If you own an independent recruiting firm, you know the struggle of being all things to all people. To your candidates, you’re a career adviser. To your clients, a business consultant. To your employees, a boss. And even while you’re wearing all those hats, you still have to think like a business owner!
It’s enough to exhaust anyone. You probably don’t find the time to really think about your recruitment business strategy very often. You’re too busy with all the obligations you have right now to worry about years down the road.
Here’s the problem: If you’re like most recruiters, your business strategy needs some serious attention—pronto.
Luckily, this is a topic industry trainer Barb Bruno knows a lot about. She recently shared her expertise in the Top Echelon webinar, “Simultaneously Grow and Protect Your Business.”
Read on for the key takeaways:
#1. You’re wasting time and money on the wrong searches.
You probably consider your firm successful when you are rolling in job orders and hunting for a variety of titles. However, this is one area where diversification is not your friend.
Barb told the story of one owner who couldn’t figure out why his fill rate was so low when his recruiters were so busy. Probing further, she discovered that his team was working on searches for 68 different job titles. She asked him to conduct revenue modeling to see where the money was actually coming in, and he was shocked by the results: 90% of the firm’s income came from only 6 job titles, and they only had a 38% fill rate for those 6 titles!
Within a few months of focusing their searches on the 6 instead of the 68, they were filling over 65% of their orders.
Barb’s rules: target 85% of your marketing and recruiting efforts at your best business, and realize there are “riches in niches.”
#2. The next economic downturn is going to hit you hard.
There will be an economic downturn. It’s just a matter of when. Since the staffing and recruiting industry is cyclical and highly affected by recessions, it will hurt a lot if the next one takes you by surprise.
How to know if your firm is in danger:
- One client represents over 15% of your revenue.
- You only have one contact at most of your client companies.
- You are only a vendor to your clients.
- Many of your clients only have one point of contact at your firm.
- You own the firm and it’s assets.
- Your “big billers” basically run their own shows.
- Your “big billers” supervise other recruiters on your team.
If one or more of these are true, you are teetering on a cliff. It’s critical to develop a strategy to put your recruiting business on more solid footing. Barb gave action items to remedy each of these situations in her webinar, so check out the video if you need some direction.
#3. You need an exit plan.
Most firm owners are so busy trying to drive their annual profit higher and higher that they never stop to consider much their direct hire business is actually worth. Hint: the amount your firm bills annually is not the amount it will sell for. Not even close.
“I often receive calls from owners who went to sell their business and were stunned to find out it has little or no value,” said Barb. She gave the example of an owner who billed $2 million in direct hire business annually, but ended up with a best offer of $25,000—for everything, including the equipment!
There are two main reasons this can happen:
- As an owner, your personal production makes up 35% or more of total sales. The problem with this is that you own too many of the key relationships with clients. There is no guarantee that those relationships will stay with the business when you sell, and that dramatically lowers the value for potential buyers.
- Your business has no additional sources of revenue beyond direct hire placement fees. You have no recurring revenue or diversification if you only work direct hire searches. Again, this means that the possible value of your business to anyone who is not you is unpredictable.
If either of these scenarios apply to you, you need an exit strategy for your recruiting business.
#4. If your firm is direct hire only, you are slowly going extinct.
By 2020, over 50% of the workforce will be flexible, which means half of the available search business will not be direct hire. Currently, it’s around 30%. There are contingent workers in nearly every industry and at almost every level.
“If you aren’t offering contract staffing, that doesn’t mean your clients aren’t using W-2 contractors. They are hiring them from your competition, and you are leaving money on the table,” said Barb.
More facts about contract staffing and the flexible workforce model:
- The Affordable Care Act increased the demand for W-2 contractors. Companies need to keep costs down, and contractors don’t add to an employer’s headcount for ACA purposes.
- Adding contract staffing to your direct hire business model dramatically increases your business’ inherent value because the revenue is recurrent.
- Historically, when direct placements are down, contracting is up, and vice versa. Sometimes, both are up (as is the case right now), but rarely, if ever, are both down.
- Hiring authorities used to keep staffing and direct hire separate, relegating one to a staffing agency and the other to a search firm. However, they now prefer working with a trusted full-service firm.
Recruitment Business Strategy 101: The School of Bruno
Not only does Barb give advice, she gives actionable advice. One webinar attendee put it this way:
“As one of those solo practitioners Barbara talked about, it’s a constant struggle to work both ‘in the business’ and ‘on the business.’ I loved her practical advice and suggestions. Great info that’s applicable at any age and to any size agency.
Thanks for a superb webinar. It was well worth the time!”
Lynnette Z., Wisconsin
For more tips you can put into immediate action, watch Barb’s recorded webinar video.
Don’t forget to subscribe to our blog to be notified of future webinars with Barb and other industry trainers!
Barb Bruno, CPC/CTS can be hired for your next conference or event or for in-house training. Barb’s training techniques have guided thousands of recruiters to a higher level of sales and profits. She is best known for her methodical, easy-to-implement strategies that she shares with her audiences. Her enthusiasm is contagious! If you would like to hire Barb, please call 219.663.9609, email support@staffingandrecruiting.com, or visit Good as Gold Training online.
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