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Small Business & Retail—Small biz keeps up with corporate giants on the Web



Firms Not Making Use Of Tax Deductions for Cost of Health Insurance

It seems small businesses are doing just as well as the big guys in adjusting to Internet commerce , perhaps even better.

Businesses with 99 employees or less are not far behind the big companies in establishing a presence on the Internet, according to a study by the Farmingham, Mass.-based eBusiness analyst group International Data Corp.

And small businesses on the Internet are twice as likely to use sophisticated E-commerce tools such as online credit card payment systems on their home pages, according to IDC’s newly released survey of 1,022 business owners.

Molly Upton, an analyst who conducted the survey for IDC, found that among businesses with 99 employees or less, 58.9 percent of them have a home page. Among medium-sized businesses, with 100-499 employees, 83.9 percent have a home page, while 95.7 percent of the large companies do.

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Interestingly, the small businesses that have a home page are more likely to be Web-savvy than their larger counterparts. About 18.5 percent were able to take credit card orders online in 1999. That compares against 8 percent for medium-sized businesses and 7 percent for large businesses that year, she said.

Upton attributes the relatively high percentage of Web use to outsourcing. In 1998, more than half of small and medium-sized establishments used outside sources for hosting their home pages, Upton said.

Small companies have an abundant choice of providers of storefront and related facilities at relatively low prices. This makes the Internet the “Great Leveler,” with companies of all sizes now able to throw open their doors to the wide world of commerce, she said.

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Breaks For Health Care Costs: A new report finds that most small business owners are unaware of important tax write-offs they can get for offering employees health care benefits.

Jack Faris, president of the Washington, D.C.-based small business advocacy group the National Federation of Independent Business, said 57 percent of small employers do not know they can deduct 100 percent of their health insurance premiums.

Faris cited a survey done by the Employee Benefit Research Institute and paid for by the BlueCross BlueShield Association.

The study also said two-thirds of small business owners said they would consider offering health benefits if the government helped pay premiums. Almost one half of employers said they would consider offering health benefits if their workers demanded it.

Of those providing insurance, 78 percent said it helped improve employee recruitment, and 76 percent said it aided worker retention.

But that’s not enough, since the high price of health care discourages many small business owners from providing benefits. The average health costs rose 13.9 percent for small companies last year, compared to 7.2 percent for large companies, Faris said.

Due to economies of scale and the dynamics of insurance risk pools, health insurance is much higher, per employee, for small business than it is for large companies. Worse, small businesses that offer health benefits must comply with costly state and federal mandates, while the large companies that self-insure are exempt from those mandates, he said.

The solution would be to lobby Congress for legislation allowing small businesses to band together, across state lines, to purchase health insurance. This will allow small firms to enjoy the benefits of economies of scale, while giving them the same opportunities enjoyed by big businesses that self-insure and are exempt from mandates, Faris said.

Family Squabbles, Business Wobbles: If all families are a bit dysfunctional, then family businesses are even more so.

Sometimes, internecine strife between relatives can ultimately spill over into a family business, warns La Jolla-based Alice Reinig, clinical psychologist specializing in family business consultation.

“It is not out of the ordinary for such situations to arise and interfere with the success of the business as well as the success of the family,” she warned.

Power struggles within the family can often lead to power struggles in the business, including disagreements over business goals, failure to resolve disagreements, and more.

Problems in the business can then exacerbate the home situation as family relations are strained, sometimes going so far as having family members avoid each other, Reinig said.

Send your small business news to Lee Zion at (858) 277-6359, Ext. 112, or lzion@sdbj.com.

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