Leveling the playing field for America’s small businesses
Amidst the roiling atmosphere of political, societal and environmental volatility, American news coverage in the past year has largely lost sight of a powerful source behind our nation’s economic momentum: nearly 30 million small businesses. According to the U.S. Small Business Administration, this group:
- Represents 99.7% of all American business
- Provides 47.5% of the private sector jobs for 59 million people
- Contributed about 50% of our Gross Domestic Product (GDP)
Despite how consequential this segment of our economy is, it is also vulnerable. Even though small business owners in 2019 said they felt more optimistic about their prospects, according to data from the U.S. Bureau of Labor Statistics, about 20% of small businesses fail within their first year. By the end of their fifth year, roughly 50% of small businesses fail, and the survival rate drops to approximately 35% after 10 years.
There is no way to generalize the opportunities and challenges for these millions of diverse U.S. businesses. But the reality is that running a small business is hard. And, some of the thorniest and most volatile issues impact many — if not most — small and mid-sized businesses. This is exactly why at Zenefits we’ve doubled down to help level the playing field for America’s “other 99.7%.”
Here are a few examples of how America’s small business innovators are using Zenefits to help manage their people operations issues, with confidence. These are the companies and stories that inspire us to do more, every day.
Issue: Record low unemployment.
The battle for talent is real at every level and across every industry. Finding skilled employees, whether for construction or cardiac surgery, gets harder every day. Add to that the limited reach and resources of a small business — as well as the lowest national unemployment rate in history — and you understand the growing challenge.
We look at this from two perspectives: First, to help companies better compete for new talent by enabling a seamless, online offer-to-onboarding process. Second, and just as important, we support better employee retention with employee benefits and tools to enable and track continual development, goal-setting, and well-being.
We also help automate the hiring cycle with online access to offer letters, required compliance paperwork and benefits enrollment information. On average, this means saving 50% of the time required for companies to onboard new staff and get employees into their jobs sooner. Here are a few examples:
- At Zagster, faster onboarding was the difference-maker in 2019. The company made a business pivot that resulted in mammoth nationwide growth from 50 to 500+ employees in less than a year. The bike and scooter rental company shared its decade of expertise in micro-mobility to become the operations team for personal mobility manufacturers. Today, Zagster can scout a new location, arrange warehouse space, recruit, hire and train a team in a new location all in four to six weeks.
- Sky Trail Management and Development acts as the back office for sales, marketing, finance, and HR for more than a dozen customers with a total of 200+ employees. Improving the speed to offer letters — all available via mobile phones — for seasonal family entertainment staff, mostly college students, helps their brand look bigger and more compelling, making it easier to outpace other seasonal employers.
While pay matters, in a tight hiring market it’s also important to retain talent by ensuring they are learning, growing, developing and feeling connected to a meaningful business purpose. We help businesses more easily set and manage performance development, goal-setting and tracking to keep businesses growing and employees engaged. Further, by closely monitoring feedback from more than 11,000 customers, we continue to make it easier to deliver tools for financial and well-being tracking.
- At Feedonomics, Inc. Magazine’s top 100 fastest-growing companies, the founders know their best retention advantage is the broad growth opportunities that come with 100% annual growth in their business. They keep that scope in check with regular 1:1 check-ins to ensure their unique culture is delivering for their carefully selected staff.
Issue: Competitive benefits costs are skyrocketing.
It’s no secret that healthcare costs are becoming untenable. In 2018, the median household income in America was $59,000. Healthcare costs for a family of four accounted for 21% of that income and a whopping 48% of that income when you add in the employer portion of the cost. Small businesses don’t have the bargaining power that large ones do. In fact, they pay on average 18% more per employee for insurance coverage. Beyond all that is the immense administrative drain — and cost in time and resource — to find, offer and manage the benefits enrollment process, which is often fraught with paperwork, faxing and errors from incorrectly reading and recording. Our customers pair our all-digital benefits administration technology with their choice of the best insurance brokers to get the most from their investments.
- At Coney Island Prep, a charter school for K-12 in Brooklyn, NY, great benefits — from healthcare to commuter benefits — are key to attracting and supporting their passionate teaching staff. The school has helped 100% of their graduates leave high school with at least one college acceptance in hand — in an inner-city where the odds are against completing high school at all. And with Zenefits, the nonprofit ensures its employees have easy access to a growing set of benefits, from day one.
- Five-year-old product support platform company, Boomtown, needed to better manage the 10%-20% annual increase in benefits costs as its business grew. They leveraged the ease of open enrollment with Zenefits and the cohort rate reductions from Sequoia Tech (a Zenefits Certified Broker Partner). The result is a more manageable and predictable benefits investment.
Issue: Employment-related regulations.
Even while Washington is walking back some federal compliance mandates, states, and local municipalities continue to advance a wide (and varying) range of regulations that companies of all sizes must adhere to — from minimum wage to the new AB-5 definitions in California for “gig” versus company employees. This is a huge job to track even for big businesses with deeper pockets and staff trained in regulatory compliance. It quickly becomes untenable for small businesses. And, as technology enables small businesses to operate across the country and internationally, managing compliance becomes even more critical.
We get in front of this by tracking compliance and alerting our customers to upcoming deadlines as well as putting compliance forms online, where they can only be submitted when complete.
- One of our customers, Jodie Heal, was an auditor for years before starting her own accounting practice in rural Maine. She reminds her 300 small business customers that while large companies miss compliance often, the cost of fines for incorrectly/incompletely filling in I-9 employment forms alone could be the difference between making payroll and staying in business for a small company.
- LeapPoint Consulting’s hiring strategy — recruiting the best resources, regardless of location — has contributed to its ranking by Forbes as one of America’s Best Management Consulting firms. They use Zenefits to help them absorb the litany of registrations and compliance each time they hire someone in a new state.
As we usher in a new year and new decade with all its inherent business challenges, we’re resolute in our mission to materially reduce the number of small business failures. We’re “in it together” with an exceptional group of employees and a deep network of insurance carriers, benefits brokers, HR and productivity tech providers to help small businesses and their employees. Ultimately, by leveling the playing field for small businesses, we help ensure a thriving U.S. economy.