WHEN you run a small business, finding the right people to work for your company is even more important.

But recruiting and retaining staff can feel like an uphill struggle if your budget is limited and you're competing with multinational companies.

Frances Wilson, human resources adviser at the Chartered Institute of Personnel and Development, says small firms should make use of local contacts to spot talented staff.

Local newspaper adverts usually produce a good response and often attract candidates that big companies miss.

"Small companies should emulate the best practice of larger companies, whilst at the same time trying to be more creative and inventive," she says.

Building links with local schools, colleges and universities will raise your profile.

By offering a student work experience you're giving them a chance to get to know your firm and they will be more likely to return once they're qualified.

Your chamber of commerce, Business Link (the Government's one-stop advice centre) and other networks may be able to suggest who to approach if you're looking for certain skills.

And once you've recruited the right person small companies do have advantages over their larger brothers in keeping staff.

Because while you may not be able to offer fat salaries your strengths as a small business are your flexibility and sense of community.

Once you've recruited someone use these two advantages to hold on to them.

If you own the company you may be reluctant to offer employee share options but there are plenty of other perks to keep staff happy:

* Sabbaticals or career-breaks - if a member of staff wants to take time off to travel, look after an elderly relative or support their child during their exams, for example.

* flexible working - working from home one day a week, or job sharing is often easier to arrange in small teams.

* bonuses - many small companies offer 'suggestion schemes' so that the employee who comes up with a new idea receives a percentage of sales generated as a result.

Training is a useful way of persuading staff to stay. If you pay for someone to obtain a new qualification make sure that they don't leave immediately afterwards by including a clause in their contract saying that they have to pay you for the cost of the course.

This usually acts as a deterrent while also ensuring they know how much you have invested in building up their skills.