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Setting up a Small Business Infrastructure

May 26, 2008

Part III:  Tools, Benefits and Policies

Other key decisions in setting up your business infrastructure include incorporating the tools that will manage day-to-day operations and deciding what the company benefits and policies are.

Line up your tools.
Leverage technology whenever you can.  I know from experience that the Web is the best way to do business. It is the driving force of my current and former businesses and has driven many of my business decisions. All of my advisers need to connect to the Web. Most of our tools—from our phones to our financial information—are accessed online. We use Quickbooks on line, as well as, of course, and PayCycle.  For me, the web allows me to work from anywhere.  This is one of the key advantages of starting and running my own business.  As they say, “the noose is looser and the leash is longer.”  As a result of Web tools, I am able to run a 25 person business with limited infrastructure, (one day a week of outside accounting/bookkeeping help) and one day a month of IT.

For our phone system, we use Voice over Internet Protocol (or Voice Over IP). I choose VOIP for a couple of reasons but mostly because it is simpler to set up and cheaper than working with the phone company.   One Internet connection can get you as many lines as you need.  I had a hard time investing in phone lines for all employees since we will most likely move and most employees don’t use a phone to get their job done. 

Determine your Policies.
In terms of other company policies, it’s best to have a framework or, better yet, a written policy before things come up.  Figuring out policies on the fly is awkward for you and your employees.  I know this from experience.  So take a little time to decide what you want to do about maternity leave or vacation time. You and your employees will be glad to know what the policy is. 

One thing we didn’t discuss in the post about hiring employees was compensation. Something I would encourage anyone to do is to offer stock. I think it’s really important to provide stock to all employees, so that everyone is an owner. We spend most of our lives at work and all of us want to belong.  Giving stock to employees is one way of telling them that they belong.  You of course get the added benefit of employees knowing that they are an integral part of the growth and success of the company.

Another policy to mull over before making a decision is whether you want to offer the more traditional vacation time and sick leave versus an overall Paid Time Off (PTO). PTO is like having a bank account of time for your employees to draw from for vacation time, as well as sick leave, a mental health day, or an emergency. (Find more info on this topic here.) After experiencing traditional vacation policies for the last 20 years, I switched to PTO.  The main reason is that I wanted to give the same benefit to all employees.  My experience shows that some employees never get sick while others use all of their sick time immediately.  It just wasn’t fair to the folks that didn’t get sick.  With a PTO policy, all time off is the same.  If you are not sick you get more time for vacation.  This seems like a better message to send to employees. 

At Paycycle, our health insurance covered the employee but not the dependent. As the company grew, I saw how much people were paying for their dependents.  I wanted to do more for employees but wanted to be fair to employees without dependents.  When I started, I made a decision to go with  a Health Savings Account (HSA) High Deductible  Insurance plan. The key to the HSA is that once you offer and contribute to the HSA, the employer is required to use a high deductible health insurance plan.   The HSA is an employee account that employees and employers  can invest money into to save for future medical expenses,.  Most contributions and all earnings are tax free. Employees then use the funds in the HSA to cover medical expenses not covered by the deductible of the health insurance plan. The funds contributed by the employee and employer are vested immediately and are available to the employees to use today or in the future. I made a decision at to contribute all of the savings from the higher decutible health insurance premiums and then some more to the employee accounts. Ultimately, I increased the contributions so that I felt that employees' dependents were getting some coverage.  The HSA allows me to contribute equally to those without dependents to use at some future date. If you are interesting in learning more please check out this site. Also, here’s an easy-to-understand brochure on HSAs from the Department of the Treasury.

That's the end of the series on small business infrastructure. Next we tackle customer service.

One Comment
  1. Great advice!
    More than 6 million Americans have chosen the lower cost HSA qualified plans so far. With common sense articles like yours the number will grow exponentially.
    We have a website that is a tremendous resource for those that are trying to understand HSAs along with
    Keep up the good work!

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