12 drivers of growth for your recruitment business
When entrepreneurial recruiters embark on a journey of leaving the safety of employed status within an established agency to launch out on their own, there are often a number of key drivers behind their reasons for doing so.
For some it centres around “doing it better” than their existing employer, for others it is to create the freedom associated with being your own boss and the rewards that come with that (lifestyle, financial etc.) and for others it is about generating shareholder value, building a business that has equitable value and therefore is set up to realise a potential event (i.e., an exit) at some stage in the future.
Whilst some become fixated on the exit route, which only a few ever achieve in reality, the overriding principle across all these strategies is the same – to build a business that is highly profitable, sustainable, not overtly reliant on the owners (or one or two clients) and that gets them to a point where there is both opportunity and positive choice with what they can do with the business next.
Build a business that gives you an opportunity and a positive choice
The different stages of growth follow this same principle, whether you are in the start-up phase, trying to cross the great chasm to 10+ employees, expanding up to 30+ employees with a more defined management structure or pushing out to multiple offices and doubling your workforce.
Many small recruitment businesses never get past the first phase of having more than a handful of employees, which is fine if that is all you want and creates the lifestyle that you are looking for. But if you want to realise greater shareholder value, then the DNA of the business owner, their mindset and behaviours, need to change …as does the business structure.
The fundamental key is to ensure that you don’t grow too quickly before the core foundations are in place.
I often liken it to building a franchise network – if your business is franchisable (i.e., could be picked up and dropped into anywhere in the world and would function in exactly the same way) then the model and the infrastructure you have created works and that has the making of a great, enduring business, whatever you want to do with it.
Does your recruitment business have the DNA of a successful franchise?
One key thing to note – don’t build your business growth plans based on other agencies and what they are doing, but instead base it on the true potential your business has, using your business’ unique proposition, capitalising on the core niche markets you are working in.
I so often see recruitment leaders set budgets based on a % uplift on what they did last year as opposed to focusing on what the future opportunities look like, on what they could achieve – this can stifle progression, focus employees on mediocrity and limit a business’ overall growth potential.
Create your business goals based on the future, not on the past
Once you have identified where you are going, business leaders should then look at the various growth engines, those fundamental drivers, that will effectively push the business along on that journey.
These drivers will evolve as your business evolves, but are consistent with many of the key attributes investors tend to look for in a business – the business milestones you set as part of your growth journey should reflect these right from the start.
Business leaders should have answers to these 12 questions, each aligned to the 12 key drivers of profitable growth and value creation in a business:
- Do you have the right leadership skills in place to drive continuous employee performance?
- Are you attracting great people to your business, with the right attitude and DNA, or just filling up empty seats in your office with bodies?
- What is the level of engagement across your people and do you have a clear strategy in place to retain your top talent?
- Have you created a culture in your business where everyone is obsessed by growth, profitability, customer experience and outperforming the market?
- What is the value of your brand and does it alone attract new clients, candidates and talent to your business? What does it actually stand for?
- Are your internal systems and processes robust enough to manage your future growth plans?
- Do you have a good account spread in place or are your consultants too heavily reliant on one or two clients?
- Are your demonstrating a good level of account penetration and driving growth from within your existing customer base?
- Are you building market share within the right markets, or better, the right niches within those markets, where there is a clear line of growth ahead?
- Do you have a good business blend – a solid mix of contract and perm, contingency and retained, that de-risks your business and creates more sustainable forecasts?
- Are you solving the talent shortage issues within your markets, unearthing hard to find candidates and continuously improving your job to placement conversion ratios?
- Are you measuring the right metrics and achieving appropriate levels of profitability per headcount, above market trends?
Are the 12 growth engines driving your business forward?
Above all this, there is one pivotal constituent of any business, that impacts nearly every element of those 12 growth engines, but is often seen as counterintuitive to many business leaders. Importantly, it is something that we should never lose sight of as we grow.
Whilst growth and shareholder value is intrinsically linked to the levels of profitability you generate as a business, it should not become the driving force for what happens in your business day to day. The “cause” should.
It is the overarching reason why many business owners set up in the first place, why we get out of bed in the morning to go to work, why our employees stretch their capabilities and efforts above what is expected of them in the workplace, why clients and candidates are attracted to our brand.
The cause for effect doesn’t sit as a line item in a budget or measured in a monthly P&L, but does impact everything in your business – employee engagement (and therefore performance, retention and consultant ROI), brand value (and therefore customer and candidate acquisition and retention), industry positioning (and therefore market penetration) and so on.
Are you keeping sight on the cause and effect in your business?
Ultimately, whilst we are looking for bottom line growth in profitability, aligned with those 12 growth engines, the intrinsic reason behind your brand positioning, the real transcending cause your business is striving to accomplish, is what will set you apart, create pride and purpose amongst your workforce and will drive the right behaviours in your business – get this right and the profits will follow.
At the end of every calendar year, before we go out and celebrate our achievements at the Christmas party, we take our employees off-site for a day with just one item on the agenda – to remind ourselves of what the cause for effect of our business is and to assess what we have done well this year to represent that, where we may have missed the mark and what we will do differently in the new year to ensure we don’t lose sight on why we do what we do.
We don’t talk about the figures, that is taken care of in the annual budget planning day and in the monthly board meetings; we just talk about the purpose.
About The Recruitment Network
This blog article was provided by The Recruitment Network.
The Recruitment Network is the ultimate support club for recruitment business leaders. We give our members an unparalleled level of support, guidance and tools to help them transform their recruitment businesses with the ultimate objective of improving business performance, increasing business efficiency and significantly growing profitability and shareholder value.
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