|By Marketwired .||
|January 28, 2014 04:31 PM EST||
GLENVIEW, IL--(Marketwired - January 28, 2014) - Recent legislation in thirteen states to raise the minimum wage, various increases in some cities across the country, and news that an executive order may soon mandate an increase on federal contracts, means small business owners will face yet another challenge to build, sustain and grow their business in a difficult economic environment.
If the federal minimum wage increases, 31 states that do not have a higher minimum wage would be mandated to a new federal standard. Right now, the Congressional wage bill is seeking $10.10 as the federal minimum. In an election year, expect to hear a great deal more on the subject. Small business owners can take steps to mitigate the impact.
"Whether you're in favor or against minimum wage hikes, few would argue that small business owners, in comparison to large corporations, often face greater challenges to absorb increased costs to run their businesses," said SurePayroll CEO and President Michael Alter. "Margins, pricing, cash flow and credit access already loom in the background for small business owners. As a result, increased regulatory pressures may place a disproportionate burden on these businesses."
According to the National Federation of Independent Businesses (NFIB), the small-business sector has historically created two-thirds of net new private jobs in the U.S. economy, however, this sector has been slow to recover in recently due, in part, to a series of government policies. For instance, higher taxes, increases to health-care costs, more costly regulations, and now the potential minimum wage increase impact small businesses ability to recover and grow.
Historically, economists have been divided on the impact of raising the minimum wage on businesses, and consequently on the minimum wage job market. A recent University of Chicago poll of economists found that it will be much more difficult for people to find these jobs, suggesting a reduction in employee hiring or hours. On the other hand, consumer spending and employee retention efforts may positively impact small businesses and minimum-wage employees.
"In the end, the full impact to small business owners remains to be seen within the constraints of our new regulatory environment," said Alter. "However, similar to other challenges, it's all in how you prepare."
With this in mind, SurePayroll, a leading provider of online payroll services to small businesses nationwide, recommends the following six steps to prepare for potential negative impact.
- Understand profit margins, projections and business requirements to ensure profitability.
- Determine permanent hiring vs. contracting decisions for staffing needs.
- Make good hiring decisions -- mistakes can be costly since training/onboarding new employees is a considerable investment.
- Invest in employees -- turnover decreases productivity and increases business costs.
- Be sure to employ time and cost saving tools to standardize back office tasks. Consider outsourcing to easy affordable services like SurePayroll that allow you to focus on growing business not administrative functions.
- Research competition and adjust pricing accordingly.
SurePayroll may be one of many tools small business owners will consider to help them save time and focus on building and sustaining business in the ever-changing competitive landscape. Let us know how the minimum wage increase may impact your business http://blog.surepayroll.com/minimum-wage-poll/.
SurePayroll is the trusted provider of easy online payroll services to small businesses nationwide. Whether a business has 1, 10, or 100 employees, SurePayroll delivers peace of mind by combining innovative, industry-leading technology and personalized support from an award-winning, U.S.-based customer care team. SurePayroll also provides private-label and co-branded services for accountants and banking partners as well as offering efficient online solutions for managing 401(k) plans, health insurance, workers' compensation, employee screening and more. SurePayroll is a wholly owned subsidiary of Paychex. For more information, please visit www.SurePayroll.com. Follow us on Twitter -- Circle us on Google -- Connect with us on LinkedIn -- Like us on Facebook.
Paychex, Inc. (NASDAQ: PAYX) is a leading provider of payroll, human resource, insurance, and benefits outsourcing solutions for small- to medium-sized businesses. The company offers comprehensive payroll services, including payroll processing, payroll tax administration, and employee pay services, including direct deposit, check signing, and Readychex®. Human resource services include 401(k) plan recordkeeping, section 125 plans, a professional employer organization, time and attendance solutions, and other administrative services for business. A variety of business insurance products, including group health and workers' compensation, are made available through Paychex Insurance Agency, Inc. Paychex was founded in 1971. With headquarters in Rochester, New York, the company has more than 100 offices serving approximately 570,000 payroll clients as of May 31, 2013. For more information about Paychex and our products, visit www.paychex.com.
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