As the Great Resignation continues in 2022, staffing shortages are a familiar challenge faced by small businesses in many industries. Transportation, manufacturing, and construction businesses are feeling the pinch the most—half of small employers in these industries reported “significant” staffing shortages, with half of businesses also reporting significant losses in sales opportunities as a result. Fifty-eight percent of small business owners in the construction industry reported significant or moderate lost sales opportunities due to staffing shortages, closely followed by 55% of manufacturing and mining businesses and services industries.
According to April’s Small Business Economic Trends survey, 22% of all small business owners plan to increase employment to alleviate the staffing shortage. The industries hardest hit by the staff shortage are also the most likely to plan to hire—31% of owners of manufacturing businesses plan to hire, followed by 28% of transportation operators and 24% of construction business owners.
In March 2021, the U.S. Bureau of Labor Statistics reported an all-time high of 8.1 million job openings with a job openings rate of 5.3%—a 43% increase over March 2020, the month COVID shutdowns began. Despite their plans to hire, many industries are struggling to fill job openings—in the same year, the National Federation of Independent Business found that a record high of 42% of small business owners had jobs they couldn’t fill. Forty-three percent of small businesses across all industries have current job openings they are unable to fill, and more than half of small business owners in construction (60%), transportation (56%), and manufacturing (50%) reported not being able to fill open positions.
Wondering how to deal with staff shortages when you’re trying to hire but can’t seem to find the right candidates? Many business owners are raising compensation in order to attract and retain employees—39% of manufacturing firms reported raising compensation in April 2022, as well as 27% of retail firms and 34% of construction and wholesale firms.
Raising compensation is one way to attract and retain talent, but there are many other strategies small businesses can employ to boost hiring. These strategies require an investment of working capital, and after two years of shutdowns and restrictions and major changes in consumer behavior, many small businesses may not have the funding they need to deal with staffing shortages.
Merchant cash advances (MCAs) can be an ideal source of working capital for small businesses who are looking to boost cash flow in order to hire and continue to grow. With a streamlined online application, flexible approval requirements, and fast turnaround, small businesses in almost any industry can quickly access the funding they need to implement attractive new hiring policies.
How To Deal with Staff Shortages: 8 Ways MCAs Can Help
Let’s take a closer look at 8 ways you can use a merchant cash advance to deal with staffing shortages, including:
- Offering overtime
- Hiring more staff
- Upskilling existing staff
- Offering higher wages and better benefits
- Providing flexibility to new and current employees
- Investing in technology to help you automate and reduce staffing needs
- Working with a staffing agency
- Employee referral bonuses
1. Covering overtime
Offering more hours to your existing staff may mean paying overtime, but this approach may be preferable to losing clients or compromising the quality of your services. Paying overtime also means you can avoid the higher costs of hiring and training new employees.
2. Hiring new staff
In 2022, small business owners can’t afford to wait for potential employees to come to them—they must take a proactive approach to hiring in order to find the best candidates for the position. This can mean participating in job fairs, working with college training programs to create a hiring funnel, or developing paid internship programs. These strategies all require an investment of capital, but this investment could return dividends in the form of qualified staff who are interested in building a long-term career at your company.
Merchant cash advance funding can be used to offer new employees higher wages, better benefits, or more competitive salaries in order to attract top talent. You can also use MCA funding to cover onboarding expenses so that you can hire inexperienced staff that may require more training. Once your new staff member is on board and helping you earn more money, you’ll be able to repay your cash advance faster.
- Law firms can hire bookkeepers, additional attorneys, paralegals, office managers, and reception staff so managers and partners can focus on higher-value work.
- Construction companies can expand their team or hire subcontractors so they can take on more projects, bid for larger projects, or offer more comprehensive services.
- Restaurants can hire more front-of-house staff so managers can focus on higher-value activities like reviewing reports, identifying opportunities to improve menus, and addressing supply chain challenges.
3. Upskilling existing staff
Use merchant cash advance funding to offer existing staff additional training so that they can provide more value to your business, work more efficiently, and help you earn more money. Skill-building programs can also be a strong retention incentive for your existing staff.
- Restaurants can offer the option of working from different kitchens to learn different menus.
- Manufacturers can cover tuition costs so employees can learn new skills.
- Any industry can offer leadership and training opportunities to entry-level staff to prepare them for future roles.
4. Offering higher wages and better benefits
Paying median or above-average wages shows staff that they are valued, which can have a positive impact on job satisfaction. If your employees often work other jobs in addition to yours, a higher wage can incentivize them to take more hours at your business, or even quit their other jobs.
Offering higher wages or other perks, such as more paid time off, better health benefits and sick leave, or retirement savings plans, will also make your workplace more attractive to potential employees, and can minimize turnover.
By showing employees that they are valued, eliminating other demands on their time, and reducing stress during their off-hours, you can help your existing staff be more productive while they’re on the clock. Merchant cash advance funding can provide the working capital you need to implement these changes without straining your cash flow.
5. Providing flexibility to new and current employees
Offering flexible work hours signals that you value work-life balance, which can give you a strong competitive edge over other businesses in your space. Flexible work hours can also make your business more appealing to different groups, such as parents and recent retirees who are looking for part-time work.
With a merchant cash advance, you can hire more part-time employees to enable flexible work schedules. You could also use your funding to invest in technology—like remote desktops or laptops—so your staff can work from home with a flexible schedule, or you can hire without borders and offer employees the option to work how they want. Investing in work from home tech is especially ideal for professional services firms like law firms, accountants, and other types of office work.
6. Investing in technology to help you automate and reduce staffing needs
Investing in technology that replaces the need for some employees or helps employees do their work more efficiently is a great way to use merchant cash advance funding to deal with staff shortages. Automating time-consuming but simple tasks such as inventory or taking reservations can help your entire team work more efficiently so you can provide better service. Using technology to de-silo different functions using cloud-based software can also help you integrate your business processes more easily to make onboarding and flexible work arrangements easier to implement.
- Quick service restaurants can invest in self-ordering kiosks, or use new technologies to automate tasks like dishwashing.
- Construction companies can invest in building information modeling (BIM), telematics, and emerging tech like VR or AR, robots or drones, 3D printing, connected devices, or autonomous vehicles to improve communication, productivity, and safety.
- Retail outlets can add self-checkout and improve point of sale systems to enable online shopping and omnichannel approaches.
7. Working with a staffing agency
If you’re wondering how to deal with staff shortages, working with a professional staffing agency might be the right way for you to find talented candidates. Some qualified staff simply prefer temporary work, and working with a staffing agency can help connect you with these workers, as well as fill staffing gaps when permanent employees need time off. Staffing services can also help connect you with qualified candidates for long-term contracts, special events, or seasonal hiring, such as:
- Planned vacation time
- Sick leave or personal emergency leave
- Parental leave
- New system implementations
- Seasonal projects
Merchant cash advance funding can be used to cover agency service fees so you can continue focusing on operating your business rather than hiring and onboarding new employees. Staffing agencies will handle the entire process, from posting the job to vetting candidates, so all you have to focus on is welcoming new team members and growing your business.
8. Employee referral bonuses
Employee referral bonuses can help incentivize your current staff to share new job openings with others they know. If a staff member refers a candidate who gets hired and stays for a certain period of time, the referring employee could receive a cash bonus or other incentive.
Merchant cash advances can provide the working capital you need to fund such bonuses or implement other benefits for successful employee referrals.
Can a Merchant Cash Advance Help You Manage Staffing Shortages?
Merchant cash advances are a fast form of alternative funding that is ideal for hiring new employees or creating employee retention programs. Because MCAs are repaid from a portion of your daily or weekly credit card sales, retaining staff or hiring new employees that will help grow your business can help you repay your funding faster than other forms of small business loans like SBA loans or term loans.
When issued by a reputable lender, merchant cash advances offer a number of advantages over financing options offered by traditional lending institutions, including:
- Simplified applications with less paperwork and less rigorous approval requirements.
- Faster processing and approvals, with funding sometimes available in as little as one business day.
- Greater flexibility and more room to negotiate terms.
With funding from as little as $3,000 up to $500,000, Greenbox Capital® can help business owners access flexible merchant cash advance funding to help hire new staff, retain existing employees, and fuel the growth of their business.
- “Small Business And The Staffing Shortage by Industry.” William Dunkelberg. Forbes. May 27, 2021.
- “How to Overcome the Small Business Labor Shortage.” Nextdoor. June 21, 2021.