Here’s what small businesses are doing instead of increasing pay

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According to recent Intuit QuickBooks payroll data, employees of almost 500,000 small businesses in the US, Canada, and the UK have received big pay increases over the past 12 months, but inflation has risen faster. We wanted to understand more about this trend, so QuickBooks commissioned a survey of 2,250 small business decision-makers in the US, UK, and Canada.

 

The Intuit QuickBooks Pay and Benefits Survey 2022* found that in the past 12 months, small business employees in the US, Canada, and UK have been proactively asking for pay increases due to inflation. Many small business owners have listened, but are struggling to keep up with pay demands. In the next 12 months, will small businesses be able to increase pay to meet demand?

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Pay increases rose in the last 12 months

Two-thirds (66%) of small businesses surveyed in the three countries say they have given larger than usual pay increases in the last twelve months. In the UK, 51% of small businesses said they gave significantly larger pay increases.

 

Pay increases rose in the last 12 months

Inflation outpaces pay raises

 

Employees have not been shy about telling employers what they need and why. Almost nine out of 10 (88%) mentioned inflation when asking for pay increases this year. And 68% of small businesses expect pay demands to get more frequent over the next 12 months.

 

Inflation outpaces pay raises

Despite this communication between small businesses and their employees, recent QuickBooks Payroll data shows pay raises have not kept pace with inflation. Increased labor costs are a big concern for small businesses. More than three in five (63%) small businesses with current job openings said it has been “very” or “somewhat” hard to fill them.

 

Filling open jobs

As a result of these hiring challenges, 79% of small businesses are already turning to contractors or gig workers to fill the hiring gap.

 

Freelancers in small business

Small businesses see more jobs ahead, but not more pay raises

 

Small businesses say they see more job openings ahead. More than two-thirds (69%) say their business will have “significantly” or “somewhat” more job openings ahead than in the last 12 months. These businesses said strong business growth and a softer jobs market were factors driving an increase in job openings.

Small businesses see more jobs ahead, but not more pay raises

However, it is unlikely that pay will continue to rise at the same pace. Three-quarters (75%) of small businesses in the US, UK and Canada, say they have increased pay “as far as we can go” and that “anything higher is currently unaffordable.” Looking ahead, this suggests pay is unlikely to continue rising as fast as it has been over the past 12 months—especially in the UK.

 

Small business pay increase

As a result, 49% of small businesses surveyed expect that it will become harder to retain good employees in the next 12 months. In the UK, 40% of respondents say it will be significantly harder to retain good employees.

 

Retaining employees

Benefits backlash

 

More than half (58%) of the small businesses surveyed say they are expanding employee benefits alongside larger than usual pay increases.

Benefits backlash

The extra benefits are not only to attract and retain workers but to try to slow the pace of wage increases. Benefits include more time off, flexible work options, and better health benefits.

 

Small business benefits

But, due to inflation, benefits are currently less attractive to some employees than an increase in pay. Of those employers who did expand benefits instead of increasing pay, 72% reported some backlash.

 

Benefits and complaints

A closer look: Hiring woes in the UK

 

In many cases, small businesses in the UK face much greater challenges than in the US and Canada. Almost nine out of 10 (88%) of UK small businesses say they have been trying to hire employees this year, more than in the US or Canada. Yet more than two-thirds of employers surveyed in the UK (69%) say it’s harder to hire because applicants lack the necessary skills, and their demands for pay and benefits are too high. Notably, 62% of UK small businesses surveyed said applicants didn’t show up on the first day of work, compared to about 30% of applicants in the US or Canada.

 

Two in five (40%) of UK small businesses think it will get significantly harder to retain good employees over the next 12 months, compared to just 12% in the US and 17% in Canada.

 

A closer look: Hiring woes in the UK

Labor cost pressures may also be greater in the UK. More than half (54%) of UK small businesses surveyed “strongly agree” they have already increased pay as far as they can, compared to just 32% in Canada and 37% in the US.

Methodology

 

* Intuit QuickBooks Pay and Benefits Survey 2022

Intuit QuickBooks commissioned an online survey in September 2022 of 2,250 small business owners and decision-makers (comprising payroll, accounting, and human resources (HR) professionals) in the US, UK, and Canada. Of these, 66% were small business owners (1,488), 21% were human resources professionals (474), and 13% were payroll and accounting professionals (288). All respondents were 18+ years of age. There were 1,000 respondents from the US, 500 respondents from Canada, and 750 respondents from the UK. Small businesses are defined as having less than 100 employees. Percentages have been rounded to the nearest decimal place, so some charts or statistics shown here may not add up to 100% but 99% or 101% instead. Responses were collected in an online survey using Pollfish audience pools and partner networks with double opt-ins, random device engagement sampling, and post-stratification to ensure accurate targeting and results. Respondents received remuneration.

 

Disclaimer

This content, report and materials are for informational purposes only and should not be considered legal, accounting, financial, investment, or tax advice, or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit Inc., or its affiliates do not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc., or its affiliates do not warrant that the material contained herein will continue to be accurate nor that it is completely free of errors when published. Readers should verify statements before relying on them.

 

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This article originally appeared on the Quickbooks Resource Center and was syndicated by MediaFeed.org.

 

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money. The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

 

Whether you’ve come to embrace WFH culture, need to supplement your income or have joined the Great Resignation and are now looking for more fulfilling work, starting a freelance business can be a great solution.

 

Freelancing often comes with a number of perks, like getting to be your own boss, setting your own hours, and working from wherever you like. Start-up costs are often low. And, if you need some capital to get your business going, you may qualify for a small business loan for self-employed people.

 

However, starting your own freelance business can take a lot of hard work and hustle, and it may be some time before you start making real money. If you’re up for the challenge, here are some home-based small business ideas to help you brainstorm the best way to tap into your talents and flex your entrepreneurial muscles.

 

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If you have a great eye and a decent camera, you may be able to turn your creativity into cash. One option is to sell your photos to a stock imagery site like Getty Images or Shutterstock. If your home is particularly picturesque, you might offer to do headshots or portraits in your yard or set up a home studio. If you’re interested in event photography, you can market your services to people who need professional photography for weddings, graduations, engagements or other events.

 

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If you are both creative and technical, you might enjoy freelance web design. A web designer typically builds all the elements of a website, including the graphics, type fonts and layout. You’ll likely need to have some knowledge of basic programming languages, such as HTML, CSS and JavaScript, and also know your way around image editing software like Photoshop. You can learn these programs through research and practice or classes. When you’re ready, you can create your own website to showcase your skills and market yourself to potential clients.

 

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Virtually every business needs creative elements like logos, web designing, memes, blog posts, infographics, ad banners and more. That means there is often a lot of opportunity for a good graphic designer to get freelance work. To become a graphic designer, you typically need to have strong drawing skills, knowledge of graphic design theory, and mastery of design software (such as Photoshop and Illustrator). You can take a degree course in designing or learn it online. Once you have some solid skills, you can start marketing your design services to potential clients.

 

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If you have an eye for color and composition and love to create beautiful, inviting spaces, you may want to think about getting gig work as an interior designer. You don’t necessarily need to have a degree in design to become an interior design consultant. You can just create a portfolio of some of the successful redesigns you’ve done and ask your friends and family to start recommending you.

 

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If you have video editing skills and are looking to freelance, you may find yourself in demand. With the growing prevalence of video in social media and marketing, the need for video producers has grown in recent years. Even if you don’t have a lot of experience cutting and editing video, you can hone your video skills with online classes and tutorials.  As a video producer, you can have the flexibility of working from home on a variety of projects while also utilizing your creativity.

 

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Does your skill set include online advertising, content writing and SEO? If so, you may want to consider starting a digital marketing services business. When companies roll out new products, they often need help handling external communication and messaging, including email campaigns, online advertising, and social media marketing. And since it’s digital marketing, you aren’t likely to be rooted in any one location.

 

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If you understand how engaging multimedia content can be used in marketing, then social media consulting may be a good fit for you. As a social media manager, you can help companies understand how to use Facebook, Twitter, Instagram and other platforms to reach their business goals. If you can stay on brand, share content appropriately, and reply to customers intelligently, you might make a great social media manager.

 

 

 

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Companies of all types and sizes are using data analytics to understand trends in customer behavior. Data analysts use a variety of analytical tools to assess things like sales numbers and performance, identify market trends, and then write reports that chart their analysis and recommend future strategies. This can be a great freelance option for people who have been working in data analytics. However, beginners can take online courses and enroll in certification programs to master the required skills.

 

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To stay competitive, email marketing is a must for many companies. And that can be great news if you are a strong and creative writer. Having a background in sales and marketing can also serve you well. Email marketing pros need to be able to craft creative and compelling copy about a company’s products, services and promotions, and convert readers into buyers. The job may also include monitoring email marketing campaigns, building email databases and tracking results.

 

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Blogging can be a profitable freelance job. If you are able to build a large following, you may be able to sell advertising space, which can bring in a small revenue stream. You can earn even more through sponsorships and affiliate marketing, which is when brands you believe in pay you for advocating their goods and services. If you don’t want the limelight yourself, you may be able to blog behind the scenes for companies and individuals (like high-profile folks who need a blog but don’t have the time to feed the beast) who may pay you handsomely by the hour or post.

 

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Copywriters typically create material that encourages consumers to buy goods or services. Copy can be used for advertising, websites, billboards, email campaigns, newsletters and more. As a freelance copywriter, you may find yourself creating catchy taglines for online or print advertisements or composing a unique blog article optimized for the web. Freelance copywriters can work directly with clients or through intermediaries such as agencies or online work exchanges.

 

 

 

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If you’re an ace at organization and love throwing parties for your friends, event planning could be a good fit for your freelance business. An event planner ensures that events, such as parties, weddings, fund-raisers, meetings, and conventions, are planned, organized and executed correctly. The job typically includes scouting out locations, securing any services needed at the event (such as food, transportation, and entertainment), and being on-site the day of the event to make sure everything runs smoothly and everyone has a great time.

 

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Maybe math is second nature to you, or your grades on essays were always A+. Or perhaps you are a gifted piano player. Whatever your particular talent, there is a good chance that there are folks out there who need some assistance in that area. You can start advertising your tutoring or teaching services through friends, family and neighbors and build out from there.

 

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If you’re an animal lover, pet-sitting allows you to enjoy pets without the responsibility of ownership. All you typically need to get started is an understanding of how to properly care for dogs and cats (or any other pets that may need your services). For many, this freelance job can be a win-win: You get to build relationships with the animals and get paid for showing some TLC.

 

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Do you have a talent for crafting or creating handmade goods? It could be quilts, decorative pillows, hand-knit sweaters, jewelry, you name it. If so, you may be able to turn your hobby into a freelance business by advertising your goods on a craft-selling site like Etsy, Handmade at Amazon or ArtFire. In addition to selling online, you may also want to take advantage of opportunities to sell at street fairs, bazaars and festivals.

 

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If you’re a fast and accurate typist, you may want to consider becoming a freelance transcriber. This kind of work involves listening to an audio recording, such as a webinar, video conference, interview, or speech, and then typing every word that is spoken into a document. There are all kinds of companies that hire freelance transcribers, as well as transcription services that hire individuals to transcribe audio for various clients.

 

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Once you have your cosmetology license, you typically have a lot of flexibility in terms of when and where you work. Who says you have to be in a salon all day? Many hairstylists and makeup artists work for themselves and offer mobile services, in which they serve clients right in the client’s home. Or you might offer services in your own home. You can also start a hair or makeup blog or post tutorials on YouTube to generate an additional revenue stream.

 

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When it comes to starting a freelance business, having a good idea is only the beginning. A great next step is to develop a business plan. This involves deciding your company’s purpose, figuring out what service or products you will offer, and setting measurable targets and goals.

 

In addition, you may want to determine business financing options if you need initial capital to get started and then create a business budget.

 

It’s also a good idea to choose a business structure (such as a sole proprietorship or limited liability company), get any required licenses or permits, and purchase any equipment and supplies you may need, being sure to keep receipts since these expenses may qualify as self-employed tax deductions.

 

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There’s much appeal to the freelance life. You get to call the shots and work as much or as little as you like. And turning your marketable skills into your own home-based freelance business may be easier than you think.

 

One of the biggest challenges you may face is how to fund your business. You may have savings to get you going or have family and friends who will help you launch. If not, you can look into getting a small business loan.

 

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This article originally appeared on LanternCredit.com and was syndicated by MediaFeed.org.

 

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