It is time for budgeting and planning for next year. Yay!
What is always an arduous task under the best of economic conditions is much more so as we look to 2021 amidst a pandemic and a presidential election year.
The good news is the picture appears bright for the Staffing Industry. My clients report a weekly sequential increase in new job orders and revenue.
And Staffing Industry Analysts predict that after taking a beating this year with a projected 17% decline, the industry will grow 11% in 2021.
Indeed, COVID-19 has fueled an increasing trend toward contract and gig work – perhaps the only good news for the Staffing Industry as we look forward and reason for optimism as employers resume hiring.
And yet here we are, eight months into the pandemic without a vaccine and uncertainty about who will occupy the white house. Perhaps the best approach for budgeting and planning this year is to embrace the optimism but be prepared if trouble strikes.
Drafting two budgets reflecting the best and worst-case scenarios will increase your confidence that your business will thrive despite economic conditions.
If you are like many, your firm has benefited from the stimulus and weathered COVID-19 better than expected. If you are in a strong cash position now, now is the time to fund investments you’ve been putting off, such as:
The best way to manage a sales slump is to get creative to recover margins.
Where is the opportunity? Is there a skill that’s in high demand that your team could fill even if it isn’t in your wheelhouse? Is there a direct-hire business you can get at a reduced fee? Can you inch bill rates up? Can you reduce temp and contractor pay by even a few cents per hour?
Of course, the other way to preserve profit is to cut expenses.
To maximize net income, the guiding principle for Budget B is that it reflects gross profit growing at a faster rate year-over-year than expenses (or declining at a slower pace). You’ll have to make some hard decisions.
Finally, remember that the Staffing Industry business is cyclical, and a slow start to 2021 does not spell gloom and doom for the entire year. So mid-January, if you do not see the numbers you projected, resist the urge to abandon Budget A for its ugly cousin Budget B immediately.
It will be waiting there for you if you need it.
Article authored by Amy Bingham, Owner of Bingham Consulting