Running a business is demanding—and with today’s challenges, it’s no wonder so many owners are lying awake at night. Seventy-six percent of business owners say owning a business has become more complicated in the past year. Between rising costs, talent shortages, growing compliance demands and technology advancements like artificial intelligence (AI) and cybersecurity risks, business owners are juggling more than ever to stay competitive and compliant. It’s a fast-moving landscape that requires constant adjustment.

With so many shifting demands, it’s clear that business owners need smarter, more agile strategies to navigate the challenges ahead.

1. Economic Uncertainty and Shifting Market Conditions

According to isolved’s second-annual Business Owners’ Imperative report, increased costs (41%) are the top reason business owners believe owning a business has become more complicated in the past year. The economy (40%) and increased employee compensation (34%) also contribute to making running a business more difficult, indicating questions about the evolving market conditions and turbulent economic state.

As the strain of shrinking margins and unpredictable consumer demand grow, business owners are actively seeking ways to stay competitive amid inflation and labor shortages. Because of such economic uncertainty, it has become more critical to implement workforce strategies that not only reduce costs but also enhance employee satisfaction and retention.

Building Financial Resilience Through Innovation

Forward-thinking solutions like flexible pay arrangements and strong employee enablement are proving essential. With 76% of business owners acknowledging their employees live paycheck to paycheck, offering flexible access to earned wages can relieve financial stress, boost employee satisfaction and improve retention.

Earned wage access provides workers access to a percentage of their accrued wages before the end of the current payroll cycle. This allows them to withdraw funds at employer-specified intervals (i.e., mid-month or weekly) to assist with any immediate financial burdens. On-demand pay is similar, offering workers access to all earned wages whenever they need it. For example, once a worker completes their shift, they can access their earned wages. On-demand pay gives workers flexibility to withdraw their wages immediately after earning or letting it accrue and withdraw on an as-needed basis. Both options give employers a competitive edge in hiring and productivity.

Additionally, setting employees up for long-term success through early and ongoing training, clear role expectations and a focus on overall well-being helps sustain the workforce. Faster ramp-up, greater engagement and reduced turnover contribute to fostering a positive company culture and improved productivity and thus supports business success in an uncertain economy and evolving labor market. Proactively developing employee career road maps and promoting them with value-added benefits like earned-wage access or on-demand pay empowers businesses to maintain their workforce while navigating uncertain economic conditions.

2. Talent Shortages and Workforce Retention

Business owners are facing a rise in expectations from both employees and customers, requiring more personalized, responsive and flexible experiences. Increased employee relations challenges, such as overall well-being, work-life balance and diversity, demand more time and resources.  Adding the competitive nature of the labor market makes recruiting and retaining qualified employees more difficult, often leading to higher costs and slower growth resulting in exacerbated operational challenges and strain on leadership.

Creating a Culture of Belonging and Engagement

To navigate today’s evolving job market, business owners are turning to strategic workforce planning to close talent gaps and improve hiring outcomes. Human capital management (HCM) platforms with built-in applicant tracking systems (ATS), like isolved Attract & Hire, help streamline recruitment processes with AI-powered features including job ad writing and candidate matching to reduce time-to-hire. Promoting employee referrals also provides a cost-effective solution that enhances candidate quality and reinforces a company’s internal culture, making it easier to compete for top talent in a tight labor market.

But attracting talent is only part of the equation, as retaining employees is equally important. With 82% of business owners reporting growing concerns around employee wellness, many are planning targeted investments in areas like financial wellness to better support their workforce. By focusing on culture, benefits and engagement, organizations can improve overall employee experience (EX), which in turn can create better customer experiences.

3. Compliance Complexities and Regulatory Pressures

Business owners overwhelmingly report (95%) being deeply involved in HR, recruitment, benefits, payroll and employee experience operations regardless of company size. This hands-on involvement is driven by a desire to improve EX and a growing concern over multifaceted areas like compliance and the employee lifecycle. As employment laws evolve and HR decisions become more closely linked to overall business outcomes, leaders are staying closely engaged to mitigate risk and maintain their competitive advantage in an increasingly regulated and people-driven business environment.

Establishing Proactive Compliance Management

Given the nuances of compliance and business owners’ deep involvement in HR functions, empowering HR teams with access to professional services can provide critical relief. These third-party providers act as extensions of internal teams, handling time-consuming compliance tasks and reducing the risk of costly errors. By offloading these tasks, HR can continue focusing on strategic initiatives, and business owners gain confidence that essential responsibilities are being managed effectively and efficiently.

4. Technology Integration and Cybersecurity Risks

Business owners are constantly facing data protection demands, with 68% expressing concern that a data breach could occur within their organization this year. Many businesses handle large volumes of sensitive employee and customer data but may lack the enterprise-level infrastructure or expertise to fully secure it, creating urgency for proactive security measures, HR system audits and employee training.

These considerations extend into emerging technologies like AI, which provide undeniable efficiencies, as well as bring their own set of security and ethical risks. Although 81% of business owners view AI as a business opportunity, many have not adopted broader integration due to skepticism of its long-term impact, proper usage and data governance despite early-stage wins.

Elevating Data Protection and Digital Trust

Our recent business owners’ study showed that 26% of business owners are working with IT to ensure employee data and HR systems are protected, followed closely by specialized training for HR employees handling sensitive employee data, integrating security in new vendor vetting processes, utilizing third-party security software and/or services and providing extra compliance training to all employees.

HCM providers, such as isolved, are helping organizations explore how AI can support smarter, faster decision-making. For example, a business might use Predictive People Analytics to anticipate workforce trends, identify retention risks and make data-driven talent decisions with confidence. By embedding AI into HR workflows, business owners can establish a secure, scalable path to boost efficiency while maintaining a strong focus on data integrity and compliance.

Lead with Clarity and Confidence

While owning a business may have become more complicated, HR leaders and modern HCM solutions are stepping up to ease the burden. With the right support, technology and strategies in place, business owners finally rest easy, confident that their workforce, compliance and growth challenges are being handled with care and expertise.

Stay ahead with strategic insights and practical solutions to navigate uncertainty, optimize your workforce and align technology with business goals by downloading The Business Owners’ Imperative: Aligning Tech & Talent in Turbulent Times.

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