Get Used To It

I was recently listening to people my age trash online social networks and specifically, Facebook. I think Facebook was the chosen goat because that’s the only social network name that everyone could recall. It’s interesting how so many in the graying group proudly announce that they don’t participate in online social networks. I can remember when some of my friends didn’t have a phone; I can remember one who didn’t have electricity. That all changed, and so will attitudes toward online social networks.

Look around at any given setting and notice how when people are given a moment of free time, they’re checking their mobile devices, which are those things that some people still call a phone. And, it’s not just the younger generation; these days everybody is a palm reader.

Why should a small business owner care about social media? Millennials. What are millennials? They’re the thirty and under gang who are now beginning to shop with their own money. And, the way they make their choices is radically different than their parents.

Millennials aren’t easily influenced by traditional marketing strategies and are heavily dependent on product reviews from family, friends, and even internet strangers they’ve never met. When you think about it, taking the word of a total stranger isn’t much different than my generation being influenced by the likes of John Cameron Swayze tossing a Timex into the sea to demonstrate the watch’s durability. We all believed that a Timex could take a licking and keep on ticking. What the heck did Swayze do to earn our trust other than appear on TV?

Millennials use Facebook. The average Facebook user has 130 friends, but a Facebook friend is different than a real friend. A real friend will help you change a flat tire; a Facebook friend would consider the idea of actually meeting you in person kind of creepy. Facebook users like to share information. Let’s do the math. A person posts something of interest on their Facebook and all 130 of their friends see it and then share that with their friends. And then, those friends share the post with their friends. Even when considering for the likelihood of mutual friends, the original post is shared with literally thousands before the day is through. A business can do the same thing, except a business Facebook has fans, which are the same as friends, except different. Confused yet?

The viral nature of online social networks is intriguing but that’s not the most important element. It’s no longer kids playing on their phones. This wireless linking is now the primary source of information for the next generation of shoppers. The sooner a business gets in the mix and begins building an online brand, the better. The longer one waits the more difficult it will be to break through the clutter and be fanned or friended by the next generation of shoppers. Get used to it.

Affordable HealthCare Act

The Supreme Court has ruled. And ever since, too much time is being spent discussing if the so-called penalty should be classified as a tax. No matter the classification, it’s money that will be taken from the private sector and spent by the government. A more productive discussion addresses how the ACA will affect individuals, families, and businesses. After browsing the IRS website, I’ve boiled it down to a few talking points.

Insurance companies will be required to provide coverage for everyone by 2014, regardless of a pre-existing condition. In my opinion (IMO) this will cause premiums to rise.

Everyone will be required to have insurance. IMO – this should cause premiums to decrease. Except, there’s the penalty option which states that people without healthcare coverage will be required to pay. And the penalty option may be the less expensive choice. But then, there’s the tax credit feature that offers those who can’t afford healthcare a government subsidy to cover those costs.

Businesses with 50 or more employees will be required to provide health care coverage. If a business with 50 or more employees does not provide healthcare coverage they will be assessed a penalty of $2000  x their employee head count minus 30. Confused yet?

If the business does provide coverage and pays more than 60% of the cost, then they’re home free – almost. If any employee is paying more than 9.5% of their family income for health care coverage, then the employer must pay a penalty of $3000 x their employee head count minus 30. So, it’s easily possible for a business to provide healthcare coverage and still be assessed a very heavy penalty.

IMO – due to the potentially rising cost of individual healthcare coverage, businesses that employ more than 50 will find it difficult to escape the penalty. Many will choose to pay the penalty and drop group healthcare coverage. It’s impossible to know what affect that will have on individual cost of health care.

Businesses with less than 50 employees will qualify for tax credits to subsidize the cost of coverage. The amount of the tax credit is inversely proportional to the average employee’s compensation - the lower the average compensation, the higher the tax credit. IMO – this could result in small firms keeping the average compensation low in order to gain a higher tax credit.

There’s a lot of talk about tax credits and affordability. But there’s little talk about how the tax credits will be funded. In most cases, tax credits are a reduction of a tax liability. With regards to the ACA, tax credits are monies received separate from one’s tax liability.

The bill includes a long list of tax increases and new taxes in order to fund the tax credits. This list is complicated but can be found on the IRS website.

IMO – the ACA deals only with cost coverage and does nothing to address health cost drivers. And worst of all, the ACA will increase the overall cost and the decrease the quality of healthcare for everyone.