Why Are You in Staffing?

76755013One would hope your reasons for being in staffing are:

1. You know something about staffing, that is getting orders and filling them.
2. You enjoy what you are doing for a living day in and day out
3. You know how to make money in staffing, both for the short term and building value.

We will concentrate on the last item; that is the business part of the picture, assuming you know what you are doing in making placements and enjoy doing it. We are fortunate to be in a thriving industry outpacing the growth in the general economy by a factor of 2-3 times.

To start off with making money in the short term and building the value of your company are not the same. Making money is a tactical decision making practice through your sales and recruiting efforts. This includes things like prospecting for new business, taking care of your existing clients, what price to charge for your services in relation to what you pay your temps, your staff and fixed costs and have something left over as profit to pay yourself. Yet, after doing this for 25 years I am still surprised at how many owners don’t do this quite right. They don’t know how to develop a value proposition for either their prospects or clients to enable themselves to meet those needs best and make a decent profit by responding to those needs. In addition uncovering hidden needs, which if known would enable them to generate even more business. On top of this they don’t hire and retain the best people and create a win-win comp plan for their staff to motivate them to earn more money with a highly incentivized comp plan. As our industry has become more commoditized if one does not do these things well they will either eek out a profit in good times and then fail in bad times. Good owners do these things routinely and revisit them to make sure they are working as intended.

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After one is running a good shop their next step should be to maximize the value of their business. This does not happen by magic. If one does not plan ahead they may even be making a decent profit on the way to oblivion if they are in a declining staffing market sector, not retaining their top talent, don’t take note of new competitors entering their market, have a highly concentrated client base that may one day leave them, or a dozen other factors that they fail to proactively deal with. Solving this problem is the essence of strategic planning. Most staffing companies do a rather poor job in this area and just go about growing and not thinking about the long term consequences of how they are growing. For example, commercial staffing is growing much slower and is more commoditized (lower margins) then professional staffing. When extrapolating this, one can easily double or quadruple the value of ones company by strategically planning their future and then following through on those plans, monitoring their results and making changes as needed to assure the right outcome.

MORE: How to stand out in a crowded market

Michael Neidle

Michael Neidle
Michael Neidle is president and CEO of Optimal Management, an advisor to staffing firm owners and managers.

Michael Neidle

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