Small businesses are one of the most important pillars of every country’s economy. They built a sense of community within the area operating and also getting more money circulating in the local economy. Finally, small businesses provide more job opportunities, which makes it easier for locals to have an income and work close to home.
However, small businesses face a labor shortage since they can’t fill open jobs. The leading cause of this phenomenon is the challenging economic situation that doesn’t offer many options for competitive wages.
But how does this affect small businesses?
Flexibility and better pay are required by employees
Nowadays, employees are demanding more flexibility, as it has been proven during the pandemic that offices can still perform in a hybrid way. At the same time, bigger wages are required, considering how much gas prices have increased, while house renting is becoming more challenging than ever.
Health and safety concerns and rising levels of burnout and anxiety may also cause worker shortages. Considering these tough situations, productivity may decrease, and the company can be negatively impacted. A solution for this challenge is getting small business insurance in case of general liability or workers' compensation, but not all SMEs afford this type of service.
How are small businesses affected in the long term?
Labor shortage may not seem a problem as it happens, but in the long run, revenues are dropping, services need to be diminished, and companies need to cut costs. At the same time, work hours are decreased, meaning less time for clients to communicate with staff, which are already overworked. This cycle of events may lead to the need for the business to close down in the future, as it can not sustain itself with no staff. An economy without small companies would be heavily changed, as they account for a considerable percentage of the entire economy.
What can business owners do to protect their small businesses?
Ensuring small businesses are thriving in this fast-pacing world can be difficult. However, there are some steps to minimize the impact of inflation, recession and unexpected events on small businesses' profits. For example, before launching a business, getting EK Insurance for business owner policy ensures different types of coverage which can later pay back in case something unfortunate occurs.
At the same time, small businesses need to be flexible and understand they need to adapt to trends and social changes to make a profit. In this world backed by technology, seizing opportunities and taking advantage of certain situations is the only way for a business to survive.
Redesigning and reorganizing must happen frequently so the industry doesn’t get lost among competitors.
Staffing shortages are not linear, so there will be a period when talented people come to interviews. This means that the company must also be flexible with requirements and their level of exigence.
Will the situation improve?
Labor shortages and the effects of worldwide events incredibly impact small businesses. However, they need to remain positive and change their approaches to adapt.
This article was written in cooperation with EK Insurance