Starting a new business often requires a varied set of skills and experience. A solo entrepreneur may need to call on other professionals to complement their own skillset and help get a startup off the ground. Although employing members of staff might seem like the obvious choice, this is not always the best solution – particularly for short-term requirements.
Let’s take a look at some of the different options for plugging any skills gaps in a new business.
1. Business partners
Many successful enterprises are started by two or more entrepreneurs – either as joint company directors or members of a business partnership. The addition of business partners can broaden the range of skills, as well as provide a more balanced approach to running the business.
However, it can be difficult to find a partner whom one trusts, as well as someone who has a similar vision for the business. Partnership also entails ceding some control and accepting that it will be necessary to debate business decisions and make compromises.
One of the most straightforward ways of obtaining skilled individuals for specific projects and business needs is to work with freelancers and other small businesses. Contracting out work to third parties provides ultimately flexibility with minimal administration.
But whilst the choice of contractors is virtually unlimited, it can be difficult to find someone suitable for the right price. As a general rule, more experienced freelancers will charge higher fees, so there is a balance to be struck between skill level and cost.
Although contractors may end up doing regular work for a business on a retainer arrangement, it’s important to remember that they are essentially free agents, so any investment in training will end up being lost.
Clear briefs with specific timelines and explicit goals are crucial to ensure expectations are met and disputes avoided.
Some of the benefits of working with freelancers are that there is no employment law red tape, and no ongoing payments to third party agents. And although some contractual arrangements are short-term, many SMEs work with contractors for many years in a symbiotic business relationship.
3. Agency workers and the gig economy
Temping is sometimes perceived as focusing on low-skilled work, but actually, there are many highly experienced professionals who work primarily as agency staff.
Entrepreneurs will often need help with marketing and branding efforts in the early stages of business, and there are plenty of skilled designers and marketing experts who can be found through niche employment agencies.
Although they might initially start on a temporary basis, many temps go on to become full time members of staff.
One of the downsides of plugging a skills gap via a temping agency is that this can be very costly. Typically the agency will take an hourly commission which is equal to the hourly rate of the worker.
A cheaper option to traditional temping agencies is the burgeoning gig economy. A variety of new apps and web platforms – such as Upwork and Fiverr – have sprung up over recent years, which seek to offer “gigs” to freelancers. Although these gig economy platforms also take a commission, this is far lower than the standard temping agency rates.
Where there is a long-term requirement to plug a skills gap, the best option will generally be to recruit the right members of staff and build a comprehensive team. Since employees are generally taken on in a full time permanent capacity, they can be properly trained up and will become a core part of the business as a whole.
Becoming an employer for the first time is one of the biggest steps for most small businesses, particularly if they have been operating for several years without any dedicated staff. As well as the significant expense of paying a regular wage, there are a whole series of employment laws to navigate.
One of the most cost effective ways of plugging a skills gap in a business will be to provide training for existing members of staff, rather than trying to bring in new professionals. Most colleges and universities offer part time courses that are designed to cater to people in full time employment, often only requiring half a day of attendance each week, with most of the training offered online.
Discounts are sometimes offered by higher education institutions to employers who send their staff on courses, and there are government backed schemes. Aside from the cost of the course, the main outlay for the business is time off for the employee to study.
Companies that offer training to their employees will often have higher staff retention rates and will find it easier to recruit the best candidates. They can also mention this in their Corporate Social Responsibility (CSR) materials which are valuable from a marketing perspective.
Some businesses also send their employees on “secondments” which essentially entails going to work for a specific company or organisation temporarily – often just for 6 months or a year. This can broaden the experience and knowledge of these individuals, adding skills and value to the business.
Many companies have a non-executive director (NED) who advises the management team on a range of issues. NEDs are normally highly experienced business people who have decided to take a step back from active management but wish to share their skills in an advisory capacity.
NEDs are often semi-retired and will not generally be looking for highly lucrative roles. They are therefore a very cost effective method for companies to plug any management skills gaps without having to significantly reduce dividends for existing shareholders. Furthermore, since NEDs do not have any decision making rights within the company, there is no risk of power struggles that can arise when bringing on board a new executive company director.
Common types of issues on which NEDs provide advice include:
- The strategic direction of the company
- Decisions on the remuneration of executive directors
- Risk analysis and auditing
- Setting targets and improving business processes
For more information on NEDs see the Institute of Directors.