The surge of rising health-care costs.
This year, entrepreneurs will be hit hard by increases in health insurance premiums. In fact, benefits consultants are reporting rates for many small businesses will increase by as much as 50 percent in 1999.
How are small businesses affected by health insurance inflation? If you have 10 employees and just two of those employees have babies in the same year, 20 percent of your employees will incur major hospital bills. That's a significant increase in the claims you file that year. Insurers typically compensate for the unpredictable nature of small- business claims by charging hefty premiums.
Entrepreneurs can fight this inflation in a number of ways. First, you can stop offering health insurance. With today's squeezed labor market, however, this option could knock you out of competition for top-notch employees.
Another choice is to join a health insurance purchasing alliance that pools your insurance needs with other entrepreneurs in your area, thus reducing policy costs for each participant. To locate alliances in your area, contact your local chamber of commerce or your state's insurance department.
You can also ask your employees to share part of the burden. "Many may be covered by their spouse's policy," says Barry Schimel, president of The Profit Advisors, a Rockville, Maryland, business consulting firm. "They'll drop the plan if you ask them to pay even a small amount, and you'll still be offering coverage to the people who really need it. Everyone wins."