Small businesses are grappling with significant hurdles when it comes to hiring, new data has revealed.

Insights from Talent Hub –  a new resource to support micro and small businesses with no HR department, found while half of small businesses polled had hired staff before – only a third (33%) said they were confident to hire again.

Economic uncertainty and an increase in the cost of employment are key considerations behind the decision, but on top of that, 75% of small businesses cited a lack of adequate training resources as the primary barrier to recruiting and retaining staff, while 25% reported difficulties in finding candidates with the right skills.

Polly Dhaliwal, COO of Enterprise Nation, said: “At Enterprise Nation, we speak with thousands of founders each year. We hear their ambitions, but also their challenges. For many, hiring feels like a leap into the unknown: unclear processes, perceived risk, and little tailored support, particularly for those with fewer than 10 employees. This is why we launched Talent Hub – to demystify and simplify hiring for micro businesses, offering practical, free, and timely guidance.

“These findings underline the urgent need for clear guidance, especially as small businesses navigate a rapidly evolving hiring landscape influenced by AI, hybrid work, and emerging digital roles as well as economic uncertainty.”

Kevin Fitzgerald, UK MD at Employment Hero: “Employment Hero’s data shows a clear U-turn in hiring over the past year. Small businesses quickly froze recruitment after the October budget, holding back until they understood the costs. It’s been a tough year for employers and employees alike, so it’s no surprise many are struggling to hire. What worries me most is the sheer number of firms who lack adequate training. Three quarters of small businesses said that this is their biggest barrier to hiring and keeping staff. That’s a huge gap – and why it’s vital we give them the tools and insights to build the skills they need to grow.”

Caroline Barbour, Senior Marketing Manager at Indeed, said: “Small businesses are the backbone of the UK economy, yet too often they face hiring challenges without the resources larger organisations can rely on. At Indeed, we want to level the playing field by giving every employer, no matter their size, access to the tools, insights and technology that make hiring simpler, faster and more effective. Talent Hub is a step in ensuring micro and small firms feel confident to hire, so they can focus on what matters most: growing their business.”

The findings, drawn from over 10,000 small business interactions through Talent Hub, built by small business support platform and membership community Enterprise Nation, with support from Employment Hero and Indeed, also show that 45% of entrepreneurs are seeking hybrid working arrangements for new hires, making finding the right candidate even more challenging, particularly amongst young people.

The report assessed national schemes to support small employers including Local Skills Improvement Plans, Skills Bootcamps, and the Digital Skills Council but found micro firms often fall through the cracks due to restrictive eligibility and low awareness.

The changing hiring landscape is a particular barrier to smaller firms, the report found, with AI automation particularly impacting the jobs market.

Secret Halo run by Lizzie Heyes, recently recruited a Tik Tok live stream presenter. The Colchester-based former fashion and homewares buyer launched her own business in 2015 and sells via online digital commerce and marketplaces like Etsy and Not on the High Street, as well as Tik Tok.

But Tik Tok is taking off and she’s now taking on her first employees.

Lizzie said: “Tik Tok live streaming is taking off!  It’s a very specific niche role because you’ve got to be able to sell and present the brand live.”

She added: “I knew I needed a physical base to do live streaming from and went ahead last year and took on a space, knowing that eventually I would have other presenters not just myself. It wouldn’t work if they had to come to my home to do it.”

“I could take on affiliates to do the live streaming from other parts remotely, but I wanted to keep it in house just so I can control how the product and the brand is presented.”

But she also said while she was nervous about the rising cost of employment, she also felt employing someone was a risk she needed to take.  “I hope I will be able to see a direct correlation between what they’ll be able to offer me by going live and getting sales.”

Talent Hub has facilitated over 5,000 successful matches between businesses and talent since its launch in 2024, with a particular focus on supporting remote and flexible working arrangements and youth employment.

The data highlights that marketing (35%), social media management (28%), and e-commerce expertise (25%) are the most sought-after skills among small business employers. Additionally, 40% of businesses report challenges in finding candidates with the right combination of technical and soft skills.

Talent Hub provides a range of tools and support designed specifically to tackle persistent recruitment challenges. Through webinars, downloadable guides and live sessions the platform empowers small businesses to navigate the complexities of the hiring process.

“The small business recruitment landscape has transformed,” said Polly. “We’re seeing a clear trend toward digital-first skills and flexible working arrangements, which reflects the broader changes in how small businesses operate post-pandemic.”

With over 13,552 hub views and 69,314 resource views since its launch, Talent Hub provides practical, free and timely guidance to small firms struggling without dedicated HR departments.

“As we prepare for an inclusive economy built for the future, it is imperative that every small business gains access to tailored, actionable guidance and the technology needed to succeed,” Polly added.