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During tough economic times, small businesses are often the first to feel the crunch. The good news is that a gradual economic improvement is helping small Utah businesses to thrive again.
When small businesses are hiring, it means good things for everyone else. Though a small business might have a fraction of the customer base of a larger competitor within the same industry, size does not lessen its impact. If anything, the economic fortunes of local communities, states and even the nation are tied to what small businesses are doing.
“If you think about all the small businesses out there and if each of them were to hire one or two employees, you’re starting to talk about hundreds of thousands to millions of people who now have jobs,” says Brock Blake, CEO and co-founder of Lendio, a South Jordan company that helps small businesses obtain financing. “It goes a long way when each business is hiring maybe just one more employee.”
According to analysis from the Utah Department of Workforce Services, companies with 50 to 99 workers have contributed the most to employment growth. Companies of that size added 27,800 workers from 2000 to 2011. And while companies in that group represented 14.4 percent of the total labor market in 2000, its share of new jobs rose to 21.7 percent by 2011.
Businesses with less than 10 employees added 18,400 jobs during that time period, while those with more than 1,000 employees only added 8,400 new jobs.
An uptick in small business hiring has helped Utah’s economy recover faster than the national economy. A DWS report for July revealed the state unemployment rate held steady at 6.0 percent compared to an 8.3 percent unemployment rate nationally during the same period. From July 2011 to July 2012, Utah added a total of 24,500 new jobs.
“The last 12 months we’ve seen a trend of increased hiring,” says Rick Westbrook, manager of the Utah market for Robert Half International. “But businesses are hiring those individuals with specific skill sets that will take them to the next level.”
Westbrook identifies small businesses as a catalyst for economic growth both inside and outside of Utah. More than 50 percent of Americans either work for a small business or own one. Small businesses are responsible for 60 to 80 percent of new jobs created nationwide. Looking at how small businesses are doing offers a great indicator for how the rest of the economy is faring.
“How small business goes is how the economy goes,” Westbrook says.
Making the Commitment
Lessons learned from the recession have made small businesses in Utah exercise more caution in when—and who—to hire. Many small businesses are tied to the economic cycle based on their industry. Early trends in the recovering economy seem promising, but many small businesses still feel uneasy about making long-term financial commitments like adding new full-time employees.
Fewer small business owners are willing to take a risk and hire someone who might not have enough experience or skills. Potential is still a valuable trait in a job candidate, but the realities of the national recession have lessened the ability to look at the long-term picture at the expense of the short-term one.
“We tend to be more risk adverse in hiring decisions,” says Marshall Tate, president of Midwest Commercial Interiors. “In robust economic times, I might be willing to take a gamble on someone with a lesser level of experience. I might be willing to work with someone more as a long-term prospect for the company. I am inclined now to take a little bit of a near-term view of an employee and look at what they can do for us right out of the gate.”
After hiring decisions are made, employee retention becomes even more critical for a small company. If it loses one employee, that usually means replacing a person who wears many hats within the organization. Such a loss can set the company back and stunt its growth.
One thing that sets successful small businesses apart from the crowd is their effort to create a culture that involves employees, promotes innovation and gives them a reason to feel committed to the company beyond simply drawing a paycheck.
Neutron Interactive, a marketing firm based in Salt Lake City, has developed a strong focus on retention and company culture in order to maximize the skills and potential of its small workforce. “We want them thinking outside the box,” says Brittany Call, director of culture for the company. “We want them being creative. Having a culture that promotes that is essential. We couldn’t do without it.”
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