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Fear of taking on staff is blocking microbusiness' growth

Microbusinesses are finding the same obstacles to growth as their larger counterparts, according to a Government study. Cashflow, red tape and access to finance feature as among the most prevalent issues - and the larger the business becomes, the more likely it was to encounter such obstacles. But it's sole traders who are really struggling to grow, particularly those who are reluctant to take on staff.

The study, which defined microbusinesses as having between 0 and 9 employees, found that only 5 per cent of sole traders in 2007 increased employment in the five years to 2012, but 20 per cent of employers with 1 to 4 staff did so in the same period.

For sole traders, it emerged that the greatest impediment to growth was the challenge of taking on their first employee. Many harboured perceptions that taking on staff was associated with increased risk, cost and time commitment.

Only one in five non-employers considered recruitment to be very easy compared to half of employers, and non-employers reckoned recruitment costs to be more than twice as expensive as employers' reckonings. The report also found that non-employers were more likely to say of themselves, 'I am not a business', a perception that was linked to a reluctance to recruit staff.

Research cited in the study found that micros starting with at least one employee were more likely to grow, and the longer businesses employed no one, the lower the probability of recruiting.

Acas is full of useful information for microbusinesses and sole traders on Growing your business and keeping it simple, and can provide help and training for first-time employers with courses on Human resources management for beginners, Contracts and terms and conditions and Recruitment.

Visit the Acas Training and Business Solutions page for more information.

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