Growing at a pace that suits you - Part One
After successfully managing the start-up of your own recruitment business, how do you take it to the next level and grow at a pace that suits you? It’s not just about doing the same – but a bit more. It’s about reviewing where you are and what resources you need to take your business to the next level.
In Part One, we'll look at where you are now and some of the issues that can arise as the business starts to grow. In Part Two, we'll talk about the resources needed to deliver a business plan for growth.
Revisit the big picture
Following good practice is the key to sustainable growth. Even if you’re a small business, it’s time to review what you want to achieve and where you want your business to be. If you haven’t already done so, it’s time to do a SWOT analysis of the business. (What are the Strengths, Weaknesses, Opportunities and Threats facing your business, both internally and externally.)
Goals and objectives
The outcome of your SWOT analysis should help you to clarify your objectives and goals. It might be adding a temporary/contractor solution to the permanent solution you already offer; moving into a new market sector or extending your geographical reach. How do you plan to implement, evaluate and resource this?
Facing weaknesses and threats
Alongside evaluating your opportunities and strengths, being aware of existing weaknesses within the business or potential threats means you can take action now to reduce risk or have a plan should the worst happen.
Overtrading
Overtrading is a common problem facing companies who grow too quickly. It’s an imbalance of cash coming in and cash going out. It can lead to business failure. Even profitable companies can end up with a negative cash flow. It’s important to be aware of the danger signs and keep on top of your finances.
Paying your workers on time every time
For example, you may have accepted business from a number of clients but find that late payments are causing an issue with working capital. If you are a temporary or contractor agency, it is crucial that you have guaranteed cash to pay your workers each week. However, the level of cash required weekly can vary according to the duration of the project. You need a financial solution that can guarantee payment of your workers every week, allowing you to take on new business with peace of mind. You cannot 'just hope for the best' with this one.
Late Payments/Aged Debt
Aged debt and late payments can be the death of a business. Some factoring companies, for example, will charge you interest every day an invoice is outstanding. As soon as an invoice hits 90 days, they will hold money back from each week’s draw down, negatively impacting your cash flow.
A robust credit control process is essential going forward to mitigate this risk as well as debt protection for peace of mind. Chasing debt can be time consuming. Consider outsourcing this to a recruitment specialist. From performing due diligence and credit checks on clients to invoicing and collecting overdue payments – this can help reduce your debtors’ days and improve cash flow. It can also free your time to focus on billable activities, which again keeps the cash coming in.
Relying on one or two major clients
Don’t become overdependent on a few large clients to fuel your growth. Large clients are often demanding and drain your time – balance this up with the value they bring in and whether it’s worth your time and effort. Let them go if they are profit drainers. You may have a mix of high margin and low margin clients depending on what sector you are in. It’s worth reviewing your pricing model to make sure that you are not undercharging. Also, spread your risk – if you just have clients from one specific sector and that sector takes a downturn for whatever reason – then you’re vulnerable. The key is to diversify where possible.
Working in the business rather than on it
There’s only 24 hours in a day. If you find yourself spending more time sorting out business administration than on performing billable tasks, then it’s worth considering outsourcing your back-office. Your entrepreneurial skills should be spent on sourcing positive revenue streams for your growing business rather than dealing with issues arising from Payroll, for example. Therefore, it also makes sense to focus your resources on growing your recruitment team who can help you achieve your sales targets.
Look for a back-office specialist who is experienced within the recruitment industry and can pay all your clients’ workers if you offer a temporary or contractor solution. There are providers who can offer a pay-as-you-go service to preserve cash flow. Make sure they have the flexibility to offer a solution for all of your workers, however they need to be paid.
Simplicity have been supporting the start-up and growth of successful recruitment businesses for over 15 years. If you want to find out how we can free up your time and help you grow at a pace that suits you, then contact one of our business development specialists today.
READ Part 2 - Growing at a pace that suits you