Investing in staff is the secret ingredient to grow a business, say small and medium sized enterprises (SMEs). New research from American Express® has found when it comes to growing their business, SMEs believe investing in their staff is key. Nearly a quarter (23%) of firms state that after launching their business, hiring new staff has been their biggest business decision, above choosing suppliers (20%) and investing in technology (19%).
The study, conducted in partnership with the Centre for Economics and Business Research (CEBR), found SMEs face various challenges when it comes to hiring new staff. More than a third (35%) of small businesses report a shortage of necessary expertise among applicants as the main hurdle in hiring. A further 27% are worried about how they will fund the hiring of new employees, highlighting the importance of tight financial management in ensuring a business can bring on staff as the firm grows, whether at home or as they expand abroad.
Despite these barriers, SMEs remain committed to staff investment, with more than one in five (22%) saying if their revenue were to double, their first investment would be to increase their staff numbers.
As businesses grow in size, investment priorities change. Medium-sized SMEs reported if their revenue doubled, a third (32%) would invest in new technology first, followed by 22% whose first investment would be new hires. Medium-sized SMEs also reported greater difficulty finding new employees with the necessary expertise. While 35% of small firms said the biggest obstacle to hiring staff was short supply of expertise, this figure increases to 42% among medium-sized enterprises.
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Jose Carvalho, Senior Vice-President at American Express commented: “There are many hurdles on the path to business growth and securing top talent is key priority for ambitious SMEs. Whether expanding at home or globally, business owners are looking for partners that can help them attract and retain staff, whether that’s through payment cards which enable rewards earnt on business spend to be gifted to employees, employee expense management solutions or cross-border payment tools to help ensure companies can smoothly pay employees based abroad. SMEs want hassle free solutions which help ensure they are in full control of their cash flow”.
When it comes to managing cashflow, SMEs are most likely to worry about rising costs (55%), followed by how to finance future spending (19%). 18% of SMEs worry about how to prioritise their spending across their departments.
To help growing SMEs with the costs of hiring staff, American Express has put together the following top 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.
- Work with a payment provider – When choosing a business payment card, consider a provider that can support your hiring and retention goals. The American Express Gold Business Card* provides 54 days deferred payment on purchases and no pre-set spending limit providing a tool which could be used to help manage hiring costs.
- Positive cashflow is king – While every business will be focussed on the bottom line, it’s essential not to become complacent when it comes to managing your cashflow. 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.