One of the most common assumptions small business owners make is that competitive benefits are something only large companies can afford. That assumption is wrong, and it is costing businesses candidates and employees every day. Here is a realistic look at what small businesses can offer and what actually moves the needle for your team.
What Employees Actually Value
Benefits surveys consistently show that health insurance is the most important benefit to employees across virtually every industry and income level. After health coverage, the benefits that generate the most employee satisfaction are retirement savings plans, paid time off, dental and vision coverage, and mental health support. Perks like free snacks, casual dress codes, and ping-pong tables rank far lower than employers tend to assume.
This matters for prioritization. If you have a limited benefits budget, spending it on meaningful coverage delivers more retention value than spending it on workplace amenities.
The Health Insurance Problem for Small Businesses
Health insurance is where small businesses feel the most disadvantaged. Individual and small group market rates are significantly higher than what large employers pay for comparable coverage, because large employers can spread risk across a larger pool. A 30-person company buying coverage on the small group market pays more per employee for a worse plan than a 3,000-person company buying coverage on the large group market.
The practical consequence is that many small business owners either cannot afford to offer health insurance at all, or offer coverage so limited that it fails to attract the candidates they want.
How PEO Partnerships Change the Equation
This is the fundamental problem a PEO partnership solves for small businesses. Because a PEO pools employees across hundreds of client companies, it accesses the large group market on behalf of businesses that could not reach it on their own. LBMC EP clients offer their employees access to health insurance at group rates that a 30-person company simply cannot negotiate independently.
Beyond health insurance, LBMC EP clients provide access to dental, vision, life insurance, short-term and long-term disability, telemedicine services including mental health, physical therapy, virtual primary care, fitness benefits, and employee assistance programs. This is the Fortune 500 benefits package, available to businesses a fraction of that size.
What You Can Offer Without a PEO
If a PEO partnership is not the right fit right now, there are still meaningful steps you can take. Fully funded health insurance is the highest-impact benefit you can offer. If you cannot cover 100% of premiums, covering a meaningful portion and giving employees options matters more than the exact split.
A SIMPLE IRA or SEP-IRA can provide retirement savings options at lower administrative cost than a traditional 401(k). Flexible PTO policies, remote work flexibility, and professional development budgets cost relatively little and score well in employee satisfaction data. The key is to be intentional and consistent rather than trying to match everything a larger employer offers.
Your Team Deserves Better Benefits Than You Can Build Alone
LBMC Employment Partners gives small businesses access to the benefits packages that retain employees and win candidates, without the cost structure of building it independently.
Real People. Real Relationships. Real HR Solutions.
See what your team could have: lbmcep.com/contact.
