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Startup Small Businesses Struggling to Hire Skilled Staff; Turn to Contractors for Specialized Expertise

WASHINGTON: More than half of new entrepreneurs are hiring to support their first year of operations, but many cite difficulty filling job openings and finding competent workers, according to original survey data published by SCORE, the nation's largest network of volunteer, expert business mentors.
When startup entrepreneurs do hire additional help, they gravitate toward contractors who can provide specialized, need-based expertise.

This original survey data constitutes part three of the Megaphone of Main Street data report on small business startups, and focuses on how new entrepreneurs find the right team and handle business functions in their first year of operations.

Key findings include:

Startup entrepreneurs personally handle majority of their business functions during their first year of operations, by necessity, not choice. Entrepreneurs rely on help from others (contractors, employees, interns and friends and family) when specialized expertise is required, most often in the following areas:

Legal (39.5%)
Manufacturing (27.3%)
Accounting/Finance (23.3%)
Technology (20.9%)

For new entrepreneurs, the biggest barrier to hiring employees is an inability to find qualified applicants.

Half (52%) of startups cited difficulty filling job openings, a significant increase from the 41% of startups who reported hiring difficulties hiring workers in 2017.
One-third (33%) of startups reported having job openings they could not fill, which is almost double the 14% of startups who reported unfilled job openings in 2017.
Among startups who reported unfilled job openings, the majority (75.7%) reported that the problem was that they could not find qualified applicants.

Startups looking to hire opt for contractors and temporary workers instead of employees because they provide specialized expertise, and cost less money.

When asked why they did/will hire a contractor or temporary worker instead of an employee, 23.7% of respondents cited specialized expertise.
23.1% said it was less expensive.
18.9% of businesses hired temporary workers because their needs were seasonal or temporary.

It's not surprising to hear that most new entrepreneurs are personally taking on the majority of business functions in their first year of operations, given that entrepreneurs tend to be hard workers with a lot on their plates, said SCORE CEO Bridget Weston. However, not having the right team is a key reason that startups fail. At SCORE, we try to remind small business owners that they are not alone, and to encourage them to take advantage of our expert business mentoring, and the abundance of startup resources available on SCORE.org, to help guide their decision-making process during their critical first year of operations.

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Startup Small Businesses Struggling to Hire Skilled Staff; Turn to Contractors for Specialized Expertise

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