Sheri Tischer, VP of Business Development at TCI Business Capital, and Jeff Pelliccio, founder of Allied Insight, were live on LinkedIn discussing “How to Recession Proof Your Staffing Business.” If you were unable to tune in, don’t worry! We recorded it.
In this discussion, Sheri and Jeff will cover:
It’s essential to manage your customer concentration. Forbes suggests that no single client should account for more than 10% of your total revenue, although some sources say 20%. In other words, don’t put all your eggs in one basket, just in case that basket breaks. Small or startup agencies can struggle with this as they take on one large client that requires a lot of time, energy, and resources. Additionally, this can put you at risk for credit and accounts receivables issues. Staffing agencies with many clients can also fall into trouble by being too industry-specific. In either situation, losing your significant client or the industry taking a downturn could be devastating.
The American Staffing Association recently did a candidate Sentiment Survey, and poor career growth or lack of professional development was one of the top reasons why people left their last job; as a matter of fact, it came in right behind being burned out. Developing and cross-training your team beyond product knowledge is critical for retention and morale. It’s a win-win because it also better positions your employees and your business for success in the event of an economic downturn. Examples of skills that can transfer across industry and positions include time management, leadership, team building, and emotional intelligence training. Book clubs are also a great way to support professional development. Another way to promote career growth is by incorporating micro adjustments and promotions. Micro promotions help incentivize and set milestones for people to aim for. Giving employees ownership of a project feeds them intrinsically, and the return on that is significantly higher than solely monetary compensation.
Are your relationships solid? How many contacts do you have at each client company? These are good questions to ask yourselves to avoid running into the dilemma of your only point of contact with a client leaving you without a solid relationship to fall back on. A goal of at least five contacts at each client company is a great guideline to ensure the relationship’s longevity. Another critical point is to study the client experience. Learning what the entire client experience is like and what needs to be improved will lead to more success. The client experience should represent the company’s core values and mission statement.
Self-funding is the ideal situation. However, researching and knowing your options if you need a solution in the future is setting yourself up for success. Several options exist: bank loans and lines, credit cards and merchant cash advances, and accounts receivable financing. Determine what type of service and qualities you expect from a funding partner. ASA research shows that client companies are looking for their staffing partner to have agility and transparency. Your clients expect you to move quickly, and with open communication, you should ensure your financial partner can do the same.
The biggest challenge staffing agencies face is meeting weekly payroll when it takes 15 days, 30 days, or even 60 days for customer payments. Payroll funding for staffing agencies gives companies access to the working capital they need to meet payroll obligations and grow. Payroll funding is also known as accounts receivable financing; it provides instant cash flow so your agency can grow without limits. The process works by selling your open receivables to a payroll funding company in exchange for an immediate cash advance.
Having a dependable funding source is one of the most essential aspects of operating a successful agency. Payroll funding from TCI Business Capital gives staffing agencies the confidence that payroll will be met every time. Payroll funding gives you the financial freedom to market your agency, take on new clients, go after large contracts, fill orders, and achieve the goals you have for your agency.