October 23, 2014

Why Most Small Businesses Still Aren’t Ready to Hire

Although MarketWatch is theorizing a hiring boom may soon be in the offing, small businesses are likely to stay on the sidelines—at least, according to Office Depot’s latest SMB National Tracking Survey. The monthly poll of small business sentiment finds 80 percent of small business owners have no plans to hire in the next six months—a figure that has stayed pretty consistent throughout the year.

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Just 12 percent of the small businesses surveyed plan to hire in that time period, while 8 percent plan to let staff go. Again, both numbers have remained fairly consistent throughout the year (in this survey; other surveys have indicated nearly opposite findings).

However, the ho-hum hiring news is not all bad. For one thing, of the companies that are hiring, 50 percent say it’s because business is improving, and 47 percent say it’s because they’re understaffed.  In other words, some small businesses are seeing growth that’s significant enough to prompt hiring.

On the other side of the coin, the companies not hiring mostly say they already have sufficient staff in place (58 percent). “Economic uncertainty” was cited by a far smaller number (30 percent), and just 18 percent of those not hiring say it’s because their businesses were in decline.

Overall, small business owners’ top concerns are “making more money” and “saving money.” Not hiring is one way they’re cutting costs; 65 percent of those surveyed cite “hiring less” as a money-saving strategy. By comparison, just 10 percent say staffing is a top concern right now.

But there’s a bit of a disconnect here. The number one priority small business owners are planning for in the next 12 months is “business expansion”—and to expand, you’re likely to need staff, right? Yet, at the same time they’re planning to grow, just 10 percent say they’re planning ahead for staffing.

I recently discussed the difficulty businesses are having finding qualified hires—so if you’re planning to expand, the wait-till-the-last-minute approach to hiring may not be the smartest.

Clearly, small businesses remain in wait-and-see mode. Asked whether they think their businesses will be in better shape at the end of 2012 than at the beginning of the year, about the same number say it “will be better” as “it will be about the same,” while relatively few expect it to get worse.

Despite that seeming confidence, there’s widespread worry about a double-dip recession, with the majority of small business owners either “very worried” or at least “slightly worried” about the possibility.

Will the upcoming presidential election make a difference in small businesses’ hiring plans? All we can do is wait and see.

No Help Wanted Photo via Shutterstock

2 Comments ▼

Rieva Lesonsky


Rieva Lesonsky Rieva Lesonsky is a staff writer for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Follow her on Google+ and visit her blog, SmallBizDaily, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.

2 Reactions

  1. Hiring is tough for SMBs. You want to get the right person (which can take awhile) but you need to have the revenue in place before making the hire. Therefore, they stretch existing resources as far as possible and then usually need to make the hiring move quickly to eliminate the strain before something breaks.

  2. I’ve got to believe that one of the other reasons that SBs are reluctant to hire is because, given the last few years, it is hard for them to feel confident about the marketplace on a longer term basis. And hiring is certainly something that you do with strong consideration for the long term.

    One of the things that SBs can do in the short term is improve their marketing. It won’t be as big an investment as hiring. And it will help with their number one objective — business expansion. We should encourage them to increase the number and productivity of the contacts they have with their existing customers.

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