Are Your Recruitment Firms’ Profits on a Rollercoaster Ride?

If you run a successful staffing firm, you’re probably content with how your firm is doing financially. However, being a profitable staffing firm doesn’t necessarily mean you’ve achieved a foundation for long-term stability and growth.

In this third blog post in a series from our recent webinar on Crushin’ It In Staffing with Amy Bingham, CEO of Bingham Consulting, we’re going to get into the third major mistake staffing firms make: failing to grow profit.

First, it’s important to remind yourself of this:

“Failing to grow your profit doesn’t mean you’re unprofitable. If your profits are up and down and up and down, one good year, one bad year, one good month, one bad month, one good quarter, one bad quarter, and are unpredictable, there’s work to do in the area of managing to profitability.”

Here are three key recommendations from our conversation with Amy:

Build a balanced portfolio.

In the early days of the staffing industry, it was common for firms to have 80% or more of their revenue tied up in one or two clients. However, this can be risky, as losing one or two of these clients can quickly lead to financial turmoil.

To counteract this potential problem, Amy says its best to avoid becoming overly reliant on just one or two highly profitable customers. Instead, start diversifying your customer portfolio, explaining that it’s important to develop a sales strategy that goes “beyond managing client concentration, grows your firm and ensures some stability with profitability.”

To accomplish this, Amy says to first start with a profitability analysis of all your accounts. From there, you can see where your work is being allocated. For example, you may have one monster account that’s producing the highest volume with the lowest markup.

Putting together gross profit dollars, what you’re investing in your people, recruiting horsepower and sales horsepower, you may find that this particular account is actually unprofitable. However, with a balanced portfolio of small and midsize customers, you can easily cut your losses from an account that’s taking up too much time and resources.

Are Your Profits on a Rollercoaster Ride?

Maintain a sales and client development focus.

Even when things are going well, Amy emphasizes that a lack of new business focus is the “kiss of death” over time. Having an established salesperson (or a department of designated salespeople) is critical for attracting a steady stream of new business.

All too often, staffing firms rely solely on their recruiters to maintain current accounts and keep running things running “business as usual.” This mentality will, over time, cause your business to flatline. As Amy says, “This is a sales business. If no one is hunting for new accounts, then that is why your business is not growing. That’s the very first thing you need to fix.”

If you’re the founder of your agency, you likely started out as the firm’s sole salesperson. However, this is unrealistic as your business grows to a $3, $4 or $5 million bandwidth. You must realize you can’t continue functioning in a sales capacity on an island on your own. This is where investing in a qualified salesperson will allow you to spend more time engaging with your current clients while bringing new business through the door.

Reinvest in your business.

Many staffing firms plateau because of failure to reinvest. As Amy puts it, “If you’re running your business as a lifestyle business where it is just supporting you and your family, there isn’t necessarily anything wrong with that. Just know that you’re only going to get so big if you do that.”

If you’re constantly drawing from your business to pay your own expenses, (such as sending your kids to college, taking vacations, etc.), you’re not investing in the growth of the company.

So, what are the top investments you can make to propel your growth?

1. Additional staff

In terms of additional staff, running a high-performance culture is key to growth. As Amy explains, “Hiring to support the growth of your firm is going to be the most essential thing to do. Not only will you burn your people out if you don’t hire to support the growth that you’re achieving, but then you’re going to have turnover, and then you’re on this wheel of turnover that you can’t get out of, because you really don’t have enough staff on board to support your existing business.”

To have a highly functioning staffing firm, it’s important to have a mix of people working in various capacities, including sales, recruiting, technology, back office and marketing. It is the multifaceted nature of your team that will ultimately make it successful and keep everyone on track to meet business goals.

Furthermore, providing targeted training and development to each department of your agency is imperative in ensuring that every person on your team has the tools and abilities to perform their best and excel.

2. Recruiting technologies

As for technology, Amy explains the importance of having the right ATS and CRM systems in place that offer visibility to your business and pipeline. The best platforms are those that provide access to meaningful data and information without being so overwhelming that your team abandons it altogether.

When implementing technologies, Amy advises to “select carefully and make sure your people are trained on the systems. Don’t spend any more money on technology until they embrace the technologies that you have in place today.”

Get off the Rollercoaster Ride?

Recognizing the many common barriers to greater profitability outlined above will allow you to focus your time and efforts on the areas of your firm that need the most attention so you can get off of the profit rollercoaster for good!

As you can see, growing a profit is directly connected to reinvestment into your business, most often in the form of people, culture building, sales and technology. With all these major factors combined, you’ll strengthen your firm and give it the building blocks it needs to grow.

About TrackerRMS

TrackerRMS is a leading applicant tracking system designed for the SMB Staffing company. Our industry-leading Recruitment Software will help you recruit faster and more efficiently. With over 20 years of experience, we bring you the Best Staffing Software.


CEO of Tracker for over 12 years with an overall 25+ years in business process, IT strategy, and management

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