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Economy

Labor Shortages and Cost Increases Tighten Hold on Small Businesses

December 13, 2022

HOUSTON – Leading invoice funding company Charter Capital says small businesses are feeling especially squeezed by the current labor market. Between the record-breaking cost of labor hikes and challenges filling vacancies, employers are exploring new ways to address the strain. The topic is covered in depth in “15 Tips for Combatting Labor Shortages and Increased Labor Costs,” which is now live at CharCap.com.

Nine-in-ten businesses that are hiring say finding qualified candidates is a challenge, the report notes, drawing on data from Goldman Sachs. A net loss in people seeking employment is tied to increased numbers taking early retirement and reduced immigration during the pandemic, with some industries feeling more strain than others due to a reallocation of workers. Industries with the greatest number of unfilled job openings include financial activities, professional and business services, durable goods manufacturing, leisure and hospitality, and wholesale and retail trade, per U.S. Chamber of Commerce data.

“Small businesses tend to have more difficulty filling their roles because they don’t always have an HR department, let alone a team dedicated to recruitment and creating competitive benefits packages,” explains Gregory Brown, Co-founder and Executive Manager at Charter Capital.

At the same time, the nation is experiencing its largest labor cost increase in 20 years, per Reuters. Although business owners may feel tempted to cut salaries to help cope with the strain, doing so only makes it harder to attract and retain talent, which Brown notes can harm business success in the long run.

“Businesses that take care of their teams and use cost-cutting measures such as employee schedule optimization and automation fair better over time,” Brown contends. “Organizations can make themselves more appealing to jobseekers by offering perks that don’t necessarily increase costs as well. Flexible scheduling, hybrid work environments, and creating positive, inclusive cultures are prime examples.”

He says that businesses struggling to build a budget for recruitment or HR, and those that may need the occasional cash flow bump to cover payroll, can get help through invoice factoring. It accelerates payment on B2B invoices, so organizations are in a better position to handle vital expenses without taking on debt.

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