Welcome to the Small Business Run Down. Each day, we bring you stories that impact small business owners and their workforce.
Monday, Monday. Let’s start our week by looking at the surprising relationship between vaping and small businesses … followed closely by SMB efforts to reduce health benefit costs and how new federal bankruptcy laws may actually favor small business.
Crackdown on vaping hurts mom-and-pop shops
As vaping has grown in popularity over the past decade, mom-and-pop vape shops have mushroomed across the country, making them one of the fastest growing retail segments in the nation. These businesses represent a significant percentage of small businesses with fewer than 10 employees and add jobs and revenue to local economies. Recent vaping-related deaths, however, have heightened scrutiny and increased regulation threatens to favor larger companies with deeper cash reserves.
The Number: 93%. Okay, see if you can follow this statistic: “Two thirds of vape-shop workers are employed by the 93% of businesses with fewer than 10 employees.”
The Quote: “When you have regulations that are increasing the entry cost of any particular industry, that tends to favor the large incumbents.”
SMBs look for solution to high-cost healthcare by banding together
Providing an attractive benefits package with affordable healthcare is becoming increasingly difficult for small businesses, according to a recent survey. Many SBOs prefer a private sector solution over government intervention, with 92% favoring the ability to join together with other small companies to gain bargaining power when buying healthcare plans for employees.
The Number: 69%. A national survey of 500 businesses found that paying for benefits already accounts for a large portion of bottom-line operating cost and 69% of businesses report that the problem is getting worse.
The Quote: “Without advantages such as a larger pool of insured employees, more bargaining power with health insurance companies, and the benefit of full-time human resources personnel, small-business owners are often left with little recourse and few options when a health insurance carrier hikes costs.”
New law makes it easier for small businesses to declare bankruptcy
Slated to go into effect in February of 2020, the Small Business Reorganization Act of 2019 seeks to make it less painful for SBOs who have to declare bankruptcy. Reorganizing a business in the bankruptcy process can quickly rack up costly accounting and legal fees. Under the new law, the process takes much less time and is significantly cheaper.
The Number: $8,000. In the past, declaring bankruptcy could cost tens of thousands of dollars. The new law seeks to streamline the process and is expected to keep the cost closer to $8,000 on the high end.
The Quote: “Struggling small businesses should consider it as a potential remedy to their financial distress.”