How to Create a Small Business Benefits Package

While a higher salary might be what many people look for when searching for a new job, job seekers also look for a position that offers great employee benefits. Great employee benefits are known to attract top talent and can often be a deciding factor when salaries are comparable.

If you’re looking to create an employee benefits package for your small business, you may wonder how you are supposed to compete with a larger company. There are plenty of ways that you can offer competitive benefits no matter the size of your business. Here are some basic employee benefits and strategies that can help you create a great employee benefit package for your small business.  

Why Offer a Benefits Package to Your Employees?

Retaining great employees and attracting good talent are important for any small business. As a small business owner, you want trustworthy employees that are passionate about their job. What better way to reward them than by giving them great benefits?

Employee benefits are essentially the forms of compensation that employees will receive in addition to their regular salary. Most businesses have insurance included in their benefits package, but this could also include development opportunities, health and wellbeing or retirement.  

Having great employee benefits not only gives your company a competitive advantage in the hiring market, but also increases employee retention and productivity. When creating a benefits package for your small business, you should consider what most traditional companies have in place, as well as what may set you apart from others. 

Traditional Employment Benefits for Businesses

The most common benefits for traditional businesses include insurance, retirement plans, paid time off and additional compensation. Depending on federal and state laws, your business may be required to provide mandatory benefits depending on the company size. It’s important to comply with these regulations, but also offering additional benefits could set you apart from other businesses and help you attract more candidates.

Insurance Benefits for Employees

Although employers can be creative in what their benefits include, insurance is usually the most foundational benefit for employees. Often employers can pay for a group health plan that makes paying for insurance more cost effective. Insurance can be offered in several forms, like:

• Health Insurance: Health insurance is considered one of the top benefits that make a competitive package. Whether you pay all or some of your employees’ premiums, that is up to you. However, having the support of health insurance makes a difference to your employees.
• Vision and Dental Coverage: These coverages are often added onto the main health insurance plan or could be added as a supplemental policy. These additional coverages could be added to cover costs of vision examinations for your employees as well as preventative or emergency dental care. 
• Disability Insurance: There are two different types of disability insurance that could be included in your benefits package: short-term disability insurance and long-term disability insurance (LTD). Ultimately, disability insurance is what protects employees if they are unable to work due to an injury, illness or accident, the only difference being that LTD protects employees that are unable to work for an extended period of time. 
• Life Insurance: Life insurance is a great addition to any employee benefits package. Not only does having life insurance show employees you care about them, but it shows that they care about their employees’ families as well. In short, life insurance is to protect your family from financial loss if something happens to you. If any employee dies, the company will provide a sum to the family to cover funeral costs and other expenses.

Financial Employee Benefits

Many companies offer additional financial benefits in their employee benefits package, such as:

• Retirement Savings Plans: The common types of retirement plans offered from employers are either a 401(k) or a Roth IRA. The company will usually help you set up a retirement fund if you’d like to participate. Many companies match up to a percentage of your contributions to help employee’s grow their retirement funds. These contributions can also usually be set up to come directly out of your paychecks. 
• Paid Time-Off: Paid time-off, also known as PTO, is a designated period of days employees can take off work for personal needs. This could range from appointments, vacations, etc. Usually, the PTO policy depends on the company and some leave types have restrictions on how they can be used. These types of leave could include bereavement leave, paid sick days, paid holidays, etc.  Occasionally, you can earn additional PTO days the longer you work for the company. 
• Pay Raises and Bonuses: When candidates are searching for a new role, something they usually consider is how often the employer’s offer raises. Some companies offer an annual cost-of-living adjustment, or even give quarterly or yearly bonuses based on performance. Having an opportunity to grant employees a pay raise or bonuses annually would create a competitive compensation for your company. 

Unique Benefits to Offer Small Business Employees

There are additional ways to set yourself apart from other businesses, large or small. Offering unique incentives in your benefits package is a great way to attract employees. These unique perks could range from different programs you offer your employees to different work arrangements that fit their needs. Here are some examples of unique benefits to offer to your employees: 

• Flexible Work Arrangements: There are several different opportunities for a flexible work arrangement such as remote, hybrid, condensed work weeks, etc. As of 2023, 12.7% of full-time employees work from home, while 28.2% work a hybrid model. Not only is remote work a possibility, but you could offer a flex schedule, meaning an employee’s hours may be outside of normal hours. An example of this would be someone working from 7:00 a.m. to 4:00 p.m. instead of their normal 9:00 a.m. to 5:00 p.m.
• Wellness Programs: Many businesses nowadays are focusing on offering their employees some type of wellness program. Whether it be fitness classes on site, discounts for gym memberships, mental health counseling or even behavioral or lifestyle coaching, there are many opportunities for employees to improve their overall wellbeing. 
• Social Activities: A chance to connect with your coworkers outside of the office is just what some employees might need. Depending on the size of your company, it may be a good idea to plan quick lunches out of the office or even sports events in your local area. Don’t forget to ask your employees what they’d like to do to increase their engagement!
• Employee Discounts: Offering discounts to your employees is a great opportunity for you. Not only does this help your employees, but this can also help you create business partnerships in your community. This could look like a preferred hotel discount for travel or even a deal on a new car!
• Education and Tuition Reimbursement: Professional development and reimbursing tuition are great ways to invest in your employees. These opportunities attract top level talent and enhance your employees’ skill sets. Helping your employees with financing their education shows them that you value them and support their development, which will also help your company retain employees. 

How to Offer Benefits as a Small Business

Creating a benefits package for any business is no easy task. Larger companies usually have a human resources department coordinating all employee benefits, but a small business may not have that luxury. Here are a few ways you can improve the management of your employee benefits to save time and avoid mistakes. 

1. Understand the Cost of Offering Employee Benefits

When you begin to determine the salaries for your employees, it’s important to factor in the cost of each employee’s benefits package. The Bureau of Labor Statistics can give you an estimated employer cost per hour worked for common benefits and pay. As a small business, it’s important that you can afford a salary and benefits package while keeping it affordable. Setting a budget and adjusting it year to year may be a great place to start.

1. Make No-Cost Upgrades to Your Small Business Benefits Package

There are several opportunities listed above that can upgrade your business’ benefits package at no cost. Small social events or half-day Fridays could brighten the mood of your employees. Offering flexible work arrangements such as remote or hybrid work, compressed work schedules or a flex schedule could improve your employee benefits package without putting a strain on your budget. 

1. Ask Your Employees What Benefits Matter Most to Them

As an employer, it’s important that your employees can evaluate their benefits package. This helps you to be aware of the needs and priorities of your employees. For example, some older employees may care more about the additional health insurance benefits than a discounted fitness program. Stay engaged with your employees and assess the effectiveness of the benefits offered to make changes as they are needed.

Set Your Business Up For Success

One of the first things a candidate seeking a job looks for is the compensation and benefits offered by a company. Talk to a Farm Bureau financial advisor when you’re ready to make plans for your small business’s benefits package to see what is feasible for your business.