Episode 114 - Losers are Winners: Better Benefits, Bigger Profits, & Less Headaches with Mike Notte

Losers are Winners

Oct 14

Episode #114 | Losers are Winners | Better Benefits, Bigger Profits, & Less Headaches

What if you could offer better employee benefits, save on taxes, and make your business more attractive to top talent without wrecking your profit margins? Mike Notte joins Mark Williams to explain how smart employee benefits can help attract the kind of people who take ownership and keep the business moving. They also unpack tax-saving strategies, wellness plans, and why assuming benefits are too expensive could be costing you the very talent you need to grow.

About The Curious Builder

The host of the Curious Builder Posdast is Mark D. Williams, the founder of Mark D. Williams Custom Homes Inc. They are an award-winning Twin Cities-based home builder, creating quality custom homes and remodels — one-of-a-kind dream homes of all styles and scopes. Whether you’re looking to reimagine your current space or start fresh with a new construction, we build homes that reflect how you live your everyday life.

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Mark D. Williams 00:00
This episode is brought to you by Altink. For over a decade, I've been partnered with them for all of our appliance needs: quality of service, the attention to detail. They help us troubleshoot with clients. They're also one of our first people to be a sponsor and a partner for our curious collectives here in Minnesota. To find out more, head to altink.com and tell them the curious builder sent you. It's funny when it comes to entrepreneurship, we think as entrepreneurs we have to know it all, and we either are forced into inaction because we're too busy, which a lot of us would claim we are, but we all have the same amount of time. Two, we're too stubborn, which is probably another large proportion of people, and three, we just don't know what we don't know. Welcome to the Curious Spirit Podcast. I'm Mark Williams, your host. Welcome back to Thursdays. Losers are winners. We're going out to the Orange County area out in California. We've got Mike on the pod. Mike, why don't you give us a quick intro? Who you are, what you do, and we'll dive into some some story time.

Mike Notte 01:02
Sure thing, man. Yeah, thanks for having me on. I'm Mike Noty, owner and founder of MJN Insurance Services Incorporated. I help business owners develop a winning strategy when it comes to offering more benefits to their employees without it breaking the bottom line of the business, putting more P back in your P and L, and helping you retain and attract the right talent for yourselves.

Mark D. Williams 01:24
I like that. I like that one. That would be a great shirt to wear at the fair. And I think most of us can imagine what my shirt would look like. What? All right. Well, what have you got? What are some some either some of your clients or some mistakes that you've seen that have had pretty negative effects? And how have you seen people fix them?

Mike Notte 01:42
Yeah, I mean, a lot of the business owners I talk to, it's after they've already made a couple mistakes, right? And one of the most common ones is deciding not to offer benefits at all. You know, they're a small business and they feel like, well, it's not my budget to be able to offer anything, so I'll just try and pay employees a little bit more, and it never really works out that way because often employees are really looking for their employer to provide a better benefit package to them. Because for them to go out on the markets to get on their own, there's really not a whole lot of expertise available to people just googling online and trying to go on the marketplace for themselves. So they're really reliant on that employer to provide a better benefit package that they know and trust is going to be a good deal for them, and you know other things like retirement and life insurance and all the disability stuff and all the things that come out with that are pretty difficult for you to get on your own. The days of the the insurance man coming to your house and sitting around the kitchen table and talking everybody around the family about the life insurance is pretty much over, so it's all done at the worksite. So your first mistake is thinking that benefits are too expensive to have and add to your portfolio. When in reality, it's costing you better talent because the better talent is going to go down the street where that better benefit package

Mark D. Williams 02:56
is. You know, it's funny you say that. I just had Suman Cherry on the podcast. She runs a a recruiting agency, and she was just talking that the main reason that people leave a company is not money. Most of it is cultural fit with the company, like where do they see the future? But really, job satisfaction-do they find that there's purpose? And I would imagine, kind of, what you're speaking to is a little bit about feeling secure. It's kind of like no matter what you feel about anything, like if your kid is hungry at school, it's pretty hard to learn. And so the same is true as entrepreneurs. I mean, if your people are worried about their next paycheck or what they're going to do, it's going to be hard for them to show up and do a great great work for you.

Mike Notte 03:39
Yeah, and and that's what we really try to do. So in my agency, I really specialize in becoming a true partner with that business owner. I want to get to know the pulse of your population, of your employees. You know, if it's a bunch of young kids that are still on your parents' insurance, you know, hey, maybe we don't need to offer too many benefits because they're already taking advantage of some stuff, or you got, or it's all part-time people, whatever. But if you got some people that are really committed and dedicated to your cause, they want to feel that you're invested in their future as well, and in the return, right? And so we can give them a really great package that I can go on your behalf as an owner and communicate to your employees as an expert in this field. Hey, here's your benefit package. Here's how we put it together. This is what your employer is doing for you, right? And so now let's show you how to use and understand the package that you have, so that you have a really great appreciation for what the owner is actually doing. You know, I think a lot of times people are in the misconception that you know, hey, benefits are just they just come with the job and they get them for free. It's it costs almost nothing, and it's like you got to realize that as a business owner, your first expense is usually your salary. That's your highest expense on that PNL. Second might be inventory, or it could be tied with payroll. And third is your benefits. All that stuff it really adds up, and it cuts directly into the profit of the owner. So they're giving up their profit to give you better benefits, and. And they wanted to work with me to provide the best benefit package they could possibly do for you, and I can build something that's going to feel like a platinum PPO plan, but at a bronze price.

Mark D. Williams 05:10
And out of curiosity, how is it that you're able to do that? Because there's honestly, it sounds like it's too good to be true.

Mike Notte 05:17
Of course. So there's a you know a lot of times that business owners will go online, they'll just do like a quick search. I need employee benefits, and they'll get connected to some broker that's connected to some you know general agency that has all the major carriers out there, and they just say, "Here's a census. Here's your price. We can go with these plans. And they go, "Really? That's all we can do. There's no strategy behind it, right? So we can work together to implement some tax tax incentives for you know certain benefit programs, like for example, there's one that came out in 2013 on page 33,161 of the Affordable Care Act bill. That's the actual page number, and it came out and it allows business owners to implement a wellness plan alongside of their major medical benefits. And by doing as such, it creates a pre-tax deduction followed by a post-tax trigger reward that gives the employee the money right back in their paycheck as a reward for participating in this wellness program. So it creates FICA tax savings for the employer, but it also creates tax savings for the employee that we then turn around to use to fund supplemental benefits that will fill the gap on that large deductible health plan. Like, there's a lot of different things we can do. I mean, that sounds amazing.

Mark D. Williams 06:26
That one just speaking right to my wheelhouse. I'm thinking of like, can you design the wellness plan to be whatever you want?

Mike Notte 06:30
There's a couple different wellness providers we work with, and we can implement certain aspects of that program or not. Right. So the ones I have, they don't really come with like a gym membership or anything along those lines. It's more like $0 copay services for virtual virtual urgent care, virtual mental health counseling. You can do some primary care physician work. You know, like 12 free visits a year, where you literally get a $0 copay and see the same doctor over and over again every month to manage your asthma or your arthritis or something along those lines, right? But it's designed to work in conjunction with your health insurance already, because the incentives there, because you know, in health insurance in 2013, it was going to go through a massive change. Come 2014, called the Affordable Care Act, and the reason they wanted to put these programs in, in my personal opinion, is because the government knew, hey, the changes we're making are gonna force the insurance carriers to raise their rates if they want to protect their profits. Because we're taking away their visibility, they can no longer ask health questions in order to qualify somebody for the plan and determine what rate they should be covered for. There's no longer going to be lifetime maximums on these plans either. So if someone's got something going on and they have a $2 million expense over the course of a year. They can't drop them from the policy, which is great. You know, everybody deserves to be covered by health insurance. Problem is, it's a for profit industry. So these CEOs and these board of directors aren't just going to sit back and go, "That's cool. We'll just pick up the tab and we'll make less money. Right? I don't know about you personally, but in 2014, my health insurance costs went up 400% and that's just on my own personal policy. So imagine running a small business with 50 employees, and now all of a sudden you're mandated to offer health insurance, and the rates went up. So

Mark D. Williams 08:11
what would you say? I mean, a lot of business owners. I think that's helpful context. I also like what you said earlier that I would actually. I love the idea that you offer perspective. A most business owners, I would almost argue, all of them are not experts in the field that you are. But I like the idea that you would go to our employees and say, "Hey, this is. And obviously, if in this case it would be me and you working out something for my employees, and you. But I like that as a third party, you would go to them and say, "Hey, this is in your best interest. Like you're basically just helping explain a service. It's no different. But here's what's so ironic about all this stuff: as a builder, I hire a plumber and I listen to the plumber about how he's telling me to do something, or the electrician, or the drywall, or the cabinet guy. I mean, we're very used to. It's funny when it comes to entrepreneurship. We think as entrepreneurs we have to know it all, and we either are forced into inaction because we're too busy, which a lot of us would claim we are, but we all have the same amount of time. Two, we're too stubborn, which is probably another large proportion of people. And three, we just don't know what we don't know, and which is why you're on this podcast just to educate. But I have noticed that a lot of entrepreneurs that I know, their spouses are where they carry their insurance, and even the employees that they hire, you know, especially a small company, a lot of small companies, it seems like someone else in their family is where their insurance is being covered by. So they sort of get around it a little bit that way. How? What advice would you give to small entrepreneurs that, let's say, half of their workforce, or let's say the majority of their workforce is getting coverage from their spouses.

Mike Notte 09:45
Let's keep that P in the section of your P and L, right, and keep as much of that as you can in there. But let me complement those with some other tax incentive programs because we can still implement that wellness program I was just talking about, which is like an added hook, and it's at no net cost to you. As a business owner, you'll actually save $640 a year per person that participates in the plan on the FICA taxes as an employer. So we can offer more benefits and save you more money, and put in some supplemental policies that'll complement that health insurance that may be carried by the the spouse or whatnot. There, I always say, don't go do something that you don't have to do unless it's something that's like really dire. Let's say maybe you do have a couple key employees that aren't in that situation, and they just need you know a plan to cover themselves. I can look at the situation and say, you know, you're under 50 lives. You're not required to offer health insurance right now. If you don't offer health insurance, they may qualify for some tax subsidy plans through Covered California and California, where we're at, or through the exchange on Healthcare.gov, and I can help educate them on where to go find those plans and get the best price possible for a great plan. And it still looks like it comes from you, but it's not coming out of your pocket. We can put in something called an ICRA, it's an Individual Coverage Health Reimbursement Account, which allows an employer to legally reimburse people for the cost of their health insurance premiums and take the deduction for their taxes as well. So it's like, hey, you know, here's 300 bucks a month. Go figure it out, and we can pair you with an individual health insurance agent that specializes in individual policies. Get your employees signed up on those, and you know, you're just putting a flat dollar amount every month. You don't have to deal with the hassle of the. You know, well, my claim didn't get paid. That's between you and whoever you you signed up with. You know, it's not a company-sponsored benefit. It's a company-sponsored you know expense for us, right? So it's a little different that way.

Mark D. Williams 11:42
This episode is brought to you by Pella Windows and Doors. I've used Pella for 21 years as the exclusive window company on every one of my builds. When people ask me who I trust for Windows and Doors, it's Pella every time. Their craftsmanship, their innovation, the top-tier service make them a no-brainer for any custom home builder or designer who demand the best. Whether you're designing something bold or building something with timeless elegance, Pella has you covered. They're also the only window company that has a lifetime warranty on all of their windows. I've gotten to know all their people at Pella Corporate as well as locally here at Pella Northland. I'm proud to call them our partners and our friends. Visit Pella.com to learn more and connect with your local reps today. Also, for more information, you can listen to episode one where I interview their founders, as well as episode 109, where we talk about the innovation at Pella. This episode of the Curious Builder is brought to you by Olivin Vine Socials. If you're a builder, a designer, or an architect looking to grow your brand without dancing on TikTok or spending your whole life on social media? Listen up! Olivinvine Socials specializes in Pinterest marketing, blogging, and email strategy for luxury home brands that help you turn your beautiful work into a strategic SEO-driven content that drives real traffic and connects you with your ideal clients without burning you out. Ready to grow smarter and not harder? Visit olivinvinesocials.com and tell them the Curious Builder set to you. Just so you know, I've been working with Alyssa over at Olivin Vine for three years. She helped us launch the podcast. She's helped us grow our brand at Mark Williams Custom Homes. I could not do what I've done without her help. I think it's the fact that most employers, at least small entrepreneurs, don't think like like what you're referring to. Is it that the the bad isn't the worst case scenario is not that bad, but what we have to gain is a lot better. Meaning, like, hey, if I'm not offering insurance or benefits to my employer employees, they may leave. That's kind of the worst case scenario. But I what I could retain and grow them and and their reputation. I have so much more to gain vertically. Is that the right way to look at this? Because what is the real what is the real con of you know doing what you've always done? You just if

Mike Notte 13:52
you're happy with how your business is run right now, then you don't need to change anything. But if you're trying to grow and scale and attract that true talent, that I think every entrepreneur's dream, in my opinion, is to be able to have a business that they don't have to run. Right, you're not trapped in it anymore. But that requires you to have some really talented people working for you that run the business and treat it like it's their own. They're not going to do that just for an hourly wage or you know a certain base salary. They want to feel like you're invested in them and their future again. And so, if you want to attract that key talent, that key person that you were like, "Oh, that's me, and she said, "I can be on the beach, and they're running the business. That person is going to need that benefit package to be there because if they're that talented, they're not going to come and work for Joe's Pizza Shop just for $15 an hour as a general manager or whatever, right? They'll come work for Joe's Pizza Shop as a general manager with a salary and a fantastic benefit package, and I can help you build that package and most importantly explain it to Joe, or the manager that you're trying to hire to give you more time off, more time with the kids, whatever you're trying to do, and let the. Business run itself because we've built better benefits to better your business. That's my slogan. Yeah,

Mark D. Williams 15:05
I mean, I that and the no P in the or put the P back in the P and L. Those are the two that I like for sure. Well, I can see how it'd be very. I mean, I think what you just said. I think there comes a point in every entrepreneur's journey where you realize that if you remove yourself and it doesn't work, you have a job, you don't have a business. And I remember, for me, it was year 18. I remember someone told me this: like, if you didn't go to work, how long would you be able to not go to work before your company would fall apart? And for me, at the time, it was call it maybe one month, two months. I don't know. You know, now I think my company could last you maybe a year, year and a half. But you know, and this isn't meant to be an audit of my company, but just as a reference for the audience. And it's sobering when you've been in your business for a long period of time and you realize, wait a minute, I thought I was an entrepreneur. You're not. You have a job. You, you know, you've all heard these, you know, these sayings like you're a slave to your job. You're a slave. You know, and it's, and that's all true. And so I, I like that this is a tool, not the. It's not the only tool, and it's not the tool, but it's a tool to create a business that's scalable, attracting. And you're right. Like if I was to let's say replace myself completely, it'd probably have to be several people. It'd be probably a sales department, a director of operations, and a few other things. And to your point, if you're going to offer that kind of, or if you're going to attract that kind of talent. Not only does the salary have to match, but I agree with your statement that likely the the benefit is a part of that overall scale, so that they feel comfortable. Otherwise, they'll just go on the open market. It's still a free market, and if and if other people are not doing it, and you are, you just tip the balance of attractability into your department, which I think is a huge selling point to that business.

Mike Notte 16:43
Yeah, and the thing is, it's like again, don't assume that the biggest companies out there that would attract that talent right away so would have the best benefit package available. Right, everyone makes their own decisions about that kind of stuff. But I can build you the package that I can stand proud of and say, look, even if they go down the street, whatever they're offering, this is going to be a great deal for them, and I'm going to show you exactly how, and I'm going to communicate that right to that person for you on your behalf, so you don't have to be the expert in this. You said, you know, you're a builder. I used to do landscaping and concrete work in the summertime. I know how to dig a hole, and I can grab a shovel, and I can probably lay out a sidewalk. I could probably still form it. I could probably still pull that straight edge, but it ain't going to look as good as how you do it, right? I certainly can't pour a foundation to you know build a house on top of and be confident it's going to stand up. So let me be your benefit builder and you know build you a foundation that's going to help you grow that business in the long term. Again, without totally killing the profit of the business,

Mark D. Williams 17:42
can you can you as a company, if you do something for one person, do you have to do it for all of them, or can you do custom benefit packages per person? Because you know, some person, some people might have a family, some people might be you know single. Like, how flexible can that be from an employer standpoint?

Mike Notte 18:00
We can create rules inside of it. It just can't be quote unquote discriminatory. So you have to have like a certain class of employee. Like, hey, for this class of employee, we'll pay 100% For this class of employee, we'll pay 50% of the individual. And if they want to cover their family, they can they can pay the extra, right? So like, you can make those those types of decisions. We'll work with you on the compliance part of it.

Mark D. Williams 18:25
Yeah, interesting. Well, we'll have everything in the show notes. I think this is super helpful. I mean, there's things you know already that makes me. I actually wrote down two names of people in my team because I think most of our team gets their benefits from our spouses, mine included, and but I'm kind of curious what because it used to be you know we did exactly what you said. I mean years ago you go you know I had employees that they were the sole earners in their families and I would just pay them more and just they would go figure it out and it seems like if those resources are drying up yeah it's on us it's on us as entrepreneurs just sort of figure that out and fill that gap.

Mike Notte 19:02
Yeah, well, we can do the same thing, except now you know there's new laws that came out that allow that to happen, and you be able to deduct that expense, and the employee not be able to count it as wages. So it's it's better for everybody. So we can put some plan docs in place for you to be able to do that.

Mark D. Williams 19:19
No, that's that's amazing. We'll have everything in the show notes. Thank you very much for coming on the podcast for reaching out. I think it was very informative. And for the audience, if you have any interest, can obviously reach out to Mike and stay tuned Mondays for our episodes and Thursdays for our 20-minute segments. Losers are winners. Thanks for tuning in to the Cures Builder Podcast. Thanks for tuning in to Curious Builder Podcast. If you like this episode, do us a favor: share it with three other business owners. The best way that we can spread what we're doing is by word of mouth, and with your help, we can continue to help other curious builders expand their business. Please share it with your friends, like and review online, and thanks again for tuning in.