With the new minimum wage taking effect this month, many small businesses are wondering how they will absorb this increased cost. Here are four steps you can take to offset the change in payroll.
Colorado is one of 19 states to approve an increase in the minimum wage this year, raising it to $9.30 on January 1, 2017. By January of 2020, the minimum wage will eventually reach $12.The issue of minimum wage is one that is highly contested among business owners across the country, however a 2014 survey shows more than 60% of small-business owners agreed with raising the minimum wage to at least $10.10 an hour, while 35% opposed the change. Nonetheless, Increasing the minimum wage can have serious implications for small businesses, as payroll is one of the largest expenses a business has. Here are some tips on how to prepare your business for upcoming minimum wage increases.
1. Schedule Employees More Efficiently
Look at your company’s schedule and see if you can create a better staff schedule that will save you some money when it comes to payroll. Another option is to consider closing your business during times when it’s usually slow. You can also reassess your overtime restrictions for your staff; if an employee is making $12 an hour, the rate is $18 per hour of overtime, which can make payroll hours add up quickly.
2. Adjust Prices
To balance out the losses from payroll, you may want to consider increasing your prices. Make sure you price your product correctly by researching prices from similar businesses in the same sector. If you set your prices too high, customers will be reluctant to frequent your store.
3. Hire Top Talent
Your staff should be considered an investment, so hiring the most talented employees is a great way to help your business retain its value. One important thing to take away from dealing with minimum wage increases is the importance of having a loyal workforce. When searching for potential new employees, look for people who will be worth the cost and are interested in staying at your business for a while, so you don’t have to worry about regularly training new staff. PEO’s are a great way to find and recruit the best talent for your business without the extra cost.
Interested in saving your business time and money? Contact us at Staffscapes to learn more about how our PEO and HR services can benefit your business.