If revenue was to suddenly double, small business owners would be more likely to prioritise hiring new staff than any other investment, according to new survey findings.
To find out more about how important recruitment was considered by small business owners, American Express and the Centre for Economics and Business Research think tank asked 500 employers of the most important investments they made after founding their business.
Almost one in four respondents said the most important business decision made in the early days of their company was hiring new staff. In contrast, choosing suppliers and investing in technology were considered less crucial to growing a new company.
However, a short supply of expertise was cited as the greatest barrier to hiring new staff, as employers struggled to was accessing the right skills within a sustainable budget. A narrow candidate pool was followed by the cost of increasing staff numbers.
When asked what they would invest in if their revenue was to double, over one in five respondents said they would prioritise recruitment – the most frequently cited investment.
Our three-part guide to hiring your first member of staff is essential reading for new business owners:
A closer breakdown of the findings revealed the shifting priorities as a business grows in size. For a third medium-sized companies, technology would be the first investment if revenue was to double, while just 22 per cent would focus on recruitment.
Commenting on the findings, Jose Carvalho, American Express vice president, said a strong recruitment strategy was essential to business success.
“There are many hurdles on the path to business growth and securing top talent is key priority for ambitious SMEs,” he explained.
To help growing small business owners sustain a strong recruitment strategy at realistic costs, Carvalho offered the three following tips:
Incorporate hiring into your overall growth strategy
“Having a clear trajectory of how and when you will expand your staff will help you budget time as well as money, so that you can find new candidates and onboard new employees as efficiently as possible.”
Re-evaluate your hiring budget
“While the amount set aside to fund hiring new staff may be more or less fixed, as a business grows you can benefit from re-evaluating the hiring budget more frequently.
“This will help keep pace with planned expansion and make sure your expenditures are in the right proportion to support continued growth.”
Positive cash flow is king
“While every business will be focused on the bottom line, it’s essential not to become complacent when it comes to managing your cash flow. It is crucial to do so in order to firstly pay your staff fairly and promptly but also have a longer-term view when it comes to hiring and retaining more employees.”
Find out the avoidable hiring mistakes costing UK employers billions each year
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