When it comes to growing your business, investing in your staff is a core ingredient to making it successful. And yet many small and medium sized enterprises (SMEs) are struggling to find the right staff to fit the bill.
According to research from American Express, in partnership with the Centre for Economics and Business Research (CEBR), more than a third of small businesses report a shortage of the necessary skills among applicants. This figure increases to 42 per cent among medium sized enterprises.
It’s clear that the thin talent pool is the main hurdle when it comes to hiring, and while the government hopes to tackle the shortage through apprenticeship schemes, SMEs are the first to suffer in the interim.
Of course, taking on new staff also comes at a cost, and the research found that a further 27 per cent of small businesses are worried about how they will fund the hiring of new employees.
This highlights the importance of financial management when it comes to ensuring a business can bring in staff as the company grows.
But smaller businesses face the added challenge of being in competition with large organisations that will potentially be able to offer more in the way of salary and benefits, making it harder for SMEs to attract the right candidates.
Between a rock and a hard place
Peter Alderson, managing director of business finance provider LDF, says: “recruiting the right people is crucial for any business, but this is even more in focus for smaller businesses.
“Attracting and securing new employees can be a costly and time consuming process, and with much of this often coming directly from cash flow, it’s easy to see why smaller business owners experience challenges. It’s between a rock and a hard place for many”.
It’s clear that investing in staff is a top priority for many SMEs. In fact, 22 per cent of small and medium sized businesses would put increasing staff numbers at the top of their to-do list if their revenue were to double.
Plugging the gap
While more needs to be done to tackle the nationwide skills gap, there are several ways businesses can help overcome the barriers when it comes to hiring staff.
Alderson says that some businesses want to spread the cost of new hires – which is why LDF created a specific facility for this.
“We didn’t see many options available for businesses to manage the cost of intangibles like recruitment, marketing and research, and so in 2016 we launched a business development loan to small businesses, which is already proving exceptionally popular.”
But there’s other ways SMEs can make their lives easier. For example, businesses should constantly re-evaluate how much money they have set aside to hire new staff, particularly as the business expands.
Also make sure you have a long term plan in place so you can reward – and therefore retain – skilled staff by granting higher pay packets.
Another thing to consider when hiring junior staff is whether they have the right attitude to working at your company, even if they don’t necessarily tick all the boxes in terms of skills.
After all, you might be able to help them move forward with their career, and in turn they could help your business flourish.