Small businesses struggle to attract top talent

Almost three in four small business owners say their most serious disadvantage when hiring new employees, compared with larger companies, is the ability to provide a competitive package of benefits (salary, health insurance, retirement, and vacation). Wells Fargo today released these findings in the latest Wells Fargo/Gallup Small Business Index.

The ability to provide healthcare benefits to new employees was the second most cited competitive disadvantage, reported by 68 percent of survey respondents. Additionally, 60 percent of small business owners see the compensation they can offer an employee as a critical disadvantage when compared to larger companies.

Approximately two-thirds of small business owners also report difficulty finding the right qualified employees for their businesses. However, 69 percent say this has not hurt their business in the past 12 months. While only 20 percent say they are currently looking for new employees, if they had hiring needs today, 50 percent would be more likely to hire a temporary or contract worker than a full-time employee.

Small business owners remain optimistic about the future. Eighty-two percent expect a positive financial environment over the next 12 months, 75 percent expect a positive cash flow, and 61percent expect revenues to increase. Ninety-five percent expressed feelings of success as a small business owner, and 90 percent say they are satisfied as a business owner.

The Q1 2005 Index rose slightly from Q4 2004, from 106 to 110. The Index tracks six key measures for both current conditions and future expectations as reported by more than 600 small business owners; current financial situation, revenues, cash flow, capital spending, number of jobs and credit availability.