Despite expectations of a Brexit-driven slowdown, the UK economy exceeded all expectations in 2016 with the services sector in particular capping off the year with its sharpest rise in 17 months.
With employer hiring intentions in 2017 predicted to continue where 2016 left off, it is no surprise to learn that many recruitment business owners see the next 12 months as an opportunity for growth. But is your agency ready for it?
According to the latest Markit/CIPSUK Services PMI, the UK unemployment rate fell for the fifth consecutive month in December, while November saw the highest level of job creation for seven months.
All of which is good news for the recruitment sector, which was recently revealed to be worth an estimated £35.1 billion a year – up from £26.5 billion in the year 2012/13 (REC, December 2016). To take advantage of positive trading conditions means ensuring that you have all your ducks lined up – especially your finances.
While you may have resolved this year to increase your turnover, improve your profit margins and build your existing team of consultants to help you gain a better competitive advantage, unless you have the capital in place these things will take longer than you might think.
You know more than anyone that it can take upwards of two-months before a client has paid their invoice, and if they are late that can have a detrimental impact on your daily operating costs. Not to mention effectively putting your growth plans on hold indefinitely.
Having a high conversion rate and being great at winning new business is all very well. But suppose one of your clients (or a new client) offers you a contract to supply a number of contingency workers: your workers will need to be paid weekly, yet your client may only be invoiced monthly.
So do you have the funds to bridge the gap between when your workers get paid and you receive cleared funds from your client? Is a lack of available cash seeing you miss out on taking on this new business?
Of course cash flow is only one side of the recruitment finance coin and many agencies already have a recruitment finance service in place. However, many of these arrangements come with financial restrictions that can effectively apply the brakes to your planned rate of growth.
This makes no sense to us – why should fast-growing recruitment agencies be penalised and prevented from taking on new business that will enable them to realise their ambitions?
That is the question that many of Simplicity’s clients asked themselves before partnering with us.
Take Derek Ludlow, CEO at respected agency McBarron Wood International as an example. He said: “We wanted to free up cash flow to invest in our growth and we needed something to differentiate ourselves from the competition.”
Similarly, Mike Goode, Director at GB Solutions said, “After a number of years with our previous provider we felt they were unable to personally identify with our specific business needs.”
And that’s the key point here. Whilst you may already have an existing finance provider in place, do they truly understand not just the recruitment market but also your business too?
Even if you don’t have a financial arrangement in place, do you have the capital to enable you to react to demand and drive your agency forward in the right way and at the right pace for you?
We have been helping recruiters to grow their business for over 13 years now.
If you need any advice or support on how to grow your recruitment business in 2017, get in touch. We’re here to help. Contact us today.