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Small vs. Big Business Hiring – Who’s Really Making the Difference?

It’s an understatement to say that small business hiring is important to get America’s economy back on track. Two out of every three new jobs in the country is created through a small business – not a big corporation. In the last month, small businesses were responsible for 58% of private sector job growth in the country.

President Obama recently spoke about the importance of small business hiring in Rhode Island. From CNN.com: “When our small businesses don’t do well, America doesn’t do well. So we all have a stake in helping our small businesses grow and succeed,” said President Obama in Woonsocket, R.I., in October. “And because small businesses create two out of every three new jobs in America, our economy depends on it.”

First of all, why are small businesses on such a tear? One would speculate that big businesses, with their war-chests of reserve capital, would be the first to emerge from the recession. One reason may have to do with the disparity of success between service sector businesses and goods producers. A large proportion of small businesses provide services due to their lack of ability to build goods on scale. This directly correlates to the fact that 91% of job growth in small businesses were in service providing arenas.

Another reason for small business post-recession success could be the simple fact that these companies are small. Small means the ability to change direction on a dime. If the green auto-sector is rapidly growing and shows promise, a small business can quickly adapt to the needs of the market by re-branding and offering new services. This in turn allows the business to hire specialists within that growing sector or niche.

Small businesses also have a few inherent advantages versus large corporations in the hiring game. One big advantage is the ability to offer pre-IPO stock, which big public companies can no longer do. This can win over talented employees who are in it for the long run.

Small businesses also often provide employees with more freedom, both creatively and physically. On the creative side of things, an employee of a small business is more likely to have their voice heard and see the impact of their decisions in the business’s output. Physically, small businesses are also more likely to allow work at home arrangements and enforce less stringent hours.

The gap between small and big business hiring is also being minimized through the use of technology. Large corporations often have complex internal applicant tracking technologies at work – software solutions tailor made for the company’s recruiting department. Nowadays, small businesses can leverage the power of a tailor-made applicant tracking solution for a fraction of the cost and still get the same mileage out of the software. Modern day hiring software lives in the cloud and can be accessed and utilized as easily as a web app like Facebook.

All in all, small businesses will continue to power job growth in the US, even as big corporations get back on track. Although they are often seen as ‘the little guys,’ small businesses are certainly making a big impact.

Citations

Clifford, Catherine. “Small business ‘surge’ in hiring – ADP” CNN.com. 1/12/2010. http://money.cnn.com/2010/12/01/smallbusiness/small_business_hiring_adp/index.htm

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