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Guest Post: HSAs, Auto Insurance, and Uncle Sam

April 21, 2010 in Guest Post | 3 comments

A few months ago I went to get an oil change and wound up hanging out all morning while they did other things to my car – truth is I know as much about nuclear warheads as I do about the inner workings of my car, but it was the kind of stuff that gets old and has to be replaced when you hit 80,000 miles or so. It cost me around $500 and, get this, my auto insurance didn’t pay a dime! Are you stunned? Of course not. My auto insurance, like yours, is there in case I have a wreck. What if I could sell you an auto insurance plan that would allow you to pay a $35 “copay” every time you had to get some work done on the car, and maybe gave you a couple oil changes for free each year? What do you suppose that would cost?

Here’s the deal – your auto insurance is a lot less than it would be if it paid for all of your routine maintenance. And guess what? Health insurance is the same way. Imagine a health insurance plan that gave you “collision coverage” by putting a cap on your expenses at a pre-determined deductible each year (for our example, let’s call it $5,000). Rather than paying for oil changes and new tires, it simply gives you the peace of mind of knowing that whatever happens, you’ll never pay more than $5k for your family’s medical needs each year. Do you think your premiums would look different?

The idea behind health savings accounts is pretty simple. Everyone needs protection against the big-boy expenses that come with American healthcare, but most people are paying WAY too much in premiums because they are paying for services they don’t really use that much. The HSA concept is that you lower your premiums by getting catastrophic health insurance coverage and take care of the front-end stuff on your own (though that front-end stuff typically counts towards your deductible). You then take some or all of the money you save on your premiums and put it into a tax-advantaged health savings account (HSA). Let’s outline a few key concepts on the HSA itself that will help get some common misconceptions out of the way:

·         The money has a triple tax advantage: It is not taxed going in, it grows tax free, and it is not taxed when you use it for qualified medical expenses. And the IRS definition of “qualified medical expenses” is actually broader than your insurance policy’s definition. Without confusing the issue, suffice to say you can use HSA funds to pay for things that may not be covered by your insurance policy, like dental or chiropractic care.

·         You cannot use it to buy an iPad without paying the income taxes plus a significant penalty.

·         Your HSA is yours, it does not belong to the insurance company.

·         Your HSA funds roll over year to year – this is not a use-it-or-lose-it deal.

The goal is to get to the point where you have 100% of the funds needed to cover your deductible in your health savings account. Then you’re totally good to go. You know, it’s kind of like putting some money away each month for new tires, routine maintenance, and the other inevitable expenses that come with your car so you’re not freaked out when it’s time to pay for your 80,000 miles checkup… but doing so with tax free money.

To be eligible to open and contribute to an HSA, you have to have a qualified health insurance plan, meaning one that meets certain criteria. (That’s where I come in!) The deductible must be high (but not too high) and the plan cannot offer “first dollar benefits” (think copay and drug card) before the deductible, with the exception of preventive care.

In short you lower your health insurance premiums, lower your taxes, and put a cap on your total risk exposure each year. If you can overcome “Copay Anxiety,” the HSA probably makes a lot of sense for you.

Alex serves as vice president of AC Forrest Insurance Group, an independent insurance agency specializing in innovative health insurance solutions for small businesses and families. The father of three small kids, he’s also a human jungle gym and cooks a mean quesadilla. To talk with Alex about your insurance situation, learn more about AC Forrest, or to experience more stimulating insurance blogging, visit www.acforrest.com.

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Guest Post: Kick Your Copay Habit (and other ways to lower your health insurance premiums)

March 24, 2010 in Guest Post | 5 comments

Look, let’s get this out of the way now. Health insurance does not provide the most gripping reading material, but it is one of those things that you have to deal with. Whatever your take on the ongoing debate in Washington, we have to work within the system we have now, and the problem with that system is that it is REALLY expensive. With rising costs and a down economy, most small business owners are looking for ways to take care of their team without killing their budget. Maybe you’re one of them. Let me offer a few suggestions. Not all of these will work in every situation, but perhaps a couple of them will help you.

  1. Raise your deductible. More than two out of three people don’t hit $1,000 per year towards their deductible. In other words, most people are over-insured. Of course, one out of one people will at some point reach their deductible because, well, stuff happens. That’s why you need good major medical coverage. But why not raise your deductible, lower the premium, and put some of the savings aside for the year your number comes up? That leads us very nicely to my second suggestion…
  2. Consider a Health Savings Account (HSA). An HSA allows you to save money with a triple tax advantage: the money is tax free going in, grows tax free, and is tax free as long as you use it for qualified medical expenses (and the IRS has a pretty broad definition of medical expenses). So the HSA will take your healthcare dollars farther. Because our host is a fine CPA, I’ll leave it to him to counsel you further on the tax benefits of an HSA. But do note – in order to open an HSA you must first have a qualified high deductible health insurance plan. The idea here is simple, you get major medical (catastrophic) coverage above the deductible, and you pay for everything before the deductible (though you benefit from provider discounts). You get a lower premium, and put the savings into your HSA to pay your portion. There’s much more that can be said about the HSA approach – and I bet we can get Jason to lend us a bit more space to dive a bit deeper.
  3. Kick your Copay Habit. This solution could really be categorized as 2a as copay addiction is the single biggest reason given for not taking an HSA-qualified health plan. Do you have health insurance or health-care financing? Health insurance exists to protect you from catastrophic medical expenses (like a $25k appendectomy or $150k bypass – real numbers). But the average health insurance plan includes a bunch of front-end goodies (like the office visit copay) that consumers have come to expect. But often you wind up paying a significantly higher premium for the ability to save $50 (give or take) the couple times a year you go to the doctor. Let me put it this way: Does your auto insurance pay for oil changes and new tires? Then why do we expect our health insurance to pay for routine maintenance? Kick your copay to the curb and put some of your premium savings aside to pay for the doc.
  4. Consider Individual Health Insurance. Most people assume they need to get on a group plan to get a better deal. In most cases, quite the opposite is true. Because there are fewer mandates and, yes, more underwriting, individual policies are almost always less expensive. They also remove the one-size-fits-all nature of a group policy, allowing each person to choose the coverage they want. The individual policy is also portable – a big plus in uncertain times. The underwriting issues are the key, though, and the result is that this option might not work for some people. But if it works, you could save a lot of money.

Like most things, the health insurance solution that fits you best is determined by your specific needs, situation, and budget. It’s not thrilling stuff, but it might be worth your time to kick it around.

Alex serves as vice president of AC Forrest Insurance Group, an independent insurance agency specializing in innovative health insurance solutions for small businesses and families. The father of three small kids, he’s also a human jungle gym and cooks a mean quesadilla. To talk with Alex about your insurance situation, learn more about AC Forrest, or to experience more stimulating insurance blogging, visit www.acforrest.com.

  

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Guest Post: Run Your Business Ideas Through a GRINDER!

March 10, 2010 in Guest Post, Videos | No comments

My friend and marketing coach at Biztrek, Gil Gerretsen, contributed a Guest Post for this week.  Twelve great questions you need to ask yourself before getting into a business venture.  It’s a Guest Video Post – check it out:

Many people have called Gil Gerretsen an oracle – a leader who has a unique ability to divine the potential and future of businesses.  He is CEO of BizTrek International, Inc., a worldwide alliance of small business owners learning and sharing the veracity (truth and power) of 12 Triggers that always produce more customers.  He is also a popular and accomplished business speaker and has been recognized in the Who’s Who directories since the mid 1990’s.  If you want to grow a business, then you need to plug into Gil … ’nuff said: http://www.biztrek.com

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Guest Post: The Biggest Myth in Entrepreneurship Dispelled (Part 3 of 3)

March 3, 2010 in Guest Post | No comments

I hope you are armed with your BOSI Entrepreneurship Profile. If not, read my last post so you can get that done.

Remember Bob, Omar, Sue and Ingrid? (HA! you just figured out that their names are the acronym for BOSI).  Let’s go back to their top frustrations…

Bob: People who didn’t take ownership and perform to his extremely high standards.  Bob is showing signs of having a dominant “Builder” DNA. You’ll recall from the BOSI Entrepreneurship book that the Achilles heel of the Builder is relationships. Bob blows through people faster than a tornado in Wichita. Bob also tends to be very controlling around his subjects so talented people tend to leave his kingdom for greener pastures.

In order for Bob to achieve his vision for the company, he must modify his strategic plan for life to focus on slowing down for key relationships. This includes his staff, key management, spouse and children. If not, he’ll always find himself far ahead of the pack wondering why they are whimpering in the corner or following at a great distance. Empathy and meekness need to become a pursuit for Bob. He also needs to give up ownership and control to his key executives if he wants them to perform. He has to give them the freedom to fail. That has to go far beyond rhetoric and actually manifest itself in operating systems and reporting structures. He has to keep Mr. Hyde locked up in the dungeon and focus on being Dr. Jekyll.

Strategically, Bob should consider outsourcing work rather than trying to keep control of every single task within his employee base. Areas like social media and internet marketing are growing at such a fierce pace that trying to deliver those initiatives in-house just to say it is done in-house could prove to be a competitive dis-advantage.

Susan, the CPA: Standing out in a crowded marketplace.  Susan is a classic “Specialist” DNA. She has worked hard to build her expertise but unfortunately falls short when it comes to marketing it. Susan’s Achilles heel is asking for help. She is great at helping and consulting for others, but highly doubts that someone else could provide the same quality of help. Susan, that must change for your business to thrive.

Take your business development strategy as it exists today and toss it out the window. Chances are, it is safe, predictable and the mirror image of your average competitor. Do something different and out-of-the-box. Sit down with some smart marketeers. People who are just as good at what they do as you are at doing what you do. Design a new plan from the ground up and execute it. You’ll leave your competition so far in the dust, they’ll be scratching their heads wondering what just happened.

Omar, the MLM Leader:  Success is a moving target.  Omar my friend, you are the “Opportunist”. A highly optimistic and energetic promoter of any financial opportunity that promises a very large and shiny pot of gold. You are the ultimate risk taker but you need to cool those jets just a bit. There are two key strategic decisions you must make to achieve your goal of financial freedom. First, you must pick one business opportunity and pledge to love, honor and cherish it till death (or insolvency) do you part. Dump all the mistresses (so to speak) and focus on #1.  Second, sit down and build a 3-year strategic plan and then engage a coach or advisory board to hold you accountable to execute that plan. Give them the permission to smack you around if you get off course or get distracted by shiny little objects in the sand. Focus – and you’ll have your goal.

Ingrid, the Scientist: Overwhelmed by business operations.  Ingrid must find a team to run her company for her. She needs to spend her time and passion doing R&D. Ingrid needs a trustworthy team of advisors around her who can help her make key decisions. She also needs a team (in-house or outsourced, but preferably outsourced) to take her product(s) to market. Ingrid will be much happier working from a home office than sitting in the corner office. She will be much more successful with a network of dealers/distributors than a full-time sales team doing trade shows and submitting expense reports.

The biggest myth in entrepreneurship is that we are all the same. Bob, Susan, Omar and Ingrid are proof of it. Their DNA is different and so should be their strategic, marketing and operating plans.

Share your thoughts, comments and questions about your BOSI Entrepreneurship journey above.

The entrepreneur’s biggest fan, Joe Abraham is a serial entrepreneur who has been involved as founder, executive or advisor in the startup and growth of companies in over a dozen industries from financial services to motorsports. Today, he is managing partner at En Corpus, a startup and small business accelerator that serves closely held companies. Joe is a featured speaker at industry events and an expert to the media on the topics of entrepreneurship, small business development, business startup and free enterprise. He lives in the Chicago area. You can connect with Joe and learn more at http://www.JoeAbraham.com.

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Guest Post: The Biggest Myth in Entrepreneurship Dispelled (Part 2 of 3)

February 24, 2010 in Guest Post | 1 comment

Last time we got to listen in on a hotel lobby bar conversation between entrepreneurs Bob, Susan, Omar and Ingrid as they talked about their biggest frustrations in business.

You probably found yourself connecting with one of their frustrations more than the others.  Why? Because you share part of Bob, Susan, Omar or Ingrid’s entrepreneurial DNA.  So what is this “entrepreneurial DNA” hogwash? You ask.

Put simply, it is your predisposition and modus operandi in business. See, the reason you hired your office manager or entered into the last joint venture wasn’t a random occurrence. It was a predictable event based on your DNA.  I know, I know. I’m really overselling this thing so let’s get to the brass tacks shall we?

If I told you that you were about to get on a highly entertaining and profitable ride over the next 5 minutes, would you jump on? Or do you have something else you need to handle at this very minute? (Note: Check to make sure voicemail light is not blinking…)  Assuming you said yes, click the link below. You’re going to see my smiling mug on a video followed by the opportunity to discover your unique entrepreneurial profile. A couple of minute later, you’ll see my smiling mug again on a video (watch the whole video before clicking the “next” button).

http://www.bosiceo.com/bosiquiz

Just follow the instructions I give you and the ride will continue. In your final step, you will get to download a complimentary copy of BOSI Entrepreneurship, my book in electronic format (thank Blumer for that gift). In that book, you’ll find the key to unlocking your entrepreneurial DNA. More importantly, you’ll begin to dive into your predispositions in business (and life) and begin to understand why you do the things you do. You’ll discover why some things in business come so easy to you while other things feel like you are pushing a bowling ball through a garden hose!

Most importantly, you’ll start to look at your business plan, HR strategy, marketing/lead generation and operations differently than you ever have before. Chances are, you’re doing a lot of things very well for your entrepreneurial DNA. That’s your God-given intuition at work. But I hope that BOSI Entrepreneurship will help you find some faulty DNA in your plan as well. DNA that was “grafted in” from people at your mastermind group, networking event or family who don’t have the same DNA as you. DNA that if allowed to remain in your business plan, could cause the same damage as free radicals cause on the human body.

So take 5 minutes right now and take the BOSI Quiz. Discover your entrepreneurial profile. Then download your complimentary copy of BOSI Entrepreneurship and dive into the deep end of the BOSI Entrepreneurship pool. (We’ll provide the floaties if needed).

http://www.bosiceo.com/bosiquiz

In my final post in this series next week, we’ll go back to Bob, Susan, Omar and Ingrid and look to solve their frustration using the strategic decisions that are best suited for their entrepreneurial DNA.

Oh, one last thing. It would be fun to have you come back to this post and submit a comment with your BOSI profile. Not that we’re trying to be matchmakers or anything but maybe, just maybe you’ll meet someone who has a very complimentary BOSI profile to you. You can connect and structure a joint venture, form a partnership or just go out to a romantic dinner. We’ll leave those decisions up to you.

The biggest myth in entrepreneurship is that we are all the same. Make sure to find out how unique you really are!

The entrepreneur’s biggest fan, Joe Abraham is a serial entrepreneur who has been involved as founder, executive or advisor in the startup and growth of companies in over a dozen industries from financial services to motorsports. Today, he is managing partner at En Corpus, a startup and small business accelerator that serves closely held companies. Joe is a featured speaker at industry events and an expert to the media on the topics of entrepreneurship, small business development, business startup and free enterprise. He lives in the Chicago area. You can connect with Joe and learn more at http://www.JoeAbraham.com.

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Guest Post: The Biggest Myth in Entrepreneurship Dispelled (Part 1 of 3)

February 17, 2010 in Guest Post | 3 comments

Lets listen in on a hotel lobby bar conversation between some entrepreneurs as they talk about their biggest frustration in business. 

Bob, the manufacturing company owner: “My biggest frustration is having a vision and drive so big that my key executives and staff have a hard time keeping up. I mean, they are the best people money can buy, but they just don’t get the big picture. I’ve laid out all the systems they need to scale this company up in a big way. But they just don’t take true ownership of the opportunity. I have gone through at least half a dozen VP’s of sales but we’re still nowhere near where I expected us to be.”

Susan, the CPA: “My biggest frustration is standing out in a crowded marketplace of competitors. I know most of my competitors in town. None of them really come close in knowledge, expertise and service quality. I do all the networking events. I ask for referrals. We’ve done some advertising with marginal results. But we haven’t cracked the code on getting clients at the pace we’d like.”

Omar, the MLM Leader: “Well, I don’t have any employees to frustrate me and I don’t plan to have any. The product I am marketing is so unique that I really don’t have any competitors. So neither of your frustrations are a big deal for me. However, my big issue is getting hung out to dry when business opportunities go south. It almost seems like success is a moving target. Just when I have landed the right income stream and started to build it up, someone or something pulls the rug out from under me and I have to start over.”

Ingrid, the scientist: “Wow! Just listening to the three of you makes my head spin. I’ll be the first to admit that I don’t know the first thing about business. I feel like I am stuck at square one. I’d much rather have someone take my product and market it for me. Better yet, I wish they’d just go and build out the entire company and pay me a small royalty. I don’t want the fame or fortune. I just want my product to get into people’s hands.”

As you listen in on the conversation in the lobby bar, do you find yourself resonating more with Bob, Susan, Omar or Ingrid?  Chances are, you connected with one of their frustrations more than the other three. And that says a LOT about you as an entrepreneur. A LOT more than you can even imagine! It begins to expose your entrepreneurial DNA.  See, the biggest myth in entrepreneurship has been that we are all the same. That all entrepreneurs are cut from the same piece of cloth. That we are essentially like the “borg” in Star Trek…assimilated into wearing the same uniform and deploying the identical game plan.  But is that really true? Are Bob, Susan, Omar and Ingrid really the same? Will they build the same size or type of business? Do they have the same appetites for risk and opportunity?

What about yourself? Are you like every other entrepreneur in your rolodex? Do you think, operate and manage the same way they do?

The answer is a strong and emphatic NO…right?  All entrepreneurs are NOTthe same. There are actually 4 dramatically different “DNA’s” in the world of entrepreneurism. Each DNA has it’s unique set of strengths, weaknesses and frustrations. Each DNA also has it’s own achilles heel.

You’ll learn more about that in our next post. For now, here’s the question:  Are you more like Bob, Susan, Omar or Ingrid? Use the comment box above to weigh in! 

 

The entrepreneur’s biggest fan, Joe Abraham is a serial entrepreneur who has been involved as founder, executive or advisor in the startup and growth of companies in over a dozen industries from financial services to motorsports. Today, he is managing partner at En Corpus, a startup and small business accelerator that serves closely held companies. Joe is a featured speaker at industry events and an expert to the media on the topics of entrepreneurship, small business development, business startup and free enterprise. He lives in the Chicago area. You can connect with Joe and learn more at http://www.JoeAbraham.com.

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Guest Post: How to Exit Your Business With Style

February 3, 2010 in Guest Post | No comments

Okay class! Eyes forward. That includes you Mr. Blumer.

Today’s lesson – How an entrepreneur can leave the business on his/her own terms, and in style.

No, Mr. Blumer! That does NOT mean sneaking out in the middle of the night and heading to some place in Belize you saw on House Hunters International! Now pay attention!

Think about the life-span of a business as being a week, and retirement being the weekend. Most entrepreneurs don’t deal with the issue of converting the value of their business to “retirement capital” until Friday afternoon at 2:30. By then, the private business owner is disposing of the business, probably taking an installment deal. The bad news is he has missed opportunities to maximize the value of his exit.

The good news is his prayer life really improves as he begs Divine Providence for the company to cash flow long enough for him to get his money out.

Thursday morning is a much better idea. Wednesday afternoon is even better.

Look my entrepreneurial students, you and the people you invited onto your bus have built value into the company. How long did that take? Probably longer than an installment deal to sell it.

The starting point is to ask three questions. What is that Mr. Blumer? No! The questions have nothing to do with the first three winners of American Idol!!!!!

First, you have to ask when do you want to leave your company? Fix a date, you can adjust it later if need be.  Next, what is the total after-tax income you want from all sources, including the converted value of your company? Finally, to whom would you sell your company? To a third party, or to an insider?  Don’t worry about specifics yet.

Those questions, especially the first two, zero in on the essential point of it all – your goal is not the sale of your business, it’s a new life outside of your company. So entrepreneurial students, you can retire from your company by waiting to the last minute, and do a quickly assembled sales transaction. Think: hitting the drive-thru at Taco Bell for your sit-down dinner party.

Yes, Mr. Blumer, your point about the “end results” of eating at Taco Bell is well-taken. (Sigh.)

Or, you can take some time to plan an exit on your own terms – Think: a real dinner party. Who will be on your guest list? What will be the main course? What you will have for dessert?  How about after-dinner entertainment?  You can dine in style, but only if you make plans.  What is it, Mr. Blumer? Yes, your plans can include that “pants on the ground guy from American Idol.”

Class ::SNIFF:: dismissed!

Frank Warren III, is Senior Member at Warren & Martzin, L.L.C., Counsellors at Law, where he, and partner B. Faith Martzin, help entrepreneurial business and professional people build value, and plan successful exits. When he is not collaborating with CPA’s, business coaches and financial advisors, Frank can sometimes be found searching for the perfect lap as a kart racer and racing instructor. You can email him with questions, comments, and invitations to fine dining at frank.w@warrenandmartzin.com or kartwriter83@gmail.com.

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