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How small firms can afford new recruitment in 2024

It’s no secret that jobseekers are more discerning than ever. And that this is proving a challenge for smaller businesses, not least because of rising costs. As firms tentatively eye recovery, how can they afford to recruit new staff in 2024?

The world of work is changing, thanks both to the cost of living crisis and to a generational shift in attitudes to employment and careers. Greater resources are allowing larger companies to adapt better, but smaller firms are finding the going harder.

Why are small businesses struggling to recruit?

One of main pressure points on small businesses is salaries. Against the backdrop of the cost of living crisis, people are demanding higher wages, in particular young people entering the job market. It’s not surprising but it’s tough on small firms that have limited capacity for such an increase in expenditure.

Tellingly, research from Barclays shows that two thirds of SMEs are struggling to hire gen Z workers, with almost 40% concerned that salary is the primary barrier to recruitment. The study also reveals that only a quarter of first-time jobseekers are considering working for an SME.

Separate research on graduate employment from Startups and Adzuna details a similar trend. According to the former, graduate annual wage demands have risen by around £5,000, while the latter points to a decline in graduate positions, with recruiters put off by wage expectations.

…and it’s not just salary demands putting pressure on firms

Aside from salaries, another seismic change in recruitment is how people are approaching employment. A job is no longer for life and more and more people are happy to juggle more than one gig, whether openly or not.

And when someone applies for a job, there’s a good chance that they’ll check the firm’s social media accounts and ratings on TrustPilot, and even get the lowdown from ex-employees on LinkedIn. Values and ethics are critical considerations for more and more jobseekers.

In short, there has been a shift in power. And what this means for employers is that they have to invest in making themselves attractive: in how they present themselves to potential employees and what they can offer them should they join the team. Flexibility in working patterns, career progression and recognition among peer groups are all important to today’s jobseekers.

Recruitment costs and how alternative lenders can help

As recruitment goes through a period of major upheaval, including in terms of the costs involved, it is not a shock that small firms are finding it difficult to recruit and retain talent. At a time when capital resources are already under severe pressure, how can they balance the need to invest more in recruitment with protecting cash flow?

Alternative finance can help.

Services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses in the current funding climate (with 65% more SMEs experiencing difficulty in accessing finance from high-street banks). These alternative finance facilities, which offer a more easily accessible, affordable and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth.

This profile has helped cement the reputation of alternative finance in the business sector, with a new 2024 study showing that more and more SMEs are turning to alternative lenders to access larger-scale finance packages.

Small firm finance options for new recruitment

If economic recovery is realised, integral to taking advantage of any upturn in conditions for small businesses will be their ability to bring in new talent and retain top performers. And in the new recruitment landscape, this means investment. As such, with traditional banks reducing their lending appetite, it is vital that businesses are aware of all the finance options available to them, including the services of alternative lenders.

To find out more about A&T Business Associates services, contact Steve Bowles on 01903 602211 or steve.bowles@atbusinessassociates.co.uk.

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