How to Grow Your Staffing Company Through Economic Uncertainty
Over the last three years, the staffing industry has weathered dramatic changes. The pandemic disruptions transformed into double-digit revenue increases in 2021 and 2022. Now, the possibility of continuing interest hikes and a recession have dampened growth projections for 2023. To grow in this uncertain economy, staffing companies need to improve efficiencies and align strategies with what job seekers want and what employers can afford.
Growing a staffing company requires a well-planned strategy that considers market demand, competition, and the ability to attract and retain talent. This article examines the conditions and strategies to consider when your staffing company plans for growth as the market navigates uncertainty.
Retention is the foundation for growth
Growth is essential for the long-term survival of a business, but business stability is a necessary precondition to support sustainable growth. For staffing businesses, a reliable pool of talent is an essential part of a stable foundation. The bottom line for retaining talent is to treat your staff well. Other key strategies you can employ to maximize retention include:
- Onboarding & team building – Your talent’s experience starts on day one. Ensuring employees are productive and happy is an effective retention strategy. A well-structured onboarding program allows you to position your new employees for success. Continued team building enables you to foster a healthy culture, provide training, and enhance job satisfaction.
- Reliable pay – Volatile economic environments can take a toll on your PNL. Nonetheless, paying your staff their agreed earnings on a regular cadence is critical. Ensure your staffing company has a robust payroll funding solution in place to assure regular paychecks are issued accurately and on time.
- The three Rs – Responsiveness, recognition, and rewards contribute to employee satisfaction and retention. Ensure your management team interacts in a positive and supportive manner:
- Responsiveness: Management needs to be approachable and take an interest in responding to employee feedback. Letting them know they have a voice that matters contributes to employee satisfaction and retention.
- Recognition: Give attention to work well done. People are more likely to stay on your team when their contributions are noticed and appreciated.
- Rewards: Showing respect and appreciation for employees’ efforts shows they are doing their jobs well and encourages them to stick around.
Building a solid foundation based on strong retention programs will provide additional paybacks. Employees will tell their friends about your organization’s benefits, becoming brand ambassadors and talent recruiters.
Opportunities for growth
With effective employee retention programs in place, your staffing company is in a position to focus on business development. Growth projections for 2023 may be low at just 2% overall, but when you exclude travel nurse revenue, the rest of the staffing industry is projected to grow by 6%. That’s room to grow for staffing companies that can provide qualified candidates at a competitive bill rate.
Choose your path: specialization or generalist
As you review your business plan and investigate growth strategies, you have several decisions to make. One of the first questions is whether to specialize in a specific industry or generalize to create a volume business. There are pros and cons to both strategies:
Specialization: When you specialize in a market, you can become recognized as an expert in that industry. This status can lead to increased visibility and reputation as a trusted provider of quality talent. You may also benefit from less competition and higher service billing rates. However, you must consider the flipside of operating in a smaller market and paying higher wages for specialized talent.
Generalist: Focusing on volume provides benefits, such as offering lower mark-ups and billing rates. Scale can also simplify contract management. This approach also allows you to build a larger pool of candidates, enabling you to fill standard positions quickly. However, generalist staffing companies face a great deal of competition.
Growth strategies for staffing companies
For staffing companies, growth must be coordinated between acquiring new business opportunities and building a talent pool to fill positions. With so much competition in both these areas, staffing companies must plan and execute various growth strategies. When planning your approach, consider the following strategies.
Invest in technology: Integrating technological advancements allows you to streamline processes and automate tasks, creating efficiencies that support growth. Building a digital strategy and implementing the right technology and software can elevate your staffing company’s ability to source candidates and fill job vacancies faster, with less effort and cost. Further, advanced technology enhances back-office efficiencies with integrated software systems such as:
- Applicant tracking software (ATS)
- Customer relationship management (CRM)
- Interviewing software
- Time-tracking software
- Payroll systems
Digital-first solutions can streamline operations, improve communications, and speed up time to hire. These efficiencies often result in higher client satisfaction ratings leading to further business opportunities.
Study the market for opportunities: Market conditions are in flux – it’s incredible how much the landscape can change in just a few short years! Study the market for new opportunities such as:
- An under-exploited market segment
- An under-served area deserving of a new branch location
- New businesses in your territory
- New companies planning to move into your area
- A competitor with significant vulnerabilities
Look for achievable goals that align with your decision to be a specialist or general staffing company.
Nurture relationships with clients: It’s a well-known business adage that keeping a client costs less than winning a new one. Nurture your existing client relationships to solidify existing business and increase opportunities to create and upsell expanded services.
Consider running net promoter score (NPS) surveys to identify clients with the strongest opinions about your service. Both satisfied and dissatisfied customers can provide valuable insight. Collect and record data during client interactions to help identify the additional services your clients will benefit from.
Here are some examples of specialty services that staffing companies may offer:
- Temp-to-perm placements
- Executive search services
- Payrolling services
- Diversity and inclusion consulting
- Skills testing and assessment
- Training and development
If you’ve been communicating with your existing customers and collecting feedback, you should know what additional services would benefit them. Use this information to help you identify the best direction to take with service expansion.
Ensure you have the financial strength to grow!
Business financing is critical to establishing the financial strength needed to sustain operations while pursuing growth objectives. But not all funding solutions offer the flexibility to support growth. Conventional lending facilities are typically governed by restrictive financial covenants designed to protect the lender. These covenants can stifle growth by limiting credit and restricting actions.
Alternative lenders take a different approach by providing financing solutions to help a business grow. Flexible credit limits that expand as the company grows, multiple funding solutions designed to maximize access to working capital, and innovative solutions to complex situations provide the financial resources to support growth strategies.
Payroll funding is a mainstream alternative financing option providing reliable funding to meet every payroll accurately and on time. This flexible funding solution provides predictable cash flow and access to the working capital needed to fuel growth.
Staffing companies with high employee retention, focused growth strategies, and financial stability have the building blocks to expand operations, even in a volatile and competitive market. From this position, successful staffing businesses will remain resilient and outperform competition less equipped for the changing conditions of economic uncertainty.
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