Tips for Growth Through Partnerships

In my last post, I discussed several challenges staffing firms face. Here, I address planning for growth through partnerships — focusing on business strengths and building around weaknesses

Partnering with the right financial and back-office services providers allows staffing firms to focus on their strengths.

As the business grows, consider the key goals of the company and what it will take to reach them. Every business is different, but here are common best-practices that help staffing firms plan for growth:

• Determine short and long-term goals and the resources required to achieve them.
• Map out any seasonality that requires you to scale the workforce up and down.
• Define your business funding requirements to achieve your goals. Look beyond the sticker price — low priced services can end up being more costly if you are locked into a contract and the business’ needs aren’t met:
  1. Will the funding adapt if your business situation changes? Will it grow if your business grows? Make sure you only pay for the funds you use not for the amount made available to you.
  2. How quickly and frequently will funds be made available? Payroll must follow a strict set schedule and cannot be delayed.
  3. What additional services are available that will allow you to save money on overheads? Look for services like accounts receivable management, collections management, cash allocation management, and bad debt protection in case of a client’s inability to pay.
• Consider outsourcing back-office operations:
  1. How involved do you want the provider to be in your day to day operations?
  2. What do you want to keep full control of and what part of operations would you like to outsource?
  3. How much liability would you like to keep and how much to outsource? If you choose the full package including insurance and legal compliance, then your workers become employed by your back-office provider (usually a PEO: Professional Employer Organization) and as such that provider is liable for any issues that might arise. If you prefer to only outsource timesheet management and payroll processing, then any employment compliance issues, workers compensation, etc. will have to be covered by you as the employer.
• Define your business objectives for the relationship with your provider. Are they filling a gap in the short-term or part of the long-term business strategy? Evaluate any limitations that one provider may pose over another.
• Don’t be afraid to try something new: accounts receivable financing may not be as familiar as a bank loan but keep an open mind, different options that can help your business grow.

As staffing firms expand, they need to create a stronger talent pool while maintaining a certain amount of liquidity. Partnering with a flexible financial services provider ensures that staffing firms have the financial backing and cash flow liquidity needed to pay staff, meet operational expenses and handle back-office administration.

Victor Robinson, CFO for Tamah LLC, said partnering with an alternative lender enabled Tamah to “pay the contractors when we invoiced, as opposed to waiting 60 days. This has been a great relationship for us.”

You don’t have to know it all to run a successful staffing business. Map out your business goals and plan for the challenges you might encounter. Partner with providers that will support your business and give you the flexibility to scale up and down as needed without increasing overheads.