Blog: Helping Small Businesses Succeed in a Tight Labor Market

Small business optimism is high, according to the National Federation of Independent Business, and I have seen that optimism increasingly play out in the greater Detroit region. The ripple effect of Detroit’s economic stimulus is evident in the state’s overall economic health. When Detroit thrives, Michigan thrives, and I believe the high levels of optimism will continue through 2019.
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Cathy Fisher
Cathy Fisher // Courtesy photo

Small business optimism is high, according to the National Federation of Independent Business, and I have seen that optimism increasingly play out in the greater Detroit region. The ripple effect of Detroit’s economic stimulus is evident in the state’s overall economic health. When Detroit thrives, Michigan thrives, and I believe the high levels of optimism will continue through 2019.

That buoyancy – and accompanying small business growth – is key for this region. The Detroit regional economy is growing, seeing a 20.6-percent per capita income growth since 2011, a 6-percent increase in employment since 2013, and a 9.8-percent gross domestic product growth from 2011 to 2016.

Small businesses are crucial to the economic future of the state. In 2017, Michigan had more than 870,000 small businesses employing 1.8 million employees, which was 49.2 percent of the state’s private workforce, according to the U.S. Small Business Administration. Since 2011, STEM related occupations in the region have gained more than 41,000 jobs.

That’s all great news, but small business owners face many challenges that larger companies and corporations have more resources to address – namely, the ability to build the teams they need to be profitable and sustainable.

I often hear from small-business owners who want to grow – and have a successful business model to do so – but they can’t find the labor. What can small businesses do to try and attract and retain talent in a tight labor market?

Many are looking at ways to improve their appeal to candidates by re-evaluating compensation and exploring flexible work arrangements. But not every business will be able to leverage these types of changes to address the labor challenge. For some, it will require investment in training programs to build the skilled workforce they need over time rather than seeking immediate skilled hires.

Small-business owners need to take advantage of help from many resources available to them in the region. The Michigan Department of Talent and Economic Development and Michigan Works! are two of the region’s resources dedicated to addressing this issue.

The  programs address near-, mid-, and long-term workforce development needs by bringing employers, educators, and state resources together to identify and prepare for upcoming talent-related challenges, while also providing near-term solutions through the Going PRO Talent Fund, awarded through local Michigan Works! agencies. The fund helps Michigan businesses train, develop, and retain current and newly hired employees. Over the past four years, the program has awarded funds to 2,234 companies — and many of the selected businesses have fewer than 100 employees.

Small-business owners should also look at opportunities to invest in their business in ways that could end up being part of the workforce solution in the long run.

In addition, with current economic and financing conditions, small-business owners should consider purchasing their business site and convert the real estate to a fixed cost. Removing relocation risk can also help with customer and employee retention, proving real estate’s impact on both financial and human capital.

Consult a small-business specialist to explore your options, evaluate cash flows, and create a plan that allows you to chip away at the challenges and simultaneously drive growth. At Citizens Bank, we know that the true value of a financial partner is in the advice and collaboration in the growth of your business.

Many are bullish on Michigan and the greater Detroit economic outlook right now. Let’s help small businesses take advantage of that so the region can continue to benefit from the employment opportunities and services they contribute to our communities for years to come.

Cathy Fisher is a regional director at Citizens Bank and leads a team that serves small businesses in Michigan, Ohio, and western Pennsylvania.

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