With the upturn in the US economy, staffing is on every business owner’s mind. Qualified workers are scarce, especially in some states, and the aging population doesn’t help the situation. You don’t need a crystal ball to tell you that finding the right staff is one of the top concerns of most business owners.
Research conducted in 2014 by analytics firm InsightSquared and ATS purveyors Bullhorn showed 41% of respondents cited staffing-related issues as their top priority for 2015, and that’s unlikely to change. In September 2015, The Conference Board issued a report warning companies to “start planning now for deep and long-lasting labor shortages” over the coming years.
These factors forecast a potential boom time for staffing agencies that can ride the wave effectively. This eBook highlights the challenges faced by companies in the staffing industry, particularly the financial aspects, and provides the solutions you need to get the growth results you want.
Your Biggest Staffing Challenges
It’s the typical chicken-and-egg situation: Growing your agency enough to satisfy market demand depends on being able to fulfil your client’s staffing needs, which in turn leads to increased growth. Doing this can present a number of challenges, however, especially for smaller or newer agencies. These include:
- Aggressive credit terms. This is an old tactic, used by companies during the 2008 financial crisis when credit became scarce and more expensive. Many C-Suite executives were forced to implement extended payment terms and other aggressive cash management practices to stay afloat. Such stringent credit terms make it difficult for an agency with overheads of its own to pay.
- Seasonal sales patterns. No matter how much you love the holidays, your business doesn’t. Depending on your clients’ industries, staffing needs either drop–or increase significantly. A drop means less revenue, while an increase often means:
- Tighter turnaround times
- Tougher price negotiation
- Less responsive clients and candidates
All of these affect your bottom line.
- Slow-paying customers. Every business has customers who are slow to pay their bills. Waiting a day or two is one thing, but when it stretches into weeks and months it can cripple your staffing agency financially.
- Rapid growth with no credit history. Credit might be the accepted go-to solution these days, but if your agency is expanding rapidly you’re unlikely to have had time to build up a sound credit history. This puts the ball squarely in your court to use your personal credit score to fund growth.
- Past credit problems. Acting as a surety for business credit is risky for anyone with family responsibilities, but if you’ve had past credit problems—say, as a result of the downturn or poor health—then this can be a non-option for you.
- Need for a cash investment. A cash injection from an investor can make a huge difference to any business, but the complexity of finding, securing and relating to a venture capitalist or angel investor can be prohibitive. This leaves many small businesses turning to family members and friends for funding assistance, which can be more problematic than other potential solutions.
- Payroll requirements. Ah, the elusive payroll. Staffing agencies rely heavily on personal brand, client relationships and recruiter strengths to succeed, and as in every business you get what you pay for. Employing the right people is paramount for you to succeed, whether it’s in your management, sales department or recruitment personnel.
- Hiring and training. Finding and hiring talent is vital to remain competitive and enable you to satisfy your clients’ needs. That makes allocating money for hiring and training a critical factor in your budget. These challenges can be alleviated through a variety of sources, one being the ability to factor your receivables.
This text is an excerpt from Staffing Financing Made Easy, a new eBook from the creative team at Factor Funding Co. This exclusive eBook discusses common challenges staffing agencies face, and how alternative financing methods can help with cash shortages, unmet payroll and overall lack of capital.
