In a recent commentary in the Wall Street Journal, by Harvard Business School dean Nitin Nohria, titled ” Appreciating the Big Role of Small Businesses” http://www.wsj.com/articles/appreciating-the-big-role-of-small-businesses-1472855429 a great point is made that should be the focus of many small business owners. The article pointed out that Harvard Business School now has a class dedicated to teaching “Financial Management of Smaller Firms.” MBA students are taught how to seek out, purchase and run small businesses. The thrust of the article is that while many, or most, small businesses are run by owners, incapable of growing their business, a young energetic MBA can bring new ideas and innovation into the market place. Dean Nohria does state correctly that business schools have not spent a lot of time  doing case studies of small businesses because they are not considered dynamic and most MBA grads want to work for a large corporation. The great point is, however, that you do not need to sell your business to a young MBA in order for it to grow.

It has been pointed out many times that Small Business is the engine that runs America’s economy. The problem with many is, which Harvard would find out if they did case studies, the owners of small businesses spend most of their time managing and keeping the business going. This leaves little time to learn the new and innovative ideas coming out of the idea factories. The choice trying to keep up with all the new information, running the business and having time for a personal life. while some will look to bring in a consultant of business coach most assume this is not an option because of the expense.

Today business consulting has become as specialized as many professions. There are Marketing consultants, Financial consultants, Information consultants, and a number of others.  What most small businesses need is a general practitioner, some one who can analyze the business and look for the most common solution, or see a deeper problem and suggest a specialists.

Another area that confounds and confuses the small business owner is the increasing number of government regulations. One of those regulations comes into effect on December 1st and is known as the new overtime or final rule. The impact on small businesses will be one I do not think the government has taken into full account http://smallbiztrends.com/2016/06/new-overtime-rules-2016.html the rule increases the level of salary at which the employer must pay overtime.

Key Provisions of the Final Rule

The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:

1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

In other words the small business owner must decide to:

1. Increase the salary of those fulltime employees who will be eligible for  overtime, which may not be financially advisable.
2. decrease the hours of those employees so they do not exceed 40 hours or are no longer fulltime, decreasing productivity.
3. Reducing the number of employees and allowing those remaining to work overtime to make-up the difference.

The next rule to impact business comes into partial effect in April of 2017 and full effect in January 2018. The Labor Department’s fiduciary rule is aimed at stopping financial advisors from putting their interest before those of their clients in regards to retirement accounts. While in theory this is a wonderful idea in practice it may have the effect of stopping small businesses from getting needed advice, as their financial advisors will be loth to give good advice lest they be fined, and fined heavily.

JANUSThink was founded on the philosophy that it is better to give back to the business community then to watch small businesses flounder and die. There is a better way to bring process improvement into your business then selling to, or bringing on full time, an MBA from one of the nations excellent business schools, bring in a consultant with knowledge and experience to help you move to the next level, even if that level is keeping the doors open.

JANUSThink’s payment schedule is designed to help any business get were they need to go. As a general practitioner we cover a wide area of knowledge and have partnership arrangements with those specialist that can assist as needed.

Please contact us for a free initial consultation.