’s basic selling information divides products merchants can offer on the site into three basic categories:

• handmade goods
• vintage items 20 years or older
• craft supplies

But critics say changes to Etsy’s “Dos and Don’ts” section in 2011 in an effort to help sellers grow their businesses have created gray areas.

For example, one passage of the Etsy’s official rules now states:

A third-party vendor may be used for intermediary tasks in some crafts. Acceptable examples include, but are not limited to: Printing the seller’s original artwork, metal casting from the seller’s original mold, or kiln firing the seller’s handcrafted ceramic work.

However, the rules also state these third party vendors should not be performing the majority of the work on items sold as handmade.

Meanwhile, another passage of the Etsy rules explains:

One artist screen prints fabric, then another artist sews clothing from the fabric. The finished product is listed in a collective Etsy shop.

Critics say the rule could be used to justify outsourcing of work on items that are then sold as handmade.

The Rise of the Resellers

Disgruntled Etsy members claim merchants like Laonato, a popular jewelry store on Etsy, have already become resellers of mass-produced items, reports The Daily Dot.

Back in May of 2012, thousands of Etsy sellers staged a silent protest putting their shops in vacation mode for a 24-hour period to draw attention to the issue.

Etsy claims to conduct investigations of stores flagged for violation of its rules, but some members say the the site hasn’t done enough about the reseller issue.

If you’re not happy with Etsy, check out some other alternatives for selling handmade goods.

Handmade Items Photo via Shutterstock

(Webinar 9/26) Roundtable Discussion: Beating the Competition as a Small Business Owner

Navigating the ever changing world of small business is tough. Modern technology and empowered customers have changed the way small business owners market their business and communicate with prospects and customers. What might have worked for you five years ago doesn’t work today and that might leave you open to losing customers to the competition.

On September 26th at 12pm EST,  you can join in on Roundtable Discussion: Beating the Competition as a Small Business Owner and hear from four expert panelists on how the most successful small business owners are navigating through these changes and how you can turn prospects and customers into raving fans. Panelists include:

• Scott Klososky, ‎Partner, Future Point of View, LLC
• Anita Campbell, CEO, Small Business Trends LLC
• Ramon Ray, Marketing & Tech Evangelist, Infusionsoft & Smallbiztechnology
• Robin Joy, VP, Mobile and Online, DocuSign

You can register for this event here.

Fire Yourself From the IT Department

I have an important question for other entrepreneurs.  How much time are you losing by handling your technology needs yourself?

Are you troubleshooting when your website goes down? Scratching your head while the hours slip away as you try to figure out why your email isn’t working?  Trying to ensure your files are backed up reliably?

Many of us start out in our businesses by being do-it-yourselfers. I did. Cash is usually tight in the beginning. The last thing you want to do is spend money. That’s probably the right move when getting started. In the beginning we have more time than money â€" so it’s better to conserve our cash.

But it’s a mistake to stay in the do-it-yourself mode too long.  As the business begins to grow, you need to grow too.  Your daily duties need to shift.  Spending your energies on anything less than the best and highest use of your time is not a good use of a scarce resource: you.

And what is the best use of your time?  Well, for a business owner it’s not tinkering around with backing up files.  Yes, having backed-up files may save your business from certain disaster.  But it doesn’t do much to proactively grow it.  You could do more to grow your business by working on a new pricing strategy or by making community connections that may lead to new customers.

I’m sure you’ve heard the advice about “working on, not in, your business.”  It’s more than just a catch phrase. You really must think about what that means.  An old friend of mine said it well â€" and he was extremely successful in his business.  He wrote:

Okay, so what would change if the owner started working on the business? First, he or she would not be the first one in and the last one out. He wouldn’t necessarily come to the store every day. She would be circulating in the community making contacts with other owners of small businesses getting ideas. He would seek out organizations made up of like-minded business people in his community. She would be joining associations like the Chamber of Commerce, the Rotary Club, and the Lion’s Club. Once a member the owner would be attending regular meetings to become an integral part of the community.

The owner would be expanding his or her circle of associates and yes, even friends, outside the industry. He or she would be spending ‘think time,’ that quiet time spent thinking about the future and how to use all that knowledge bottled up inside but not exercised because of day-to-day pressures.

Did you know that small business owners lose 6 hours of productivity per week by doing IT-related tasks?  Think about those 6 hours.  Multiply those by 50 weeks out of the year (assuming you take two weeks of vacation time).  That’s 300 hours per year â€" 300 hours that could have been spent working on your business instead of in it â€" had you spent it on high-value work.

That’s seven and a half weeks!  What I wouldn’t give for an extra seven and a half weeks of think time, strategy time and relationship building time in my business….

And that’s really how you have to look at it.  Don’t look at how many pennies you can pinch by doing it yourself.  That’s a small-minded approach to running a business.

Look instead at how many opportunities your business may be missing by filling your time up with what is â€" for you â€" low-value-added work.

I am not saying IT activities aren’t important. They are very important. Technology matters a lot today.

IT is just the wrong use of a CEO’s time.

You see, when you become a business owner and CEO, the business takes higher priority in your work day, than what you personally have fallen into a habit of doing. You owe a responsibility to employees, investors, yourself and your family.  It’s no longer about what you find easy to spend your time on.

You have to have the discipline to tackle the longer-term stuff â€" strategy and relationship building.  If you don’t, who will?

So the next time you are tempted to handle some IT task on your own and not wisely use technology, pretend you have a board of directors.  What would your board say about the company CEO spending time on daily details versus working on strategy and bringing in more revenue?

Image: AMI Partners study for Microsoft - click to see full image

(Webinar 9/26) Roundtable Discussion: Beating the Competition as a Small Business Owner

Navigating the ever changing world of small business is tough. Modern technology and empowered customers have changed the way small business owners market their business and communicate with prospects and customers. What might have worked for you five years ago doesn’t work today and that might leave you open to losing customers to the competition.

On September 26th at 12pm EST,  you can join in on Roundtable Discussion: Beating the Competition as a Small Business Owner and hear from four expert panelists on how the most successful small business owners are navigating through these changes and how you can turn prospects and customers into raving fans. Panelists include:

• Scott Klososky, ‎Partner, Future Point of View, LLC
• Anita Campbell, CEO, Small Business Trends LLC
• Ramon Ray, Marketing & Tech Evangelist, Infusionsoft & Smallbiztechnology
• Robin Joy, VP, Mobile and Online, DocuSign

You can register for this event here.

3 Services That Help Add A Face to the Name on Your Contact List

Since the advent of email, the contact list has become an icon of social connections across the internet. Nothing seems to better symbolize who we know than looking through that long list of names. The problem most of us experience is that our contact lists can get pretty long over time. Some email services automatically add someone as a contact every time you interact with that person. Having so many people on that list can eventually transform what was once a useful aid into a nightmarish labyrinth of tangled-up names and email addresses. There has to be some way to put it all in order, right?

What if you could attach a face to each contact’s name? Unless you are one of the unlucky few with prosopagnosia, faces are more easily recognizable to you than names. Because of this, putting a picture of a person’s face next to their name is monumentally helpful in sorting out who is who, especially in a messy and winding contact list!

Let’s look at some products that do this eloquently:

• Rapportive - If you use Gmail, you may notice that it only pulls up contact pictures from Google Plus. Not all of your contacts use that social network, but you’ll find many of them on LinkedIn and Facebook. Rapportive is a Google Chrome extension that links up your Gmail interface with Facebook. The only obvious problem with this is the fact that this doesn’t work if you access email from mobile devices. Most people prefer to use an app for this activity and forego the entire process of using a browser. For this reason, Rapportive is more useful for desktop environments.
• Rainmaker - A solution for those who wish to see contacts’ faces on mobile devices, Rainmaker offers a variety of contact sync features. Aside from Facebook, you can also pull contacts from LinkedIn and Twitter. Like Rapportive, it’s a service offered exclusively for Google users, particularly those using Gmail or Google Apps. To get real-time sync capabilities (rather than daily), you must pay $9 a month. Supported mobile platforms include Android, iOS, and BlackBerry.
• Plaxo - Although it’s an old service (offered since 2005), Plaxo still has a lot going for it. Its “Personal Assistant” plan at $6.67 a month pulls up information and photos from Facebook, LinkedIn, the White Pages, and other places. This platform works with virtually any email client and continuously finds new information - including work addresses and phone numbers - as it comes along. Plaxo also supports an unrivaled amount of mobile devices, including Android, iOS, BlackBerry, and Windows Phone.

Before your contact list spirals out of control, you need to adopt the right kind of technology. Keeping your list organized will give you one less thing to worry about - another step in reducing the struggles of running your business.

Improve Salesforce Productivity With Sales Route Mapping Software

Smartphones and tablets have become vital to the way sales professionals connect with information and data. A 2012 survey by the Aberdeen Group of 250 organizations on best sales techniques revealed that majority of the best-in-class businesses were allowing their sales force to remotely access tasks (71%), view/ edit CRM data (74%) and synchronize calendars/ contacts (89%).

At Small Business Technology we are big fans of tools that enhance business mobility, for example - mobility management software, remote file access and tools to manage virtual teams; which brings us to the topic for this post - sales route mapping software.

What is sales route mapping software? It’s a software that helps plan the appointment route in the most logical manner.The sales route mapping software recommends the number of clients that can be met during a business day and the most efficient route to be followed between appointments, thereby saving time and improving sales force productivity. In planning appointments, client data can be filtered across important parameters such as previous sales generated per customer, to schedule sales visits in the most productive manner.

Sales route mapping software is also a tool for accessing valuable customer data on the go.  Appointments cancelled at the last minute are an all too common occurrence. With the sales route planning software, your staff can immediately access information on clients in the vicinity that can be met before the next scheduled appointment. With a click of a button, the sales staff can view business potential of these unplanned for client visits, when the clients were last visited, quickly view their website, business hours and even the exact office location. Sales route mapping software such as Badger Maps, also allow users to map information from public data sources on potential customers that may be approached between scheduled appointments for the day. 

Most sales route mapping software are designed to integrate with the company’s CRM  or contact management system.

Three sales route mapping software options

Badger Maps -  Depending on the number of proposed users  you can choose from 3 pricing options, with monthly charges varying from $15 to $35 per user. The commercial and enterprise editions also include a manager view that allows the team leader to view each sales person’s territory, respective customer locations and also remotely communicate a sales call schedule for the day.

Route4Me - Their pricing is based on the number of routes being mapped, versus Badger Maps which is basis number of users. The personal plan priced at $15 a month is for planning up to 25 routes a month and the more popular pro plan at $50 is for planning up to 100 routes a month.

Microsoft MapPoint-  It can be used for defining sales territories, analyzing sales performance and charting routes for sales calls. This software provides offline access to detailed information on streets and highways in the United States and Canada. It also includes information on 2.5 million points of interest such as restaurants, gas stations, ATM’s, hotels, pharmacies etc.  More suitable for larger businesses, the software is priced at $299.99.

All the three sales route mapping software offer a free trial version as well.

Sales route planning software can minimize unproductive travel time for your sales team, improve employee productivity and reduce travel costs. Businesses that are based on fleet-on-street such as appliance repair, pest control, landscaping, appraisers, logistics and medical delivery services can benefit greatly by deploying a route mapping software.

 

Improve Salesforce Productivity With Sales Route Mapping Software

Smartphones and tablets have become vital to the way sales professionals connect with information and data. A 2012 survey by the Aberdeen Group of 250 organizations on best sales techniques revealed that majority of the best-in-class businesses were allowing their sales force to remotely access tasks (71%), view/ edit CRM data (74%) and synchronize calendars/ contacts (89%).

At Small Business Technology we are big fans of tools that enhance business mobility, for example - mobility management software, remote file access and tools to manage virtual teams; which brings us to the topic for this post - sales route mapping software.

What is sales route mapping software? It’s a software that helps plan the appointment route in the most logical manner.The sales route mapping software recommends the number of clients that can be met during a business day and the most efficient route to be followed between appointments, thereby saving time and improving sales force productivity. In planning appointments, client data can be filtered across important parameters such as previous sales generated per customer, to schedule sales visits in the most productive manner.

Sales route mapping software is also a tool for accessing valuable customer data on the go.  Appointments cancelled at the last minute are an all too common occurrence. With the sales route planning software, your staff can immediately access information on clients in the vicinity that can be met before the next scheduled appointment. With a click of a button, the sales staff can view business potential of these unplanned for client visits, when the clients were last visited, quickly view their website, business hours and even the exact office location. Sales route mapping software such as Badger Maps, also allow users to map information from public data sources on potential customers that may be approached between scheduled appointments for the day. 

Most sales route mapping software are designed to integrate with the company’s CRM  or contact management system.

Three sales route mapping software options

Badger Maps -  Depending on the number of proposed users  you can choose from 3 pricing options, with monthly charges varying from $15 to $35 per user. The commercial and enterprise editions also include a manager view that allows the team leader to view each sales person’s territory, respective customer locations and also remotely communicate a sales call schedule for the day.

Route4Me - Their pricing is based on the number of routes being mapped, versus Badger Maps which is basis number of users. The personal plan priced at $15 a month is for planning up to 25 routes a month and the more popular pro plan at $50 is for planning up to 100 routes a month.

Microsoft MapPoint-  It can be used for defining sales territories, analyzing sales performance and charting routes for sales calls. This software provides offline access to detailed information on streets and highways in the United States and Canada. It also includes information on 2.5 million points of interest such as restaurants, gas stations, ATM’s, hotels, pharmacies etc.  More suitable for larger businesses, the software is priced at $299.99.

All the three sales route mapping software offer a free trial version as well.

Sales route planning software can minimize unproductive travel time for your sales team, improve employee productivity and reduce travel costs. Businesses that are based on fleet-on-street such as appliance repair, pest control, landscaping, appraisers, logistics and medical delivery services can benefit greatly by deploying a route mapping software.

 

The Latest News on Employee Health Insurance at Small Businesses

The cost of employee health insurance at small businesses rose faster than inflation last year, with the annual premium for family coverage at the average 3-to-199 employee company increasing by $328 to $15,581, the 2013 Kaiser Family Foundation Health Benefits Survey reveals. Despite (or because of) our policy makers’ efforts, employee health insurance remains a burden for small business owners.

Measured in inflation-adjusted terms, the cost of employee health insurance has nearly doubled since 1999, when Kaiser Family Foundation data show that the average annual premium for covered workers with family coverage at small businesses was only $7,968 (in 2013 dollars).

Rising Costs and Dropping Coverage

As costs have risen, the fraction of businesses willing to provide insurance has dropped, with percentage slipping from 66 percent in 1999 to 57 percent in 2013 - the lowest level since the Foundation began reporting the data in 1999.

Small businesses account for all of the decline in the share of companies providing insurance. While the same percentage of businesses with 200 or more employees provided coverage in 2013 as in 1999 (99 percent), the fraction of businesses with between 3 and 199 employees that offered employee health insurance declined from 65 percent to 57 percent over the same time period, the Foundation’s report reveals.

The drop in coverage has been steepest at the smallest firms. From 1999 to 2013 the fraction of businesses with 3 to 9 employees offering employee health insurance declined by 18 percent. For businesses with 10 to 24 employees, the drop was 8 percent, for businesses with 25 to 49 employees, it was 3 percent, and for businesses with 50 to 199 employees it was 6 percent, Kaiser Family Foundation data show.

The link between rising health insurance costs and declining provision of coverage is not surprising. The primary reason why small firms do not offer employee health insurance is cost, a point made by 50 percent of the survey respondents whose businesses do not offer employee health insurance. By contrast only 16 percent gave the next most common reason - because “the firm is too small” - the foundation’s report reveals.

Health Insurance and Your Piece of the Pie

Health insurance costs are taking a growing slice of employee compensation. Bureau of Labor Statistics data reveal that health insurance now accounts for 8.6 percent of employee compensation, up from 5.8 percent in 1999. The cost of health insurance is now higher than all legally required benefits (social security, Medicare, federal and state unemployment insurance, and workers compensation) combined. And health insurance costs account for nearly twice the fraction of employee compensation as retirement benefits.

Small company owners have sought to mitigate the adverse effects of rising costs by moving to insurance coverage with higher deductibles. The Kaiser Family Foundation’s data show that employees paid only a slightly higher fraction of the total cost of family coverage in 2013 than they did in 1999 (34 percent versus 32 percent). However, 58 percent of workers in businesses with between 3 and 199 workers now have an annual deductible of $1000 or more for single coverage, up from 16 percent in 1999. The fraction with annual deductibles of $2000 or more rose from 6 percent in 2006 to 31 percent in 2013.

The cost of small business health insurance continues to increase, leading owners to look for ways to cope. Only time will tell whether our policy makers’ efforts to help have alleviated or exacerbated the problems.

Health Insurance Photo via Shutterstock

Building Trust: 5 Tips to Establish Your Credibility for Business

In the age of the trust economy, credibility has become everything. That includes your personal credibility, the credibility of your brand, your business, your products and services and of everything else you do.

Huge advertising budgets and PR campaigns are not a substitute for credibility. That’s good news for the small business owner who now has a more level playing field when it comes to getting their message out. But it also means spending more time establishing and maintaining your credibility because your business depends upon it.

Establish Credibility on Your Website

Think of your website as a kind of online handshake. It’s a way people instantly assess you and your business. Many people will get their first and most lasting impression of your business from what they find there.

This isn’t necessarily about your website’s design or responsiveness (though those things certainly are important.) It’s about the kind of message your website sends about you and your business.

Stanford Web Credibility Research project at Stanford’s Persuasive Technology Lab has created these 10 guidelines for establishing credibility with your website. They include listing third-party certifications and associations, showing that there’s a real organization behind the website, making your website easy to use, allowing people to contact you easily and more.

Establish Credibility in Your Product

Don’t strain your credibility by being willing to sell just anything. The products and services you sell should be those you are willing to put your name and face behind.

In fact, in a video presentation, author, hedge-fund manager and entrepreneur James Altucher talks about the most important thing you as an entrepreneur must learn how to sell, yourself.

Consider selling “freemium versions of your product to demonstrate the quality to your customers. They can buy enhanced versions of your products and services, if they like what you are offering for free.”

Establish Credibility in Your Brand

The most important quality you will need to establish credibility in your personal brand is consistency, writes Celine Roque a Gigaom.

This means making sure that every time you are visible on social media or elsewhere, potential clients and customers see you being exactly what they expect you to be.

This can be a lot of hard work, as it turns out. And that’s not because of the effort to avoid projecting the wrong image.

Much of your time and effort will be spent trying to project the right one. This can include posting consistently on your blog, maintaining a very visible social media presence, possibly writing books, excepting speaking engagements, speaking at conferences and keeping up an aggressive guest blogging schedule. All of this done to send a clear message about who you are and what you stand for.

It’s a necessary part of maintaining credibility in your personal brand.

Establishing Credibility in Your Reputation

Another reason to avoid selling just anything in your business, is that the Internet has made the world transparent. Making the mistake of backing anything even remotely questionable can have a dire impact upon your reputation. It’s critical to maintain a good reputation or your business will suffer.

Resources that publicly expose questionable products and services are everywhere. Sights like Scambusters.org and The Salty Droid are in the business of  exposing scams and questionable products on the Internet.

So don’t get your business anywhere close to any of these.

Establish Credibility in Your Social Media Efforts

We’ve touched on this above, but several things go into establishing credibility in your social media efforts. To begin with, it’s helpful to start with an audacious plan of action to improve your social media presence.

Start with a commitment to take time to build your network, try to make difference, shine a light on others and work harder on having real conversations.

You’ll be surprised how much these simple efforts will improve your social media efforts in the long run.

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