Low staffing creates a balancing act for small biz

NEW YORK — If you work for a small business there's a good chance that, since the recession, you have taken on additional responsibilities and are working longer hours. Some of the work that used to be done by fellow employees may be getting farmed out to freelancers or other independent contractors.

The U.S. economy is growing, however at a sluggish pace. Companies are cautious because they don't know what business will be like in the months ahead. Europe's lingering debt crisis and uncertainty about the outcome of the November elections is adding to the anxiety. It's a recipe that makes many employers reluctant to bring on new staff.

Certainly, small businesses are taking some of the same steps as larger companies to avoid hiring new workers. However for small business owners, finding a way to cope with less staff is an furthermore delicate balancing act because they already have fewer workers to pick up the slack when an employee leaves.

The margin of surviving

"Many of them are just at the margin of surviving," says Michael Gibbs, an economics professor at the University of Chicago Booth School of Business, who has studied and written about human resources and how organizations are structured. "There's an enormous amount of uncertainty in the economy."

In 2003, Steve Synnott had a staff of just over 50, the most people his company, PRO Group, ever employed at one time. Today, the business, which runs the marketing campaign for 600 hardware stores, has 19 full-time employees and three part-timers.

Synnott is finding high-tech ways to hold off on hiring. In the last year, PRO Group invested in what's known as voice over Internet protocol, or VOIP, the innovation that lets people talk over the Internet in other words than regular phone lines. Synnott says VOIP has lowered the company's teleconferencing costs, which used to total about $800 a month. That has allowed PRO Group to have more frequent teleconferences. And that in turn has cut the amount of time that PRO Group employees spend on the road, allowing them to stay at the company's Greenwood Village, Colo., home office and get more work done.

Many small businesses use freelancers instead of their own employees to get their work done. Freelancers, or independent contractors, are common in industries like media, construction and public relations where business owners often need someone with specific skills for a short time. Freelancers often cost less than employees because companies don't have to provide benefits or pay Social Security and Medicare taxes for them.

Jen Brady had three employees last year at her public relations firm, Fred & Associates, however she let them go and is now using only freelancers. Business is slower this year, yet "I've been able to be profitable because I've been able to take on freelancers."