How labor and supply shortages are impacting entrepreneurs
Owning a business is hard work. However, over the past decade, many have felt the need to escape the corporate ladder to become an entrepreneur. According to Legal Zoom, just shy of 100,000 new business applications were filed per week in 2020.* However, this creates an issue. With more and more companies being started, the work force is spread incredibly thin.
Amid the pandemic, and in the stage of it we are currently in, supplies are in high demand and now come with an inflated price tag. This in turn creates a problem for business owners. Now, they will have to charge a much higher price for their product or service to turn a profit. Increased prices are causing people to start doing things on their own instead of hiring someone to do it for them. Companies have a hard enough time staying in business as it is but, with the inflated cost of goods, it increases the probability a business will fail. On top of that, these business owners will also have to continue offering higher pay to their employees enough to keep them around.
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Many laborers or skilled workers require much higher pay now due to the shortages of skilled workers. Many of those with a skill are either starting their own business, freelancing, or just not working. Freelancing for skilled workers has become increasingly popular, which is removing even more people from the workforce. Freelancing also removes most costs employers may take out of an employee’s salary. The only way for businesses to compete with this increased demand for workers is to raise their wages to attract potential employees.
Most workers are very aware of the situation and realize they have all the power; employers are desperate for workers to keep their business up and running but most do not have the ability to pay enough workers for their business to thrive. These employees are being overworked because of the lack of labor in the market, therefore they require more pay or they will quit and go somewhere else. Employees have so many options that it is hard for businesses to retain them.
Business owners are scrambling for anything to help them get employees to just come and interview as their prospects also have multiple job offers and interviews.
So, how can businesses make themselves more appealing to the worker?
Employers may need to loosen their requirements for specific jobs if the role is not being filled in a timely manner; many workers can be trained and taught how to do things even if they have little to no previous experience. Hiring good people who are willing to learn is key in this labor-less market. Business owners also must get creative with how they are searching for employees – using social media, spreading awareness through word of mouth and anything else that may catch someone’s eye and give them a reason to reach out about employment is helpful. Employers must also be flexible with work hours and benefits. Having the ability to negotiate hours and benefits helps secure someone for a position. All workers want is to feel like they are appreciated and receiving the flexibility and benefits they feel they deserve in the current market.
Business owners will continue to struggle with supply and labor shortages until they make the adaptations necessary to keep their business up and running. Entrepreneurship is one of the greatest assets our world has to offer and the effects of the pandemic, among other things, are putting that in jeopardy.
Wayne Goshkarian is the Director of Communications for Scottsdale-based Association for Entrepreneurship USA where he assists entrepreneurs nationwide with creating, establishing and expanding their businesses. In addition to AFEUSA, Goshkarian is the forward-thinking founder of Dylan Consulting and is known for bringing the slow changing insurance industry cutting-edge technology. AFEUSA intern Derek Bock from GCU co-contributed to this piece.