Running a small business? Here’s why HR can’t be an afterthought

Micro, Small and Medium Sized Enterprises (MSMEs) keep economies moving and in the UK, that’s no small feat. According to official statistics from Gov.uk’s, SMEs (small and medium-sized enterprises) make up 99.8% of the UK business population. And their impact is huge, from job creation and innovations to shaping communities.

Whether it’s a high street shop or family run café, small businesses are a cornerstone of our economy and communities. But while MSMEs are known for flexibility and resilience, one area they unwittingly overlook is HR and employee management.

HR isn’t just for big business

A common misconception is that HR systems, policies, and structures are things MSMEs can put aside until they get “bigger”. Running a small business means doing it all, from customer service to stock checks and everything in between. So, it’s only natural to see HR as just one more hat to wear.

But that mindset can come with real risks.

Without things like proper documentation, contracts, or policies, businesses are more vulnerable to costly claims, staff disputes, and compliance breaches. And when things go wrong, even unintentionally, you’ll likely feel the impact much harder than a larger corporation would.

That’s why having a strong HR setup helps you do more than avoid trouble, it helps build a foundation for sustainable growth.

Why you shouldn’t rely on “informal HR”

Many MSME’s rely on things like handshake agreements and “informal HR”. It’s where things are done on a case-by-case basis with no proper systems in place.

Let’s say you have a small but loyal team. Perhaps you’ve never had a formal employee handbook, and new hires get onboarded with a handshake and a verbal run-through.

It works fine. Until someone abuses sick leave, a holiday conflict arises, or a termination gets challenged with no documentation to back it up.

Now you have more than just a “people problem” on your hands, you’ve got legal liabilities.

A lack of contracts, unclear policies, and inconsistent processes can lead to:

• Constructive dismissal claims

• Wage and hour disputes

• Health & safety fines

• Employee dissatisfaction and turnover

For MSME’s who typically have lean margins and small teams, having to deal with even one of these issues can derail your operations.

What good HR looks like for MSMEs

You don’t need a full-time HR manager or lawyer to practice good HR. With access to the right tools, templates, and advice you’ll not only protect your business, but you’ll also support your people.

Here’s what that looks like:

Legally compliant contracts and policies
Clear, up-to-date documentation that outlines rights, responsibilities, and expectations.

Smart scheduling and absence tracking
Avoid confusion and burnout by ensuring fair, transparent shift planning.

Support for difficult conversations
Expert HR advice to help you handle issues like disciplinaries, terminations, and grievances correctly.

Health & safety procedures
Meet your legal obligations and protect staff with proper documentation and risk assessments.

Centralised employee records
Stop digging through paperwork or spreadsheets and manage your people from one secure platform.

With these foundations in place, you’ll spend less time putting out fires and more time focusing on growing your business.

Stay compliant with BrightHR this MSME day and beyond

While we celebrate the hard work and determination MSME business owners embody, it’s crucial to remember to also look ahead.

As your business grows, so will your risks and responsibilities. That’s why it’s important to invest in a proper setup now to prevent HR headaches in the future

You’ll also be laying the foundation for a stronger, more professional operation that attracts talent, retains staff, and makes it through whatever challenges come its way.

At BrightHR, we support every business no matter the size. You deserve access to simple, affordable, and compliant HR support. And on international MSME Day, we’re proud to stand with the UK’s small business community and help you build the future you deserve.

Ready to see how BrightHR helps MSME businesses owners like you stay compliant? Speak to one of our software specialists today!