If you’re a small business owner, you’re probably no stranger to the challenge of finding qualified workers. According to the latest NFIB Small Business Optimism Index, this issue is still one of the biggest headaches for Main Street entrepreneurs. In January 2025, 90% of small business owners hiring or trying to hire said they found few or no qualified applicants. That’s a staggering number—and it’s unchanged from December.
So, what’s going on? Why is it so hard to fill open positions, and what can small business owners do about it?
The Hiring Dilemma: A Perfect Storm
The labor shortage isn’t a new problem, but several factors have made it worse:
Skills Gap – The number of job openings remains high, but many applicants simply don’t have the skills required. Trades, technical roles, and even customer service positions demand expertise that many job seekers lack.
Competitive Wages – Businesses are offering higher compensation (a net 33% of small business owners reported raising pay in January), but larger companies with deeper pockets often outbid small businesses.
Economic Uncertainty – Small business owners are feeling less optimistic about the economy, with the NFIB Uncertainty Index jumping 14 points in January. As a result, many are hesitant to invest in hiring and training new employees.
Lower Capital Investment – Only 20% of business owners plan capital outlays in the next six months, meaning fewer businesses are expanding, upgrading equipment, or investing in workforce development.
Inflation and Rising Costs – Inflation is still a concern, with 18% of small business owners citing it as their biggest problem. While this is an improvement from previous months, the cost of materials, wages, and overhead continues to strain hiring efforts.
How Can Small Businesses Compete?
While the hiring landscape is challenging, there are strategies that small businesses can use to attract and retain talent:
1. Upskilling and Training Programs
If you can’t find skilled workers, consider creating them. Offering on-the-job training, mentorship programs, and tuition reimbursement can help attract workers who are eager to learn.
2. Strengthen Your Employer Brand
Small businesses have a unique advantage: a strong sense of community. Emphasizing workplace culture, flexibility, and personal growth opportunities can make your business more attractive than a faceless corporation.
3. Leverage Referral Networks
Tap into your existing employees and professional network for referrals. Word-of-mouth hiring often leads to better candidates than job postings alone.
4. Reevaluate Compensation and Benefits
While not every business can afford major salary increases, offering non-monetary perks—such as flexible schedules, remote work options, or performance-based bonuses—can make your business more appealing.
5. Partner with Local Schools and Training Programs
Building relationships with trade schools, community colleges, and workforce development programs can create a pipeline of skilled workers tailored to your industry.
Looking Ahead
Despite the hiring struggles, small business optimism remains above the 51-year average. While uncertainty is growing, entrepreneurs are known for their resilience. The businesses that adapt, invest in their workforce, and focus on long-term solutions will be the ones that thrive.
Are you experiencing hiring challenges? What strategies have worked for you? Let’s discuss in the comments! 🚀
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