As most entrepreneurs know, business success is more than a great idea and hard work. One of the critical factors in building and maintaining a thriving business is your ability to confront challenges—some of which you have no control over—and navigate through them.
As the U.S. enters the third year of the coronavirus pandemic, all the inherent challenges of entrepreneurship have become even more complicated. Below is an overview of some of the most pressing issues for entrepreneurs and business owners right now.
Recruiting
Recruiting diverse and qualified talent is difficult under the best of circumstances. However, the pandemic, a turbulent economy, and a low unemployment rate have made this task even more challenging. In October 2021, the unemployment rate in the U.S. was 4.6 percent and trending downward.
Robust employment figures make recruiting more difficult, especially when you’re seeking highly qualified workers with very specific skills. But, on top of this, the so-called “Great Resignation”—fueled by the record number of workers quitting their jobs—has made recruiting even tougher. In November, there were more than 11 million open jobs in the U.S., and the current tight labor market will likely continue.
- What should employers do? Recruiting in a scarce candidate pool with an uncertain outlook requires some creative measures.
- Engage candidates as if they were your customers. Get them excited about your brand by giving them a valid reason to work for your company. Also, make the interview process hospitable, personable, and thorough.
- Create a mentoring program—for example, through a local university, business association, or even high school—to groom new talent to join your staff as your business grows. Look for local partnerships to facilitate this.
- Make your benefits packages the best they can be. Focus on healthcare (including mental healthcare), paid time off, unlimited sick leave, continued education, flexible scheduling, and remote work.
- Start employee referral programs that offer generous cash bonuses. Highly skilled professionals tend to associate with exceptional people like themselves.
- Let technology and the professionals help you. Use data-driven solutions like Censia Talent Intelligence, which uses AI to model the ideal candidate for an open position and finds the people most likely to succeed in the role.
Inflation
Inflation is at its highest point in the last 30 years, and there is no indication when or if the rate of increase in prices for consumer goods will return to pre-pandemic levels. You are probably already paying more for supplies and materials, labor, and shipping.
To survive high inflation, you may need to rethink your pricing strategy. Some businesses can increase prices without losing customers, but others can’t. For those, it may be possible to diversify with new products that yield larger margins. Cutting expenses and boosting sales are two other obvious, yet effective strategies. In terms of boosting sales, always remember that it’s cheaper to retain a customer than find a new one.
You may also have to consider financing. If your business generates a good income, you have more leverage when seeking new funding through lending or investors. Getting the money before you need it will have you better prepared to handle a drastic uptick in your supply or operating costs. Another hedging alternative is to reinvest your profits into the business.
Staff Turnover
Turnover is a serious drain on many businesses. Did you know that losing even a lower-level employee can set you back about $3,500? What’s more, the loss of a staff member costs you untold hours of productivity plus the time, money, and energy required to replace them. It’s imperative to focus on employee retention.
With the current tight labor market and workers resigning at high rates, retaining employees is much harder than in the past. The U.S. Bureau of Labor Statistics reported that 4 million Americans resigned from their jobs in July 2021. This tsunami of employee exodus is a severe point of concern for employers, particularly in the tech, healthcare, and other industries needing highly skilled workers.
To find out your business retention rate, use this formula: “Number of annual voluntary separations divided by the total number of employees equals turnover rate.” You can improve your employee retention rates by considering these aspects of the employee experience at your company
- Benefits packages are key—again, ask yourself, are you offering the most competitive benefits package you possibly can?
- Offer pay increases. Not surprisingly, when employees are satisfied with their pay, they are more likely to stick around. Pay attention to the market and adjust your rates accordingly to ensure you’re competitive.
- Provide performance incentives to increase engagement and productivity.
- Facilitate career growth opportunities. No one wants to feel like they’re working in a dead-end job that’s going nowhere. Prioritize professional development accordingly.
- Training needs to be taken seriously for both new hires and existing employees. When employees do not have sufficient training, they tend to feel like their employer isn’t interested in their success. Most employees want to do a good job, so make sure you give them the skills and knowledge to do so.
Tough, But Not Insurmountable
As the pandemic continues, entrepreneurs and business owners are facing major challenges on a daily basis. The proactive suggestions above can help you confront these big problems head-on and weather the storm.