A worldwide pandemic, economic shutdowns, and disrupted supply chains all sound like a recipe for a halt to business startups. The reality has been that the covid pandemic has seen a surge in the number of new businesses. 4.3 million business applications were filed in 2020, up 24% from 2019 and 51% higher than the 2010-2019 average, according to the Census Bureau’s Business Formation Statistics.

The pandemic hasn’t been good news for every business. On average, roughly 600,000 businesses closed every year. Between March 2020 and February 2021, an estimated 200,000 additional businesses closed due to the Covid-19 pandemic, according to a report by the Federal Reserve. Since the beginning of 2020, America’s economic and social landscapes have undergone a monumental shift, leaving behind new and some old challenges for this new batch of business leaders.

Emerging startup challenges

Competing against stress-tested businesses

2020 was a stress test for the business community that many businesses did not pass, but businesses with cultures of resilience that adapted quickly and mitigated risks did survive. Startups, by their nature, are agile organizations with an inclination to the new and innovative. These traits have been a boon to organizations started in the middle of a pandemic when volatility was at an all-time high. The worst of the pandemic looks to be behind us. What lies ahead of us is still unpredictable. Agility and adaptability will continue to be vital to a business’s success. It’s unclear if agility and adaptability alone will be enough to propel startups as it has in the past. Startups today have to face off against increasingly unpredictable markets, supply chain breakdowns, and more resilient legacy companies.

In the past, legacy companies have been conservative and slow to adopt new ideas. Today they are leaner, stress-tested, and forced to innovate. Legacy companies continue to hold on to their ability to pull from their deep resources to implement decisions quickly and precisely. It’s difficult for new startups to implement large initiatives in the same way. The challenge for startups will be developing this ability internally earlier in their story or building relationships with partners with the experience and resources to execute quickly.

Talent

Apart from capital, talent is the most crucial resource startups need, and in this job market, it’s a rare and precious resource. One of the most significant shifts since the pandemic has been the changing needs and expectations of employees. Benefits and flexibility loom more prominently today than they did before the pandemic. Employees today wield more leverage now than they did in the tight labor market of 2019. The Bureau of Labor Statistics (BLS) reports that employers have a record-setting 10.9 million job openings. That’s more jobs that than the 8.4 million unemployed Americans. After 18 months of stress and volatility, employees want stability, rich benefits, and the flexibility to work when and where they want.

  • 62% of employees think employee benefits are more important now because of the pandemic.
  • 68% of employees who can work remotely say their employer should allow them to make the right choice for themselves and their family.
  • 72% of employees say that the safety and protection of themselves and their family is more important than ever before.

The 3-punch combo of benefits, flexibility, and stability is difficult for a startup to provide. Historically, startups have been creative with the benefits and incentives they offer. Incentives like profit sharing, equity, office snacks, and remote work have been common. At least for the immediate future, creativity isn’t enough. Employees are asking for more robust benefits, and startups need to deliver on the demand if they hope to compete for talent.

Managing Growth

Attracting great talent is only the beginning. As businesses grow, its vital that they implement processes that get employees up and running faster while managing risk. This means tons of onboarding paperwork, adherence to government rules and regulations, company culture programs, performance management, and feedback. The faster and bigger a company grows, the harder it becomes to manage. When growth gets out of control, the risk of getting things wrong shoots up, likely landing businesses in hot water with the government. Investing in a good HR team or partner is a benefit that pays for itself over and over again. A good HR strategy builds a productive work culture, attracts great talent, saves everyone time, and mitigates costly mistakes that lead to lawsuits and fines.

Experienced HR Partner

Growing a business from nothing is a challenging task to take on. Building a dedicated team around you is paramount. A Professional Employer Organization (PEO) like XcelHR is especially suited to help you assemble your team and support you and your business as you grow. XcelHR has partnered with business leaders across America to help grow their teams by taking on the entirety of the employee lifecycle. That means managing the whole experience from recruitment to retirement. XcelHR helps you manage all of your employer needs like payroll, HR, benefits, risk management, and much more. We help businesses grow at the pace that’s right for them, enable them to shift hiring strategies on a dime, like hiring talent from across the country or ramping up recruitment when and how you need it. All while navigating a complicated web of laws and regulations. Reach out to us today to learn how we can help you and your team grow better.