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Why SMBs struggle with hiring technical talent: 10 mistakes and solutions

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Updated April 11, 2025
Reading time: 9 minutes

Finding and retaining technical talent can be a challenge for SMBs. Small businesses can compete with larger companies - but it takes planning and avoiding common mistakes while maximizing advantages.

Often businesses find themselves in a frustrating cycle: struggling to attract qualified candidates, settling for less-than-ideal hires, then watching them leave after a short tenure.

The cost of this cycle extends far beyond recruitment expenses and has direct impact on business.

Before posting your next tech job listing, make sure you’re not making these ten common mistakes.

Mistake 1: considering internal tech team a cost center

The first mistakes happens even before a job listing is posted.

Often internal tech team that works on a custom solutions is not considered a direct revenue generating department and that influences the salary range and the job description.

It’s easier to assign value to the sales team or production crew - their labor can be directly traced to the company’s revenue.

Technology companies consider their software team producers. If your business’s main product is not software, it doesn’t change the fact that the tech team is one asset that can, with correct strategy, step out of it’s support role.

What to do instead: Don’t treat tech team as a necessary expense. Brainstorm income possibilities - developing a tool that can be sold to your peers, creating new paid services for the customers or building a data analytics product.

Mistake 2: confusing IT and Software Development terms

Do you need someone to fix your computers, troubleshoot the network issues and apply security patches? Or do you need someone to write custom code for your internal operations?

Often the term “IT” is used by SMBs to describe any role that is working with computers. But just like you would not be hiring residential electricians to do commercial work, IT and Software Development are two distinct roles. Don’t advertise for the wrong one.

What to do instead: figure out which one you need.

IT focuses on maintaining the computer systems and network. IT professionals use the software to support business goals.

Software Developers focus on designing and building software.

That distinction also applies to leadership positions. Are you searching for IT Manager or Software Engineering/Applications Manager?

Mistake 3: cramming multiple jobs into one job description

You want your new hire to analyze data, create reports, “program” software, discuss vendor contracts, troubleshoot equipment and apply patches, manage projects and do user training?

In small businesses it’s normal to wear multiple hats. But hiring for tech position should not be a catch-all for all near-tech tasks that need to be done.

It’s hard to find a person who knows how to do all of these things - and almost impossible to find someone who can do them satisfactory. From the candidate perspective, such wide range positions do not offer enough professional development potential - there is not enough time to build up a skill. Result? Reduction of your applicant pool.

What to do instead: evaluate how much time each of the desired roles should take. Perhaps you do not need to hire a new developer and instead should look for training lead or IT support or project manager role.

Consider part time or contract approach to address sporadic needs and fill gaps. Think about outsourcing tasks (for example, IT can be managed by a vendor and you can use consultant for strategy development).

Mistake 4: requiring industry specific software knowledge

It makes sense - training takes time and you want expertise now.

But if your must-have requirement is proficiency in the software virtually unknown outside of your industry, your hiring pool is severely reduced for no good reason.

Software industry changes so quickly that learning fast by figuring things out is a common skill. You can reasonably expect your new hire to catch up quick, so don’t limit your chances to find the best candidate. Software developers have horizontal skillset and can easily move from one industry to another as the principles of software construction applies.

What to do instead: List industry software under “Preferred” or “Bonus” section. This way they are searchable by candidates that know them but you are not scaring off your pool. When making a final selection, chose the best candidate - even if they need extra week or two to figure things out.

Mistake 5: asking for associate degree as a way to reduce labor costs

Hiring juniors is fine if the team has a senior level developers with significant experience.

But if the entire hiring pipeline consists of new graduates with associate degree that leave after couple years, you are hurting your business.

The reduced education requirement is usually meant to limit the pay cap. But software industry juniors require a team to expose them to a good practices and check their work. Without the guidance the quality can suffer as the juniors may not be aware yet of what they had not yet experienced.

What to do instead: make sure your juniors have mentors and someone to review and analyze their work. If hiring a senior not in cards, consider outside help for review/training and mentorship. Even limited mentorship assistance can level up your business operations.

Mistake 6: using outdated titles

Are you looking for “programmer” or “solutions analyst”?

The software industry is always changing and titles evolve to reflect this. While most job board searches can show the listings for outdated titles, having them on a resume is not as attractive due to perception of the skill level, vagueness on the nature of work and seniority. This negative perception is also reflected on the job listing.

Here are few examples of outdated titles:

What to do instead: Always use the current industry titles to communicate specific level of skills your business requires.

Check the job listings. Are there many listings that match the title you selected?

Here are some modern titles to consider:

Mistake 7: not providing flexible environment

It’s no secret that the tech talent’s salary ceiling in SMBs is much lower that what tech companies can pay - not even counting other benefits such as annual bonus and significant raises.

This discrepancy creates a churn. While the compensation may be harder to adjust (at least until the tech team starts bringing direct revenue), other aspects are fully within your control.

Flexible dress code

If you require business casual for all office workers, relax the dress code for non-customer facing tech teams.

Flexible hours

While the tech team hours should overlap with the rest of the office, allow flexible start and end.

Vacation hours

Tech companies are known for “unlimited” PTO which usually translates to 3.5 weeks of vacation - and it’s easy to request. Compare this with commonly awarded 2 weeks with complex request process.

Continuous education and career development.

Providing time and needed resources to upskill your team generates benefits for them and for the company. Consider covering classes, conferences or books. Concern that the upskill tech talent will leave is common among smaller businesses - but consider the impact on your operations if your talent stagnates.

Allowing remote or hybrid.

Not all jobs can be performed remotely - for example, a physical presence is required when working with the plant’s equipment. There are also concerns about fairness (when most of the company must be working in person), security or productivity. But some positions can absolutely be done remote - for example, web application development that does not have any local equipment integrations.

If you find it difficult to fill a position, consider advertising hybrid or fully remote position to open applicant pool. Make sure to iron out the processes for remote work beforehand for smooth onboarding.

Mistake 8: expecting a long tenure

Tech industry has a high turnover rate - it’s common to switch jobs every few years. Exposure to different industries and software practices build a better professional.

Expecting a new hire to remain with your business for years - and marking down talent with shorter job stints will lead to disappointment.

What to do instead: plan for this: invest into documentation of your software and processes to shorten onboarding and reduce the chances of business impact. Ensure that there are more then one person who knows how things work. Hire for immediate value the person can bring to your business, not the previous jobs tenure.

Mistake 9: expecting easy hire for legacy applications

If you are running an established business, chances are you have older legacy applications - you may even have one build on top of Access database.

Languages and frameworks evolve rapidly. It may be difficult to find a developer familiar with older languages like Fortran (and willing to work with them)- and like everything in the market, the scarcity comes at a price.

While a good developer can learn any language or framework, it doesn’t make sense to do so from career skill development point of view if its not wildly used. Your best bet is to find a specialized developer.

What to do instead: plan for potential upgrade or replacement, especially for business-critical solutions. Realize that the costs will increase over time - if you can’t find talent familiar with your stack, be prepared to pay more for a specialized developers.

Mistake 10: not highlighting the benefits of working at small business

Salary is important, but there are other benefits small businesses can provide that large companies cannot. Not highlighting these in your job ad misses the opportunity to attract workers who have extensive experience but have burnout from working in the corporate environment.

What to do instead: Get ahead of objections and advertise the benefits. Lower stress, reasonable hours, decision autonomy with less bureaucracy and layers of approval, close knit team, interesting and meaningful problems with visible impact, direct connection to business result, close chain to decision makers.

Hiring and retaining talent can be hard

How many of these mistakes have you made in your hiring?

If several sound familiar, you’re not alone. Small and medium businesses across industries struggle with the same challenges.

Whether you’re looking to improve your technical hiring process or explore alternatives to building an internal team, we can help assess your specific situation and recommend the most cost-effective approach.

Reach out for a free 30-minute technology strategy consultation to discuss your business’s technical talent needs and explore potential solutions.