- Like most employers, first-year startups say they're increasingly facing talent shortages. In response, entrepreneurs personally handle many tasks, and use contractors for the rest, according to the results of a SCORE survey.
- Of the 1,000 new small business owners surveyed, 33% reported having job openings they could not fill — "which is almost double the 14% of startups who reported unfilled job openings in 2017," according to SCORE. Most said positions remained vacant because they couldn't find qualified applicants.
- "It's not surprising to hear that most new entrepreneurs are personally taking on the majority of business functions in their first year of operations, given that entrepreneurs tend to be hard workers with a lot on their plates," SCORE CEO Bridget Weston said in a press release. "However, not having the right team is a key reason that startups fail."
The increasingly frequent use of contractors goes beyond year-one: According to a Paychex Inc. study released in January, an uptick in contractor hiring exceeded employee hiring among small businesses (SMBs) in general. The report found that businesses with one to four employees rely on contractors the most.
SCORE's report noted that contract workers with specialized skills are particularly in demand, with startups frequently relying them for legal, manufacturing, accounting and technology help. But this trend also spans the business spectrum as employers of all sizes cope with the talent shortage, an MBO Partners study showed. This year, the 41 million individuals working as contractors, freelancers, consultants, temps and on-demand workers generated $1.28 trillion in revenue for the U.S. economy last year, the company said.
With such workers feeling more financially secure than they have in the past and more employers open to nontraditional ways of working, employers could see independent contractors take over the labor force by 2027, especially if the country faces an economic downtown.