Insights | Feb 11, 2019
By Tom Kosnik
The business sages tell us that if we want success then we must develop a plan for success. We’ve all heard it…“If you don’t plan for your business, then you plan to fail.” What about hard statistics? Small Business Trends surveyed 2,877 privately held business and discovered that companies that commit to planning for their business outperformed at twice the pace over companies that did not plan for their business. Another study conducted by Brinckmann, Grinchnik and Kapsa with 11,046 companies concluded that planning helped companies grow 30 percent faster! It all sounds great, but how do we go about it?
Let me first define a “small” staffing firm. Such staffing firms are what we call “owner operator” staffing businesses. They are typically firms with 15 million in annual revenue or less. This simply means that the owner of the staffing business is the president, the V.P. of sales, the lead sales rep, the V.P. of operations, the head of finance, the IT Director and, on the weekends, the repair man or woman. Sound familiar? Staffing Industry Analysis tells us that over 90% of independently owned staffing firms in the United States are under 10 million in annual revenue. It’s fair to say these firms would probably benefit greatly from planning for their businesses.
A key challenge for smaller staffing firms is getting unstuck from a particular revenue or headcount plateau that the business has settled into. Another challenge is client concentration where 1 to 3 accounts make up 80% of the overall revenues. Yet another challenge is hiring and retaining good internal staff members that will assist with account management and growth. In addition, small staffing firms are, to some point, at the mercy of the banks. Their financing options are limited as the banks view such businesses as “high risk.” Factoring account receivables can leave little to no money in the business for the owner to reinvest for growth. It becomes a catch 22. Again, business planning can help!
In Part 2 of this series, we will uncover 3 key factors for business planning that will help with any and all challenges you may be facing as a small staffing firm owner.
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