The challenges boutique and small businesses face

Jamie Sharp

Writer & Blogger

The rise in boutique and small businesses

As the Covid-19 pandemic hit hard in March 2020 and the UK went into lockdown to protect the nation, the number of new businesses fell rapidly. In March, new businesses fell by 19%, April by 29% and May by 3%, according to the analysis of Companies House data by the Centre for Entrepreneurs.

However, in June, the number of new companies formed was 77,574, a 47% jump compared to June 2019, when there were 52,779 company formations.

Oliver Pawle, chairman of the Centre for Entrepreneurs, commented in August 2020, saying, ‘With many businesses set to close, and unemployment rising, it is entrepreneurs that will drive Britain’s much needed economic recovery and create new jobs.’

With many people dreaming of starting their own business, breaking free of the 9 – 5 mentality and taking a chance on the idea that had been forming in their minds for years, entrepreneurial Britain used the weeks and months of spare time that lockdown offered to realise their ambitions.

Research by Guidantfinancial in 2019 showed that 55% of respondents wanted to be their own boss, and 39% wanted to pursue their passion. Other motivations to start their own companies were spotting an opportunity in the market and dissatisfaction with corporate life.

Many of these new businesses joined the so-called ‘Covid economy’, which saw some of the most significant increases in new companies. Disinfecting services saw an increase of 400%, closely followed by a 317% increase in companies selling medical goods and an 85% jump in specialised cleaning services.

With brick and mortar businesses closed to stop the spread of Coronavirus infections and no indication of when that would change, anything we wanted other than food and everyday essentials had to be bought online. This brought a surge of new internet retail businesses, with an increase of 110%.

In June 2020 alone, 13,904 new online firms started trading with a significant increase in a range of sectors. Sports retail and games and toys retail grew by 89%, bakeries by 58% and clothing retail by 53%.

Emma Jones, founder of Enterprise Nation, appeared on BBC Breakfast to discuss the new business formation figures, saying, ‘We’ve seen a wealth of people start businesses. People across the land are spotting gaps in the market and seeing how customers are buying in different ways. The entrepreneurial nature of British people has come to the fore in recent months.’

Regionally, all areas, including the devolved nations, saw an increase in business formations headed by London and the West Midlands with increases of around 60% and the average UK wide of an impressive 46.98%.

The challenges boutique and small businesses face and how to overcome them

Digital transformation is creating unprecedented opportunities for growth and innovation for small companies looking for ways to scale their businesses.

One area that is ripe for small and boutique businesses to shine is in markets that were previously the domain of large organisations. Cloud computing is accessible to smaller companies, and because of its flexibility and low upfront investment requirements, it is ideal for businesses looking to scale on a budget. Additionally, the need for frequent, costly software upgrades is removed, and cloud computing has in-built security.

With collaboration tools available which can be accessed from smartphones, tablets and desktops, it is less important for businesses to spend money on expensive office rentals that could be more effectively used to expand the business.

Start-ups often have aspirations not to remain small but scale and increase headcount, product range or both. This can be tricky as rapid scaling often comes with a new set of challenges that you may not have anticipated.

In the short term, staying lean may be a better option, letting your existing team expand their horizons if they feel confident to wear new or additional hats to give you the extra skills you need in different departments.

However, if business is good and you want to increase your employees to scale your business and have thought through the challenges that this may present, it’s vital that you don’t rush the process or hire too many employees at once.

Hiring challenges when you scale your business

One of the biggest challenges when you want to scale your business and increase your team is finding the top talent you need. Competing with large organisations with the infrastructure, benefits packages, and salary advantages that a small business can’t provide and reputations firmly established as an added incentive to prospective hires are challenging to overcome. However, these issues are not insurmountable. Small businesses tend to be less bureaucratic, which provides the potential for growth and rapid progression, which would interest many talented candidates.

When you’re moving from being a small business to a slightly larger company, the temptation is to rush in headlong and hire more staff than you have the capacity to onboard effectively.

This can be a major challenge for your managers and team leaders, who will have to free up a significant amount of time and internal resources to not only onboard the new employees but to train them in their new roles and get them up to speed as quickly as possible.

What happens if sales decline or your customers stop getting the wow factor they were used to because your managers must focus their attention elsewhere?

Another aspect of recruitment that is often overlooked in the rush to get additional employees onboard is company culture. With the upfront cost of recruitment, onboarding and training being high, taking the extra time to showcase what your company is about and the type of people who thrive will avoid both you and your potential candidate making a poor decision. Churn can damage your business in two ways: firstly, because of the extra time and cost required to constantly recruit and secondly due to the negative image it portrays of your business and how you look after your staff. Building your brand on a platform like Glassdoor to showcase the benefits of working in a company like yours is a smart move, and it can also be an excellent source of competitive intelligence.

Once the hiring has been completed, managing the talent you’ve brought in is equally important. If this isn’t considered a priority, it could damage your businesses processes and lead to disillusionment of the talent you worked so hard to recruit. Training and learning programs are crucial aspects of employee satisfaction and motivation. However, in-house training sessions where employees learn from each other and senior managers can promote teamwork and build unity when there are other priorities for company resources.


As a small company or boutique start-up, you are faced with a dizzying array of challenges as you grow your business. Hiring new employees is one that you will have to face time and time again.

Investing in a recruitment process that works for your business, providing you with the talent you need to expand, and grow is critical. When resources and time are tight, and there is a continuous demand on spare cash, outsourcing recruitment is often viewed as a necessary expense.

Working with professional recruiters will streamline recruitment, get candidates who are the right fit for the role and the company, and reduce the need to re-recruit because of a poor fit. Professional recruiters will ensure you get the talent you need to grow your business and that these new employees will work well within your organisation.

The irony is after a very challenging 2020, our saving grace and biggest area of growth is our “Recruitment on Demand” model that provides a “rent a recruiter” service for clients needing exactly that – agility!

Find out how our award-winning, on-demand recruitment solutions can reshape the way you meet your hiring needs.

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