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Competitive pressure among staffing firms is enormous. The fast-growing firms present high-caliber candidates really quickly and know how to sell the candidate for the job.
Staffing is a relentless march forward. The most successful firms are resolute in pursuit of their goals and single-minded about success.
For some firms, it’s exceptional customer service. For some, it’s being the best in a certain niche market. Whatever it may be for you, figure out your advantage and use it to the fullest.
We find that owners of successful firms are very involved with the sales and business development efforts – aka, the things that really drives their business, client satisfaction, and growth.
When owners of successful firms get savings from outsourcing or any kind of windfall, most of the time they are investing it back in the business, through training or more hiring.
As complexity increases in compliance, insurance, funding, and HR, we’ve seen fast growing firm owners consider outsourcing more of those activities than in the past. It frees up time to run the business and focus.
‘Professional Solutions’, a contract IT/Engineering firm, was growing rapidly. As they added new clients, they had the recruiting capacity, the tools and systems, the right candidates, but not the finances
to support it. Even with solid clients and payment terms, they didn’t have the money to float payroll while waiting 30-45 days for payment.
“Early on I would use savings, credits cards, my 401K, even defer my own compensation as we went through periods of rapid growth. Bankers told me I was going to ‘grow myself out of business.’ They
didn’t understand my business.” — Tom F.
After utilizing Payroll Funding, Professional Solutions no longer had to limit new sales because they could afford to confidently go after new clients, new candidates and any new staffing opportunity. Within the first six months of the year, they had already exceeded the year before and within a year had doubled their business.
‘PDQ Contractors’ places highly skilled labor for marine & shipyard repair, as well as temps for emergency situations like hurricanes and oil spills. After a notorious oil spill wreaked havoc on the Gulf of Mexico, their volume increased very suddenly with orders for temporary labor to assist. Within a very short time, they placed over 1,600 employees across four provinces, going from $200,000 in weekly billings to $2-3 million a week. With on-site operations assistance from Payroll Funding Canada including software integration, payroll, invoicing and tax functions, they were able to weather the storm and increase their annual billings by 500%.
“Texas Staffing”, an established firm with a strong client base, could not grow consistently. Business would trend up for several months, only to swing back down.
To help, a business development expert from Payroll Funding Canada met with Texas Staffing at their location for an intensive, 8-hour development session. After a review of every aspect of the business, including sales, operations and recruiting, key areas for improvement were identified and process updates were implemented.
In the year following the business development session, the processes remain in place and Texas Staffing’s business was up over 50 percent with strong projections for continued growth.
In the book “Breaking Through: Leadership Disciplines from Top Performing Staffing Firms”, authors Barry Asin and Mike Cleland researched the biggest, most successful, top performing firms in the country to find the shared qualities that determine their success. Here are five of those qualities summarized:
To succeed in staffing, you have to be committed to building your business – and it starts at the top. The leadership team has to ask the most important question. Why are you in business? If it’s to succeed and grow, you can’t just put in a half effort.. The simple reason that most staffing firms do not grow is that they don’t want to. Success means sacrificing time with your family, or taking big risks like investing your own money in your business for a time.
Even if you and your team are 100% committed, a rudderless firm will soon find themselves adrift in a sea of tight competition. That’s why direction is the second key quality that most successful firms share in common. The decisions you make about your firm from the outset are critically important when it comes to success. What customers will you serve? Will it be in a specific industry? A big part of a successful strategy is also to determine what you are not going to do. To succeed, it is critical to say no to business that does not align with your goals.
While there is no one answer to what your company culture should be, the most successful firms have pervasive cultures that are driven from the top, aligned with strategy, and consistent in all things big and small. Culture is not just your mission statement. It’s much more about how you create and motivate your team – who you fire, who you hire, and who you promote. Actions speak louder than words when it comes to embodying the culture you develop.
Finding good people is critical in staffing, and that goes for both your internal team and your temporary employees. Talent development goes beyond just hiring though. It includes the training, development, and motivation of your recruiters and others in your company.
Finally, we come to the last key discipline: execution. Some firms want to jump right to execution, but it’s important to have the other disciplines in place first. Execution is all about identifying essential practices, scaling key processes, and then replicating results over multiple organizations. Easy to say – and very hard to do. Executing from a standard operating system and practices makes opening up new business units or training new leadership easier than “winging it.” Successful staffing firms follow a playbook, and that makes it easier to grow.
If growing your staffing firm were easy, everyone would do it. Growing your firm requires commitment, sacrifice, and tackling the challenges that arise. Here are a few common challenges that we see staffing firms face, and how to overcome them.
As of March 2022, the US had 5 million more job openings than unemployed people in the U.S. With numbers like these, you’d think finding a suitable person for every job would be a snap. Said no staffing agency ever. The skills gap – the gap between the specialized skills that jobs need vs the available talent, makes for an increasing talent shortage in the US and that can encumber your growth as a staffing firm.
Solution: While there is no easy solution for this issue, some things you can do are to encourage candidates to train for highly sought after skills, narrow your scope and focus on areas you know you can win, and be creative when sourcing your candidates.
If your firm is growing, you may be receiving payment on invoices for 10 temporary workers, but now you have 20 of them that need to be paid. The more you grow, the bigger that gap becomes, thus, the larger your need for working capital. Not to mention, you’re looking at payment 40 to 45 days after invoicing, and we are even seeing that stretch out.
Solution: You can cover your working capital needs by self-financing through your savings or credit cards, you can go the traditional route of financing through a bank, or you can explore alternative financing options such as payroll funding.
Traditional sources of working capital typically don’t understand the staffing industry well and are not comfortable lending money to a company that doesn’t have hard assets like inventory or real estate. The main asset a staffing firm has is its accounts receivable, and that tends to fluctuate based on vertical or seasonal needs. There isn’t always the consistency that a bank is going to want to see.
Solution: Access to working capital doesn’t have to be a limiting factor, and the right working capital program can help staffing firms grow. Work with a vendor who understands the industry and can provide a flexible growth solution.
One of the most important parts of the growth process is to really understand the true metrics and drivers of your business from an operational and financial perspective. Here are some questions to ask yourself if you are trying to grow.
Some kinds of work also require you to invest more, in insurance or recruiting, for example. Knowing where your money is going and the ROI will help you focus on what matters.
You need to understand where your margin is coming from, across all your different lines of business or regions. Is there a sector where you are killing it, or one where you are spending time but shouldn’t be? In order to grow, you need to know that.
When you price your services, do you compare to market rates and understand all the true costs that are involved in working with your clients? To help, we developed a profitability calculator on our website for any staffing firm to utilize when pricing out a deal on the spot or back in the office.
Your balance sheet and income statement are two good starting points. If you don’t understand what you’re looking at, learn more about it.
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