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Small Business Labor Shortage – Forbes

Supply chain disruptions have become the favorite “go to” explanation for the difficulties experienced by small businesses. A shortage of microchips holding up automobile and durable goods productions, of lumber production, produce, and more, the list is long. Many small firms are experiencing problems restoring operations, many in the “supply chain” of yet another firm.

But even if needed supplies or goods are available, one more input is needed that is also in short supply – labor. The percent of small firms reporting open job positions reached a 47 year high at 48% in May’s NFIB Small Business Economic Trends survey. Over 60% of business owners report a shortage of labor, over 20% characterizing the shortage as “critical” to business operations. Over 80% reported a loss of sales due to the labor shortage, 19% experienced serious losses.

Solving the labor shortage problem will take time. Even though there are about as many unemployed people as job openings at firms, they do not match up perfectly geographically or by skill requirement. People move, but not enough in a year to significantly dent the gap between available workers and job openings. But there are also ongoing childcare issues and health concerns that continue to keep otherwise employable people on the sidelines.

The government’s stimulus programs have also sent a lot of money to consumers, directly and in supplemental unemployment benefits. There are over 14 million people receiving some sort of unemployment benefit, federal and state. Before Covid-19, about 2 million were receiving benefits. All this income induces many to delay seeking a paying job, which often pays less than unemployment benefits. Most of these programs will cease in September.

The labor force (number of employed plus number seeking employment e.g. unemployed) has also not increased as expected, reducing the supply of available workers.

With strong GDP growth, it remains a bit of a puzzle that total employment is still lower than pre-Covid-19 levels. Record percentages of owners report raising worker compensation to attract workers but unless there is growth in the labor force, a hiring success will come at the expense of another employer and not increase total employment. Growth will come from an increase in the labor force and a reduction in the number of unemployed.

To deal with the shortage, 63% have raised wages, 13% have increased paid time off and 13% have instituted a signing bonus. Fifteen percent instituted bonuses for successful referrals and 15% offered improved medical benefits. Owners are working more hours themselves (79%), 41% offered more hours of work to part-time employees and 60% to current full-time workers. Thirty percent adjusted hours of operation to fit the available workforce and nearly a quarter reduced product offerings. To round out the variety of efforts to deal with the worker shortage, 29% introduced new labor-saving technologies.

Overall, employers have tried just about every possible measure to improve the labor shortage problem. These problems will be resolved, particularly when potential workers begin to feel even safer about returning to work and schools re-open to alleviate the childcare problem.
Number of people claiming unemployment benefits, by program

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More than 1 in 5 adults with limited car, public transit access forgo health care

More than one in five U.S. adults who do not have a car and have limited access to public transit said in a recent poll they have forgone needed health care in the past year.

The poll from the Urban Institute found that 21 percent of those without access to a car or reliable public transit in their area said they went without necessary health care because of difficulty finding transportation.

However, this number dropped to 9 percent among those who don’t have access to a car but reported good public transportation, the poll found.

Having access to a car also makes a difference in obtaining health care, with 13 percent of those without a vehicle saying they skipped out on necessary medical care over transportation issues, compared to just 4 percent of those with a car.

Black and Hispanic adults were significantly less likely to have access to a car, according to the poll. While 94 percent and 93 percent each of white and Asian adults said they had access to a car, respectively, 81 percent of Black adults and 87 percent of Hispanic adults said they did not.

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Britain’s Small Businesses See Better Times Ahead But Is Their Optimism Justified? – Forbes

Colin O’Flaherty, Head of Small Business at Barclaycard Payments says SMEs are adapting
So here’s the good news. As the U.K. government prepares to lift almost all Covid-related restrictions, Britain’s small and medium-sized companies seem to be well-placed to raise revenues and profits in 2022.

That’s the headline finding from the latest update of Barclaycard’s SME Barometer. According to the report, revenues are up and many companies are planning to raise staffing numbers in response to increasing demand.

But we’re living in strange and unprecedented times. It’s certainly true that Britain’s economy has bounced back most of the way from the downturn triggered by the pandemic and that is certainly reflected in the Barclaycard figures for SMEs. On the other hand, consumer inflation is running high, hitting 4.9 percent year-on-year in January, with an expectation that it will peak above 7.0 percent in the not too distant future. And as power and gas prices rise again in response to sanctions against Russia, energy-hungry companies face a sharp rise in costs.

A Bullish Mood

So how positive are the Barclaycard figures? Well, it can’t be denied that small businesses are in bullish mood. More than half of the SMEs taking part in the survey reported a rise in earnings in the last quarter of 2021 when compared with the same period a year earlier.

A separate report published by accountancy software company Xero paints a similar picture. The January update to its Small Business Index finds that sales rose 3.7 percent year-on-year in January when averaged out to take account of the impact of Covid.

Arguably none of this is surprising. The final three months of 2020 were marked by a sequence of ever more stringent Covid restrictions, culminating in a lockdown over the Christmas period. And while a huge amount of uncertainly hung over the last quarter of 2021, businesses had to some degree learned to adapt. Added to that, the economy as a whole was recovering in fits and starts.

Future Prospects

And Britain’s SMEs seem to be optimistic about the year ahead. According to the survey, businesses are expecting revenues to rise by an average of  13.5 percent in the first quarter of the year. Buoyed by an increase in demand, two-fifths of the companies surveyed expect to make an average of six new hires in the coming months.

But there are warning signs that the months ahead could be difficult. Certainly, SMEs are extremely concerned about inflation. Businesses are seeing their own costs rising at a time when customers – also squeezed by rising prices – have less to spend.

Offline to Online

Two-thirds of SMEs said they were concerned about rising prices in general and energy bills in particular, with four in ten seeing it as a threat to their competitiveness. And inflation could force a radical change in business practices. According to the report, nearly 10 per cent of businesses are reconsidering the need for physical outlets. It seems the economic fallout pandemic is continuing to accelerate the move from offline to online.

Staff shortages also threaten the SME recovery. UK employment rates are high and the economy as a whole has around one million unfilled vacancies. Companies planning to take on new staff may have to work hard to attract the right people and pay more when they do. This is reflected in the Xero research. It reports wage rises of  4.4 percent in January, although this falls to 2.7% when averaged out over the two years of the Covid crisis.

Some businesses appear to be feeling the strain. Xero reports that the average payment time to customers was pushed back by 1.9 days in January and many payments were made beyond the agreed terms.  Average lateness was 8.9% days. Typically businesses begin to pay later when their own cashflow is stressed.

The Wider Picture

And if you step back from Barclaycard’s report, there are plenty of other issues to worry small companies. For those who either import or export to or from the E.U., it has to be a concern that trade between Britain and continental Europe dipped in the wake of new rules coming into force in the wake of Brexit. There has been some recovery, but according to the House of Commons Public Accounts Committee, SMEs have been particularly badly hit by increased costs and paperwork.

Barclaycard says that SMEs are responding to the economic challenges. As Colin O’Flaherty, Head of Small Business at Barclaycard Payments, observed: “SMEs are also remaining resilient by continuing to focus on areas within their control, such as by improving their operating models to overcome the hangover to supply chain disruption which peaked at the end of last year.»

So it’s a mixed picture for Britain’s SMEs. Those that have survived two years of Covid restrictions are hopeful of better times ahead, but no one can ignore the increasingly challenging economic trends. The sector is not out of the woods just yet.

 

 

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Three Questions Small Business Owners Should Ask In Creating A Workplace Culture – Forbes

For small business owners, the morale of their employees is key to success.

There is a scene in “The Wire” where Lieutenant Daniels is speaking with another police officer who is about to become a supervisor. He tells him, “all of them will take their cues from you. You show loyalty, they learn loyalty. You show them it’s about the work, it’ll be about the work. You show them some other kind of game, then that’s the game they’ll play.”

While owning a small business is different from working in the Baltimore Police Department, workplace culture is critical in both. For small business owners, the morale of their employees is key to success. Empathy and transparency are important in maintaining a positive, productive morale, and its foundation is rooted in culture.

It is important to establish a positive workplace culture in order to ingrain company values at all levels of an organization. In doing so, here are three questions a small business owner should ask themselves when working to create a workplace culture with intention.
1. What kind of culture do I want for my business?

A workplace culture reflects a business owner’s unique values, beliefs, and attitudes. Essentially, it’s what makes a business stand out. A culture varies from sector to sector and from business to business. Not every business strives for the same culture, and leaders can instill values such as community innovation, care, and a growth-oriented environment.
2. Why will this culture help my business?

Workplace culture is an important part of conducting business, as it informs how employees interact with one another, with customers, and with leadership. It also establishes core values and helps to create a space for employees to grow and learn in their roles. A strong workplace culture also has the potential to attract talent, increase engagement and retention, as well as boost job satisfaction. All of these factors together drive productivity and help a business grow to be more successful.

3. How will I create this culture?

Creating culture in the workplace takes time and hard work and means something different for every business. There are a number of different components and approaches employers can use. For example, many start with an audit of their existing policies, employee skill sets, and assessments before outlining any skill gaps in relation to future business needs to create meaningful work through community-based volunteering and reverse mentoring. Almost all positive workplace cultures have a clear “open door” policy for employees to share their thoughts or ideas. These types of actions are small steps that will make meaningful impacts down the line.

Company culture is a crucial part of creating success for businesses, providing companies a chance to connect with and learn from their employees. This culture should reflect company values because it is essential for employee engagement, retention, and satisfaction.

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