If we can share one lesson we have learned about the economy in the United States, it’s that it is unpredictable. We’re not here to quiz you on your knowledge, but we are here to help you save your company money because every penny counts. The key to success as a business owner is to save up while business is great, so your company can survive the tough times.
As the new year approaches, it’s time to ask yourself what you can improve on. First, we recommend digging deep and paying attention to the big expenses that are costing the most money. Then, dig even deeper and really knit-pick where you can save.
The cost of labor is one of the top expenses for every business. After all, what is a company without its employees? After payroll, benefits, and taxes, you’re looking at a sizable chunk of money coming out of your gross revenue.
If you’re looking for a way to save money on personnel expenses, it might be time to consider a lifestyle spending account (LSA) for your employees.
If you read “a lifestyle spending account” and immediately understood this as contradictory to saving money, we don’t blame you. But we invite you to read on to learn about an LSA and the ways it can save you money. We promise it will all come together!
What is a Lifestyle Spending Account?
Think about what you offer to your employees. First, there is payroll, then medical insurance, dental insurance, and life insurance. These are all benefits offered to employees to ensure they are taken care of in the event of an emergency or sickness. But what if you could offer benefits to ensure a happy, healthy, productive life? Everyone loves an employee who shows up to work with a smile on their faces, is friendly, motivated and productive, right? Well, personal life plays a large role in this.
Similar to medical benefits, an LSA is an employer-funded account that is dedicated to employee perks. These perks can include yoga classes, a gym membership, a lunch outing with peers…whatever it is that you believe will make your team happier, and ultimately, more productive at work.
Now that you have a brief rundown of LSAs, it’s time to jump into how they can save you money. It’s important to think of the big picture. While you are putting extra money into this new account, you’re saving big bucks when it comes to other parts of your business. Here are the ways your company can save money with a lifestyle spending account.
1.) Staff Retention
A common misunderstanding by many business owners today can often be the mindset of “It’s not a big deal if an employee leaves the team, they can quickly be replaced.” While yes, this is true because of the many qualified candidates that are out there, you want to avoid low retention as much as possible. In fact, it costs $4K-$7K to replace an hourly worker and up to $40K for a mid-level salary employee. This mentality of simply replacing team members raises huge concerns for your business. One or two employees over the years is not a big deal, but if it becomes a reoccurring issue, you can find yourself in some big trouble down the road.
While you can offer your team the best paying salary, if they are unhappy in their work environment, they will leave. According to Zoro, 71% of employees admit that having more work benefits would increase job satisfaction.
Offering benefits such as fitness classes, lunches, and other services is a great way to let your staff know they are important to you, and in return, they will show their appreciativeness through their high productivity levels on the job.
2.) Saving Money on Taxes
Taxes are a huge pill to swallow for any business owner, yet it is something that is unavoidable. We’re not saying we can get you out of the high taxes that you pay, but we can help reduce the amount.
Having your employees give up some of their salaries in exchange for a non-cash benefit can save you money on taxes. The less money you contribute to salary or hourly wages, the less money you will pay in taxes.
3.) Spend Less on Recruitment
In a perfect world, hiring new team members would be free, but it’s very far from it. Companies can expect to pay an average of $4,129 every time they need to fill a position. This price includes an internal HR team or an external recruiter, career events, job board fees, background checks, onboarding and training career pages, and salaries. Hiring a new team member is always going to be costly but the quicker you fill the position, the less money you will have to spend.
By offering benefits that other organizations have not caught on to, like LSAs, you’ll attract more potential employees. This additional option of an LSA will attract more eyes to the position and ultimately speed up the recruitment process, making it as quick and affordable as possible.
Start Reducing Costs
Looking for ways your business can improve and save money? Lifestyle savings accounts can reduce big costs in quite a few ways while boosting the atmosphere in your workplace. They also lead to higher productivity and employee loyalty. If you have noticed an increase in turnover, it may be time to look into internal factors and ways you can resolve this expensive issue; LSAs can be the perfect solution.
Haven’t heard of LSAs? This is because the benefit is relatively new in the United States, which means there is huge potential to stand out from the competition in the job market so you can begin to attract the top talent.
What’s not to lose? Bring your company to the front of the pack and contact us today for a personal demonstration of Work2Live.