Cautious Small Business Owners Agonize Over Hiring
The Buffalo News, N.Y. - January 27th, 2013
The decision to add more employees to her small electrical business was "slow and gradual" for Sharon Brown.
For years, her company, Brown Electric, operated out of a warehouse in the City of Tonawanda. Brown did the books and dealt with customers out of a home office. Then, last year, it was finally time to expand into a new space with more employees.
It was a carefully thought-out decision.
"I don't ever want to hire somebody and give them a job and then have to lay them off," said Brown, who last year opened a 8,500-square-foot building with office and warehouse space for Brown Electric in Pendleton. The expansion coincided with hiring four new employees.
Small-business owners remain cautious when it comes to hiring and expansion. The National Federation of Independent Businesses earlier this month found that the job creation plans of owners it surveyed for its monthly "small-business optimism index" fell from the previous month, with just 1 percent of owners planning to increase employment in the next three months, when adjusted for season fluctuations.
The report also noted that 70 percent of small-business owners surveyed believed it was a bad time to expand, with one in four of those owners citing "political uncertainty" as the reason.
But those who work with small-business owners in Western New York say entrepreneurs are much more sensitive to what's happening in their own businesses when they make decisions about hiring and expanding than what's playing out on the national stage.
"Our small businesses, they're going to expand when they see an increase in demand for their products and services, period," said Victoria Reynolds, deputy district director for the Small Business Administration in Buffalo.
Expansion plans, whether through added employees or upgraded equipment, are put in motion when a business owner can do so profitably.
"Small businesses are realists," Reynolds said. "They're very practical, and they're only going to do what makes sense for their bottom line."
For Brown, the decision to build a new headquarters for her business was based on a number of factors, including the fact that the electrical business was growing and she wanted her office and the warehouse used by the company's electricians in one building where she could conduct business meetings with clients. The company, which now has 10 employees and averages sales between $800,000 and $1 million a year, specializes primarily in commercial and industrial electrical projects.
"In this economy, you're worried about your funds and paying for everything, so I thought about it a lot before I did it," Brown said. "But eventually it will get paid for just like everything else. The benefits of having this are amazing."
As the new headquarters came online, Brown hired two full-time electricians, an estimator and a maintenance worker in late 2011 and 2012.
Susan A. McCartney, director of the Small Business Development Center at Buffalo State College, said bringing on new employees can be one of the greatest challenges for small-business owners and entrepreneurs.
"It's not a situation that comes with enthusiasm or confidence very often," said McCartney, who has also taught human resources at Buffalo State College. "Entrepreneurs are much more geared toward being a creative thinker, being thoughtful about marketing, thinking about their products."
McCartney said she finds that many small-business owners are not well-versed in the concept of developing a job description and ensuring that the job has written specifications before the new employee is hired. Some small-business owners, she said, are also concerned about advertising a job opening for fear they will get flooded with applications.
"They'll say, 'We'll get way to many people,' which is not true, by the way," McCartney said. "They will not a get a ton of people, but they think they will."
Once the interviews begin, she said, some small-business owners fail to set up strict protocols that can be effective in hiring, such as having a series of questions that are the same for each candidate so that a comparative analysis can be done. They also tend to turn toward hiring people they know -- a situation, she said, that often doesn't work out.
"There's a fear of bringing a stranger -- qualified as they may be -- into this very personal activity that the entrepreneur's engaged in," McCartney said. "It is not like a job for them. It is their creation, their entity, and they're very sensitive about it."
McCartney recommends that small-business owners write down a strategy for hiring and work with a business development center in creating that plan. Online resources -- such as the U.S. Department of Labor's O--Net Online (www.onetonline.org/) -- provide business owners with analysis and job descriptions for thousands of jobs.
For small businesses, she said, deciding when to hire comes down to need.
"If they have a sales position that has to be filled, they're going to start looking for someone," McCartney said. "They're very concerned with their survival, and if that survival means they have to have someone in a particular position, they're going to make every effort to make that happen."
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