Employment And Small Business

Employment and Small Business

Small business, big business, in today's business world, it is all business. Small businesses and big businesses must compete with each other on the global front, employment practices, benefits, and services. Small businesses must be able to operate their business very much like a larger business.

Employers today find that hiring and retaining employees is their biggest challenge. Researchers have found that 81% of small to medium sized businesses find this process to be very difficult. 69% of employers find that this is the most difficult and important task. 39% of employers find that retaining employees is the second most difficult and important task (Attracting and Retaining Employees Greatest Challenge).

Small businesses must comply with federal and state regulations concerning operating the business and employment practices. The different regulations that must be followed can cost small businesses billions of dollars and many worker hours annually (Warner, 2002). When hiring employees, there are regulations about minimum age standards, discrimination, minimum hourly pay, employee protection, and safety guidelines. Small businesses are held to the same standard as larger businesses, but it can cost small businesses more to comply with the regulations (U.S. Department of Labor, 2005). One state is trying to ease the burden for small businesses though. North Carolina passed a new law in 2004. The law is the Small Business Regulatory Flexibility Act of 2004. The new act requires state agencies to review their small business regulations this year, if the regulation/law is deemed too harsh towards small businesses and causes undue economic hardship, corrective action will be done. The agencies have until the end of 2005 to review all of the regulations (Brazell, 2005).

Large and small businesses everywhere are looking for ways to increase profitability. Small businesses just like large ones desire to make more sales, drive in new customers, or get current customers to buy more products. Nonetheless, if both types of businesses have the same goals, what is the competitive advantage small business has over large businesses? Porter (1998) defines a competitive advantage as "an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing better benefits and service that justifies higher prices." (par1) To gain a competitive advantage a small business must promote a diverse but unified culture and develop a strategy plan to achieve its competitive advantage.

Culture is a system of shared actions, values, and beliefs that develop an organization and guides that behavior of its members. The culture of the small business must focus more on the customers and less on chasing competitors. The staff works together to accomplish tasks, and the business stays focused on the vision. A small business that stays focused must be able to show how its firm or products can better satisfy a prospective client's needs as compared to a competitor. This is, according to Post (2002) "the comparison stage and credibility is the key to success. A small business must present facts and figures that convincingly demonstrates competitive advantages."(par2). To further the competitive advantage a small business must identify and analyze the competition to understand their strengths and weaknesses; identify their competitive strengths so they can focus on areas where the company offers a real (or perceived) advantage; and shift the battleground to those areas where the small business enjoys the most advantages. The comparison stage is the start to the strategic plan.

The strategic plan for a competitive advantage consists of four strategies as Porter (1998) explains are "strategy differentiation; strategy cost leadership, strategy differentiation focus, and strategy cost focus."(par 4 - 8). Strategy differentiation selects one or more criteria used by buyers in the market and then positioning the business uniquely to meet those criteria. For example Mercedes Benz, charges a premium price for their product to reflect higher production costs and extra value added features for the customer, which gives customers a clear reason to prefer their product. Strategy cost leadership is a strategy to be the lowest cost producer in the industry, to sell their products at market cost and have the best profits. An example of this is Dell Computer. Another strategy is differentiation focus; the specialty holiday shop is a prime example. The competitor's products are not meeting the needs and wants of the customer and they offer products that are clearly different from competitors who may be targeting a broader scope of customers. The final strategy is cost focus. This strategy a small business might market a product under its own name; the product will be basic and similar to the higher priced and featured market leader.

Other ways a small business can offer a competitive advantage is to develop convincing arguments that show how their business can do a better job at satisfying the customer's needs compared to the competition. This is done with case studies of previous successes, testimonials from satisfied customers; product reviews, comparisons, or benchmarks, and background information about the company and its people.

When a small business selects a strategy to demonstrate its competitive advantage, the business must select one strategy and be the best in the market using that strategy. If a company selects one or more strategies and then fails to achieve them, the small business is stuck in the middle without a competitive advantage.

When a small business has its market strategy set, knows how to obtain competitive advantage over large business it is now time to hire some good employees. However, what should a small business consider before hiring? A small business, generally 50 to 100 employees must know who they are, and what their values are. Furthermore a small businesses must understand who it is before it can know what kind of employee it wants to hire. So how does a small business find good employees? The first thing a small business must do according to Sikora (2002) is "develop a recruiting plan." (par1) The recruiting plan, according to Sikora, should be one that "identifies, targets, and reaches a specific caliber of person." Just as a business needs a marketing plan that identifies and targets customers and a competitive advantage strategy that gives a small businesses an advantage over competitors, small businesses need the same thing for their staffing efforts.

Small businesses need to define the target candidate. Sikora suggests "looking at the companies best employees, making a specific list of their skills, qualities, and