Startup Small Businesses Struggling to Hire Skilled Staff; Turn to Contractors for Specialized Expertise
Washington, D.C. – Oct. 24, 2019 – 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.”
About The Megaphone of Main Street
This report constitutes the fourth edition of SCORE's Megaphone of Main Street data report series, which presents original, statistically-significant survey data on the American small business landscape. Survey data was collected from 1,000 new small business owners in all 50 states and Washington, D.C., representing new small businesses of varied sizes in a broad coverage of industries. Other sections of this data report focus on the challenges that new entrepreneurs face in their first year of operations, including finding their niche in the market and finding financing.
Since 1964, SCORE has helped more than 11 million aspiring entrepreneurs. Each year, SCORE's 11,000 volunteer business experts provide free small business mentoring sessions, workshops and educational services to clients in 300 chapters nationwide. In 2018, SCORE volunteers helped to create 32,387 new businesses and 103,300 non-owner jobs.
For more information about starting or operating a small business, or on volunteering with SCORE, visit SCORE at www.score.org. Follow @SCOREMentors on Facebook, Instagram and Twitter for the latest small business news and updates.
Funded in part through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, conclusions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.
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