Small business owners are facing a "nightmare" scenario in finding, hiring and retaining employees, according to new survey data from SCORE, mentors to America's small businesses and a resource partner of the U.S. Small Business Administration.

SCORE's Spring 2023 Megaphone of Main Street: Employee Engagement report surveyed more than 1,500 small business owners on employee-related issues, including hiring and retention, and the impact on their businesses.

SCORE's Spring 2023 Megaphone of Main Street: Employee Engagement report surveyed more than 1,500 small business owners on employee-related issues, including hiring and retention, and the impact on their businesses.

At Thompson Tee in Las Vegas, Nev., a strong, engaged team of employees is a critical component of their small business success, according to founders Billy Thompson (left) and Randy Choi (center front).
At Thompson Tee in Las Vegas, Nev., a strong, engaged team of employees is a critical component of their small business success, according to founders Billy Thompson (left) and Randy Choi (center front).
SCORE's Spring 2023 Megaphone of Main Street: Employee Engagement report surveyed more than 1,500 small business owners on employee-related issues, including hiring and retention, and the impact on their businesses. Two of their top three concerns are hiring the right talent (60.7%) and retaining and motivating employees (33%).

"It's a nightmare," said SCORE client Adina Silberstein, founder, president and CEO of Queenie's Pets in Philadelphia, Pa. "We have an endless waitlist for hiring and our growth is so stunted. We could be crushing it but instead we are just stagnated."

Signs of economic improvement
While fewer small businesses are having trouble hiring and retaining employees compared to fall 2021, significant employee-related challenges remain:

Eight in 10 (84.3%) small business employers report challenges with regard to hiring new employees.
Nearly half (45.8%) say it's difficult to retain existing staff.
"This is a continual journey – treating employees as your number one asset is not a 'check the box,' but a continuous work in progress," said SCORE client Mary Kruse, CEO and owner of HealthSource Solutions in Minneapolis, Minn. "It is a journey with no endpoint."

Competitive pay and healthcare benefits
Low wages and benefits continue to cause issues for small business employers. More than half (59.3%) say the lack of competitive pay is their biggest weakness in motivating and retaining employees, while 39.1% say the same for healthcare benefits. These are growing concerns, both being rated twice as worrisome as they were rated in SCORE's 2017 survey.

A positive outlook for the years ahead
In the face of these obstacles, small business owners remain even more optimistic for the future than before the pandemic. Nearly three-quarters (72.2%) of small business employers say they're very or somewhat optimistic about the future growth of their business within the next six months, up from 67.2% in fall 2021 and 69% in 2017.

"Time and again, we see entrepreneurs exhibit an indomitable drive to succeed – and their tenacity keeps them buoyant during challenging times," said SCORE CEO Bridget Weston. "I am confident that American entrepreneurs will continue to create jobs, strengthen their local community and bolster the national economy."

Click here to view the full Megaphone of Main Street: Employee Engagement data report.