RoadBlock Busters

Roadblock: Replacing Benefits

Insurance, a retirement plan, paid holidays and paid vacations are the primary benefits you're probably getting now but will have to provide for yourself once you're on your own. And there may be other benefits, depending on how creative and generous your employer is, that you'll have to either replace or do without when you resign from your job.

Begin by determining the benefits you actually need, and which ones are the special bonuses. In nearly all cases, you'll be mainly concerned with life, health and disability insurance. Buying such coverage yourself may seem expensive, but Gorman realized "it's actually quite reasonable" when he weighed the cost against the risk. Be sure the cost of essential benefits is included in your financial forecast.

Boggs points out that if you're earning more by being self-employed than you were as an employee, you can afford to spend more on benefits.

If you've been on the job with your employer for a significant length of time, Urbach suggests taking a look at your plan to see whether you're eligible to continue any of your benefits after you leave the company. Then shop around. Benefit providers that once ignored small companies are now eager to compete for your business.

You'll find providers on the Internet, as well as through agents, trade associations and government-sponsored programs designed to help small businesses. Don't assume that the first price you're quoted is what you'll end up paying, or that you can't negotiate various points of a benefits package. For instance, Gorman was able to arrange a payment plan for some of his insurance policies that matches his company's seasonal cash flow.

You might want to think about purchasing insurance products, such as disability, before you quit your job. A good example is when Boggs knew she would need disability coverage but didn't secure it before she started her company. Afterward, she found the disability option difficult to get because she didn't have any "proven income" to insure. Discuss your plans with your insurance agent, and check the policy to make absolutely certain it'll cover you after you start your company.

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This article was originally published in the May 2000 print edition of Entrepreneur with the headline: RoadBlock Busters.

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