Small businesses in the United States play a crucial role, employing nearly half of the workforce and significantly contributing to economic recovery after 2008 through their hiring efforts. Over the past year, there’s been a noticeable increase in hiring among small businesses, reaching levels not seen since 1999.
A recent survey by SCORE, called the Megaphone of Main Street Small Business Jobs Report, gathered insights from over 1,700 small business owners about their hiring experiences.
Finding it Tough to Fill Positions
More than half of these small businesses reported challenges in filling open positions, with around 55% of very small businesses (those with 0 to 4 employees) facing similar issues. Over the past six months, 27% of job openings remained unfilled, regardless of the business size or location. Business owners frequently blamed a lack of skilled and qualified applicants for these hiring gaps. Offering competitive wages and benefits like healthcare was another significant hurdle. Furthermore, about 18% of small businesses found the hiring process too time-consuming, opting to handle the work themselves instead.
To find new employees, small businesses typically used job-posting sites, referrals from other business owners, networking groups, and online platforms. However, recommendations from current employees proved to be the most effective method.
Our infographic, “The Megaphone of Main Street: Small Business and Employment,” highlights additional hiring challenges faced by small businesses.
The Gig Economy’s Impact on Small Business
The area showing the most growth in hiring was for one-time projects or gig work, with 37% of businesses indicating an increase. Additionally, 18% of businesses reported replacing some employees with contractors over the past six months.
Of those who hired contractors, 50.8% did so for specialized expertise, 41% cited a need for seasonal or temporary help, and 35.1% preferred contractors to avoid ongoing payroll expenses. The intricacies and expenses of offering benefits like healthcare and retirement plans also motivated the shift to contractors.
Among solopreneurs, 47% hired part-time help, averaging 3.2 workers, including themselves. Contractors were mostly hired for technical tasks, accounting, bookkeeping, and marketing duties, but also played roles in manufacturing, sales, business planning, and logistics.
When opting to hire employees over contractors, business owners prioritized consistent work quality and a stronger commitment to the company. Having a permanent worker rather than rotating contractors was key, as was the ability to manage and schedule work directly. Some owners mentioned worries about complying with IRS regulations and the associated paperwork influenced their decision between hiring employees or contractors.
For more information on the gig economy’s growth, check out our infographic, “The Megaphone of Main Street: The Gig Economy.”
How does your hiring experience compare to these findings? Consider meeting with a SCORE mentor to ensure you find the best talent for your growing small business.
