Small business is a big job creator

Word of mouth recommendation remains tops for landing a job with small businesses.

MISSISSAUGA, Ont. – It seems that no amount of new technology will ever replace the most influential component of the hiring process – a personal recommendation.

A new nation-wide survey shows that Canadian small business owners are more than twice as likely to make a hiring decision based on word-of-mouth than they are by using online tools. According to an Angus Reid survey conducted for Intuit Canada, the top three choices from 505 respondents were:

  • Word of mouth (friends, family, and trusted advisor) – 68%
  • Online methods, such as job boards and tools like LinkedIn – 31%
  • Outsourced to an HR or a recruiting agency –  8%

According to the latest data from Statistics Canada (StatsCan), after losing more than 600,000 jobs in 2009, small business created almost 140,000 new jobs in 2010 and 2011 combined.

“Small business job creation is moving in the right direction, and we believe that with the right economic conditions and tools entrepreneurs can create even more new jobs,” says Robert King, Director for Small Business at Intuit Canada. “We also recognize that creating jobs is really tough work. Most entrepreneurs don’t have an HR department or a payroll unit to help them. This study is all about understanding how small businesses can ensure their hiring plans are successful.”

The study also reveals that many small business owners are feeling positive about their future prospects, with a majority (55%) either actively growing or looking for growth opportunities:

  • 32% indicate they are in a “growth stage,” with 10% of these saying they are “growing considerably.”
  • 33% report they are holding steady – but looking for growth opportunities.

There is also a strong appetite for small business job creation in the year ahead:

  • Nearly one-third (31%) of small business owners indicated that they will be hiring within the next year.
  • The majority (52%) of small businesses in the “growth stage” plan to hire over the next 12 months.

The survey suggests barriers to small business from creating more jobs include:

  • A perceived skills shortage in the workforce: 45% of the small businesses who are planning to hire in the next 12 months believe that finding people with right skills will be a barrier.
  • Uncertain costs of on-boarding a new employee: 33% small business owners do not know what the costs of hiring employees will be.
  • The pain of managing payroll: 42% indicate that they experience a frustration with managing payroll. Top pain points include: dealing with government reporting requirements, and ensuring that cash is on hand come payday.

One example of a positive initiative that can help small businesses overcome the barriers to job creation is the federal government’s recent announcement that there will be a one year extension of the temporary Hiring Credit for Small Business.

However, the survey found that the credit is not receiving adequate attention from small business owners.

  • Three-in-five (61%) small business owners are not aware of the credit.
  • Two-in-five (39%) of small business owners are aware.

The credit would provide up to $1,000 to help a small business cover its Employment Insurance (EI) premiums. According to the government, this will be available to an estimated 560,000 employers, allowing these small businesses to reinvest approximately $225 million in job creation in 2013.