What will it take for small business owners to recover from the labor shortage?

The end-of-pandemic labor shortage has put small business owners in a particularly tough spot: It’s a job seeker’s market.

Nearly 650,000 retail workers quit their jobs in April alone. And with companies like Target, Best Buy and Under Armour all raising their minimum wage to $15 or more, how can small businesses keep up if they feel they can’t afford such a rate?

C. Nicole Orr, the co-owner of A&C Pack and Ship, a shipping store located in Baltimore, has experienced this challenge firsthand. She recently hired a new employee and found that, in addition to a higher wage, it took lots of creativity to attract some quality applicants.

So, what does that creativity look like? Here are four ways small business owners can stand out and attract new employees amid the labor shortage.

Reward top performers

Orr offered her new employee an incentive: a bonus for meeting certain key objectives. She sees it as a win-win, as the idea helped her attract hard-working candidates while also encouraging them to put in good work.

“It’s kind of like supply and demand,” she said. “If you want that quality employee you have to be ready to go that extra mile. It’s just where we are right now.”

For owners, bonuses can be cheaper than a flat-out wage increase, since not every employee will meet the “top-performer” threshold. Additionally, Orr suggested a monthly competition where a single worker earns a small bonus as a reward for out-working their peers.

However, beware of bias playing a role here.

Get creative with the budget

In some cases, a wage increase might be necessary. Still, small business owners don’t have to face bankruptcy to find the funds for a pay raise.

There are countless government incentives for small businesses — many of which reward hiring a diverse or localized workforce. For example, Maryland offers tax credits to companies that hire veterans, workers with disabilities and other historically disadvantaged groups. Other states like Delaware and Pennsylvania offer similar credits.

If tax credits or statewide grants aren’t possible, business owners could also seek out a small business loan. However, beware that loans are not one-size-fits-all — here’s a breakdown of common loan types and their requirements to consider prior to going this route.

Personalize your incentives

As more and more small businesses open — Americans closed out 2020 with nearly 4.5 million applications for new businesses, an all-time record — consider customizing the types of benefits you offer employees. This is where small businesses have an advantage, according to Orr, as they can quickly adapt to meet employee needs.

“We can make decisions quicker because we don’t have that bureaucracy or board members or other franchises or people who make voting decisions on that corporate level,” Orr said. “A lot of times we’re having meetings with ourselves.”

That flexibility can yield creativity. While Orr hasn’t instituted any of these principles at her own store, she suggested that owners consider profit-sharing, or offering workers a small piece of their businesses.

Another option is tuition reimbursement. While this may sound pricey for some businesses, the IRS actually offers tax incentives to many businesses if they’re willing to help their employees repay their education costs.

Turn toward technology

Labor and employment are two different things. Automation replacing jobs has long been a concern for future-of-work experts, accelerated by the pandemic. But those in the robotics industry use the phrase “the three Ds” to describe the most probable use of automation: dull, dirty and dangerous, relating to tasks in the workplace that machines are designed to automate and are otherwise unwanted by workers.

That scenario may be playing out more commonly now, as some companies are using technology to solve their staffing issues.

Take the Island Grill Seafood & Steakhouse, for example. The restaurant, located in Ocean City, New Jersey, recently installed a “robot waiter” that can open doors, deliver food and bus tables.

The robot may be the first of its kind on the East Coast, but others may be soon to follow. Some robots cost between five and six figures, but others are comparatively cheap. A 2020 study by Ball State University found that robot vacuums can cost as little as $7,000 — while some services lease the machines for between $4 and $6 an hour.

A robot employee is likely still a pipe dream for many owners, but still, consider the point. If businesses are willing to adapt, there will always be a strategy — whether it’s new technology, a new business model or assistance from the government — to recruit skilled labor.

“If you don’t adapt then you’re gonna be done — because people are changing,” Orr said. “You have to give people an incentive to want to come.”