Marketwired Blog

How to Manage Hiring When You’re a Small Business Owner

By Tannette Johnson-Elie


Small businesses long have been the job engine of the U.S. economy. As big businesses contracted in a troubled economy, it’s the little guys we could count on to be the job creators.


Well, that’s not the case anymore as America’s smallest businesses are putting the brakes on hiring.


In another blow to the U.S. economy, small businesses, in June, reported cuts to their staffs for the first time this year, the latest sign that the economy has lost a step, according to the latest index released last Thursday by the National Federation of Independent Business (NFIB).


Overall, the index dropped by three points and represents the first negative reading of job creation in the last six months.  The NFIB survey of 740 small businesses found that the seasonally adjusted average change in employment fell by 0.11 in the three months through June after being flat in the period through May.


It’s the first negative reading of job creation since December, said Cynthia Magnuson , NFIB spokeswoman. The negative readings may be a warning that the recovery from the recent recession is weakening, Magnuson said.


“Optimism had been on a gradual upward projectory since the beginning of the year. A 3 point drop is significant given where we were in the recovery,” Magnuson said. “Overall, small business owners are just hunkering down. They’ve cut jobs and don’t have intentions of hiring.”


The results for July are projected to be even lower due to growing concern among small business owners about the political debates on taxes and health care and the policies coming out of Washington.


“We asked small business owners their number one business concern and they indicated political and economic uncertainty,” said the NFIB’s Magnuson. “


What’s more, small business optimism also declined in June, dropping to an eight month low of 91.4 in June from 94.4 in May, the National Federation of Independent Business latest Optimism Index shows. The drop marks the largest month-to-month decline since June 2010.


Economists view the results as an economic downer, an indication that job growth has slowed and will be far shorter than what is necessary to reduce the unemployment rate.


Consider Rose Corona. She owns the Big Horse Feed and Mercantile, a 14-year-old retail store and farm in Temecula, Calif. She recently cut her work force for the third time since the 2008 recession. Corona has reduced her staff from 34 employees to 25 workers since 2008, and fears the cuts will continue.


“You basically have to watch your overhead costs to keep your lights on,” Corona said. “You try to keep a positive attitude and keep fighting. I want to see better policies coming out of Washington to encourage small businesses.”


While many small business owners are forced to cut staff due to a bad economy, there are other cost-cutting measures that can help recession-proof a business, experts say. A few tips:


Rethink your marketing strategy: Make sure you’re reaching out to your customers and that your message is strong and your image is positive.


Manage your cash flow: A healthy business must have continual cash flowing through it. In hard times, this can be difficult. Be disciplined in how you’re spending money. Keep a close watch on your income and expenses.


While times are tough and small businesses owners are greatly impacted as indicated by the latest NFIB Small Business Index, entrepreneurs who use this time as an opportunity to improve their business strategies, are the ones who will survive.


How are you weathering tough times as a small business owner? Are you cutting staff or are you employing other strategies to avoid job cuts?



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