Regardless of the current economy, you can still protect your firm’s revenues, lower risk, and even position your company for growth in a downward market.
Few, if any, recruiting agencies were impervious to the impact of the pandemic. While navigating through the financial upheaval of 2020, staffing firm owners running operations of every size got a crash course in how to creatively drive revenues and reduce costs during rampant, unpredictable economic changes. Some agencies attempted to muscle through the changing market without actually changing their practices and standards, which ultimately proved a costly miscalculation.
Fortunately, some took a more agile approach to their staffing business, reevaluating and adjusting as needed. The firms best able to sustain their business through the most recent marketplace turbulence learned firsthand that while external circumstances can often affect bottom lines and headcount numbers, there are always innovative ways to protect profit margins in any job economy. Remaining lean and agile with your processes while continually evolving your operational model, regardless of the current economy, can protect your firm’s revenues, lower risk, and even position your company for growth in a downward market.
Consistently Assess Your Pricing Model to Remain Competitive in Your Vertical
Staffing firm owners should consistently assess their existing pricing model to ensure it’s competitive, sustainable, and, most importantly, profitable. Many recruiting firms launch with one pricing strategy and never adjust for workplace and job economy variables. Whether you’re using a markup or margin approach, it’s important to periodically evaluate which placements are driving revenues, and which ones are actually costing you money long term.
Evaluate the Current Cost of Doing Business — and Make Adjustments as Needed
Fees, expenses, and overhead are the cost of doing business. However, running lean in any marketplace can protect profit margins and overall bottom line, no matter what the size of your operations. Solopreneurs, mid-sized agencies, and even enterprise firms with multiple locations should constantly sort through expenditures to identify opportunities for reducing financial output.
Recalibrating your internal workforce can prove a significant way to minimize expenses. Small- to mid-sized recruiting firms often assume they have to do everything themselves, while enterprise operations build large internal teams to manage their back-office needs in-house. Both approaches can have a negative impact on overall profit margins. Smaller organizations struggling to do more with limited resources are taking valuable time away from selling, recruiting, and building service satisfaction levels. Likewise, larger organizations sustaining a substantial internal staff with salaries and benefits are often unnecessarily depleting profits.
Outsourcing Payroll and Back Office Services Can Prioritize Compliance and Profitability
To offset the expense and risk of managing internal operations and employees, staffing firms across every specialty have tapped into the benefits of outsourcing back-office requirements to an experienced business process outsourcing (BPO) provider. A competent BPO vendor customizes a payroll, employer of record, and back-office solution based on your staffing firm’s needs now, as well as anticipate future needs to help you grow and scale with other growing pains and support gaps. By outsourcing functions that extend beyond core staffing capabilities, small, medium, and even multi-locational recruiting firms can leverage their size to reduce excessive overhead, increase efficiencies, and adjust to market shifts, all while protecting profit margins.
Like any industry, a wide range of external factors beyond the job market itself can influence a staffing and recruiting firm’s profitability. Sure, low unemployment rates are always a cause for celebration with staffing firm owners who often can’t keep up with the upswing in candidate demand. However, experienced recruiters know that the job market temperature can, and often does, change quickly and unexpectedly. Additionally, evolving consumer trends, work model shifts, and rapid economic upheavals can all come into play, either individually or simultaneously, creating almost instant disruption within the staffing and recruiting vertical.
Contact Headcount Management Today
Headcount Management supports staffing and recruiting firms to maintain compliance and drive cash flow. Contact us today to hear more. Be sure to download our digital Markup Calculator to help develop the right pricing model for your operations.
