Small Business Survey: Uncovering the Challenges Facing SMBs in Canada

Small is beautiful, so they say – and many of Canada’s most beloved companies started from humble beginnings. Take Shoppers Drug Mart, for example. Once operating from a single location in Toronto, it has since grown to be Canada’s leading drug store retailer.

Today, Canadian entrepreneurs operating small to medium size businesses (SMBs) benefit from a healthy economy and access to government programs and services that are designed to aid and support new and growing businesses. But regardless of whether or not businesses transcend “small business” status, their contribution to the Canadian economy is anything but small.

According to Statistics Canada’s latest figures, nearly 98% of employer businesses in Canada are small businesses. Moreover, small businesses employ over 8.2 million individuals in Canada or 70.5% of the total private labour force.

Though they have a profound impact on the Canadian economy, SMBs have their fair share of challenges, many of which are centred around recruiting. Small business owners often juggle multiple roles within the company – they’re not just the owner, but office manager, hiring manager and more. SMBs also compete against large companies for top talent and can have a hard time finding skilled workers. And as Canada’s unemployment rate reaches record lows, the resulting tight labour market provides greater options for job seekers and even more competition for small businesses.

Of course, there are recruiting challenges for businesses of any size, but there are some hardships that are unique to SMBs. To get a better sense of these obstacles and pain points, we conducted an online survey among 1,000 randomly selected small business owners in Canada. Let’s take a dive into the data.

26% of SMB owners say finding the right employee is harder than it was five years ago

According to the survey, 38% of small business owners plan on hiring new employees over the next 12 months. But while growth remains top of mind for SMB owners, many are expecting to witness some delays in their growth plans.

More than half of small business owners (59%) find it somewhat difficult (43%) or very difficult (16%) to find the right employee for their business. Additionally, 70% of respondents stated that finding the right employee hasn’t gotten easier over the past five years. For some respondents, it has become more difficult (26%), while others (44%) claim it is about as difficult to find employees as it was five years ago.

While SMB owners have access to more recruiting tools than ever before, many of them aren’t using these tools to their full potential – or at all. Thus, only 23% of respondents stated that it is easier to find the right employee than it was five years ago.

58% of SMB owners think that tech professionals are more attracted to large companies

Although there are many benefits to working in a small company, when push comes to shove, most respondents believe that big companies have the edge on them when it comes to attracting talent.

Only 17% of respondents think that small companies are more attractive to tech professionals, an interesting takeaway that highlights the struggle to find tech talent in Canada, despite the allure of joining start-up companies. Only 16% stated that small companies are more attractive to marketing professionals, and 14% of respondents think that small companies were more attractive to HR professionals. This pattern in responses persisted across other sectors including accounting/finance, sales, administrative and customer service.

To put it simply, small business owners regard large companies as their fiercest competition when it comes to finding talent. After all, enterprises have more to offer in the realm of salary, benefits and opportunities for growth.

39% of SMB owners are offering higher wages to remain competitive

With this in mind, just how are small business owners attempting to win over the hearts of job seekers? Many respondents stated that they offer higher wages (39%), health benefits/parental leave (26%), a generous vacation policy (21%) and advancement opportunities (25%).

While these added bonuses can be effective, the more manageable size of small businesses is really their key asset. Small businesses can offer employees advantages that are difficult to achieve at a large company.

A smaller business often results in a tighter-knit group of people, and just as the owners wear many hats, so too do the employees. This gives them the opportunity to work on projects that might fall outside their typical scope of work, allowing them to cultivate a variety of skills. The ability for employees to diversify their knowledge and expertise is an advantage that employers should highlight in their job postings and in their communications with potential candidates.

59% of SMB owners find it very difficult or somewhat difficult to find the right employee

Overcoming the competition from large companies is not the only challenge facing small businesses. According to respondents, finding candidates with advanced skills is also a major pain point. These skilled workers are also the most expensive to lose, as a company may not be able to operate profitably without its most valuable employees. And the longer the role to replace this person is left open, the bigger the impact it has on the company’s bottom line.

The most difficult characteristic to find is leadership skills, with 59% stating that this skill is either very difficult or somewhat difficult to find. This was followed by critical thinking skills (56%) and problem-solving skills (53%).

On the flip side, respondents say it’s not that difficult to find candidates with communication skills (40%) and teamwork skills (43%). While many job seekers often fear that they don’t have adequate experience or educational requirements, respondents stated that proper certification/education (39%) and relevant work experience (36%) were not that difficult to find.

So, what does this all mean? From a job seeker point of view, prospective candidates who are looking to work for a small business should highlight the “hard-to-find” skills (i.e. leadership, critical thinking and problem solving) to help them stand out from the pack when going through the application and interview processes.

Employers, on the other hand, should be more explicit about the skills they’re looking for. If leadership, critical thinking and problem solving are key attributes you’re looking for in a candidate, clearly state this in the job title and description.

Moreover, given the importance of these advanced (and hard-to-find) skills, employers should also consider hiring outside their traditional talent pool and focus instead on finding candidates with core competencies and transferable skills. While these candidates might not have adequate experience in the field, they have the skills to adapt to the new role and bring fresh ideas to the table.

52% of small businesses rely on word of mouth to find new employees

Small business owners use various tools to find employees that embody the skills they’re looking for.

The most common way to find new employees is through word of mouth, with over half of respondents (52%) indicating that this is their primary recruiting method. This was followed by placing an ad with an online job search website (40%) or on social media (36%). Traditional hiring techniques persist to a degree, with 20% stating that they place ads in the newspaper, and 11% putting a notice in the window of their business.

While traditional methods can be helpful, they should be used to supplement other recruiting methods. Using the right tools strategically will reduce the level of difficulty small business owners are currently facing when trying to find the right employee. In short, employers must advertise their job openings in spaces where the most people are searching for jobs. For example, mobile search is becoming a popular method for searching for jobs. According to Indeed data (worldwide), 70% of applications are submitted via a mobile device on Indeed, and employers who accept mobile applications receive up to 8X as many applicants. Therefore, not giving candidates the ability to apply via their mobile device will significantly reduce the talent pool.

Another reason to expand beyond traditional recruiting methods is that much of the decision-making process is directly related to what job seekers can find online. As per Indeed data1,­­ 83% of people say reviews influence where they apply, and 46% say that a company’s reputation significantly impacts their final decision to accept a job offer. That said, establishing an online presence is key to attracting talent, and one way to do this is by creating a company page to engage potential candidates and enhance your employer brand.

Small business owners face many challenges such as competing with large companies and finding skilled workers, all the while managing various facets of a business. But for many, these obstacles are a small price to pay to enjoy the benefits that come along with owning your own business – such as the ability to be your own boss and the pride of knowing the positive impact your small business has on the Canadian economy.

Recruiting challenges are often a result of growth, and as such, will elicit growing pains. One of the best ways to overcome these growing pains is by staying abreast of recruiting trends and tools, so you can find the talent you need to take your business to new heights.

Methodology   

In April 2018, an online survey was conducted among 1,000 randomly selected SMB owners in Canada who are Censuswide panellists. The margin of error is +/- 3.1%, 19 times out of 20. The data was collected from a sample of business owners in Canada with 1-249 employees.

 

1Redshift Research on behalf of Indeed