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2013 Small Business Trends: Known Unknowns Ahead

2013 Small Business Trends: Known Unknowns Ahead

By: John Rossheim, Monster Senior Writer

As we head into 2013, small business trends in recruitment and hiring are decidedly mixed.

Candidates are out there, in great quantity. But competing for top talent is difficult.

Both seasoned professionals and bright college hires have sensed that they're gaining power in the labor market.

Such trends are impacting small business innovation: New business opportunities that would require more workers seem almost within reach, yet they're riddled with risks stemming from macroeconomic uncertainties.

Hedging Hiring Planning
Yes, as small firms consider their workforce strategies for the new year, much remains contingent.

The small-business community as a whole is hedging its hiring plans. According to a October 2012 survey from the National Federation of Independent Business (NFIB), 10 percent of small businesses are planning to grow their workforce; 11 percent plan to reduce headcount.

One example of an external factor that has owners hedging: The Affordable Care Act, which requires companies with more than 50 employees to provide health benefits or begin paying penalties in 2014.

"Some firms may be holding back on hiring not to cross that threshold," says a 2012 report from Moody's Analytics.

Candidates Are Feeling Their Oats
Especially for small firms that are all about technology, recruiting IT staffing the right talent will likely only get tougher in 2013.

"Now students and prospective employees are recognizing the value they bring to companies," says Faina Klyuzman, a recruiter at AWeber, an 80-employee email marketing technology firm in Huntingdon Valley, Pa.

"It's much more difficult today [in late 2012] than it was even 18 months ago," says Jerry Irvine, CIO of IT consulting firm Prescient Solutions in Chicago. "Good, strong employees are already employed, and they're reticent to jump to something new."

These anecdotes are borne out by recent data on hard-to-fill job openings, which have trended up over the past three years.

Going back to 2007, before the recession hit, about one in four small firms reported hard-to-fill openings; through 2009, in the depths of the downturn, the proportion of tough-to-make hires dropped to about one in ten; in 2012 the ratio is about one in six, according to the NFIB report. 

In the new year, consultancies will continue to try to lure talent with promises of workplace flexibility, a variety in their portfolio of projects and pay-for-performance features ranging from spot bonuses to profit-sharing.

To keep incumbent talent happy, some firms are offering perks ranging from take-home prepared dinners to housecleaning services.

Small Business Recruiters
Responding to the increasing difficulty of filling critical positions, more small businesses in 2013 are likely to make the investment in external recruiters, often for openings in technical niches.

"Income from our recruiting practice is up 70 percent in 2012 compared to 2011," says Nancy Mobley, CEO of Insight Performance, a human resources consulting firm in Dedham, Mass.

Finding the right combination of hard and soft skills will continue to be a major challenge for small employers next year.

"College graduates come out of the gate understanding social media," says Amy Laws, co-owner of Smocked Auctions, a Dallas-based online retailer of children's apparel that plans to increase its headcount of 10 by three workers in 2013 as it aims to double sales to $2 million.

Harder to find are recent grads who know how to use spell-check and have good communication skills, she adds.

Small Tech Firms Are Hiring Full-Time — Or Outsourcing
Small technology ventures — which often employ hard-to-find experts — are less inclined to bring in workers under alternative arrangements. "We steer clear of contractor and temp-to-hire situations," says Klyuzman. "We want people to have a vested interested in the company from day one."

This perspective makes a lot of sense for consulting firms whose individual contributors are the only ones with regular face-to-face contact with clients.

"Our service offering is to become a company's IT department," says Irvine, whose firm has about 90 workers. "We want loyalty, so 100 percent of our workers are W-2 employees with benefits."

Still, many small companies will choose to outsource a variety of tasks in 2013, often paying a premium in exchange for fixed costs and reduced compliance and co-employment risks. "We're seeing companies outsource non-core functions," says Mobley. "It's become even more prevalent."