How recruitment business owners can maximise Q2
As you enter the new financial year, it’s important to take stock of where your business is right now, so you can set attainable goals for the rest of the year.
This article breaks down Q2 into the key areas you and your team need to action to maximise opportunities.
For many business owners, the new financial year is a time to review what’s happened in the past 12 months and to make decisions for the coming year. Whether you plan to improve your business finance, hire new staff, enter new sectors or improve relationships with clients, a fresh look at your finances will help your business grow in the right direction.
Reviewing your finance statements
From a strategic perspective it’s important to take time out to consider what your financial statements say about your business and where opportunities lie. Key metrics you should review are:
- Net profit: not be confused with cash flow!)
- Sales: how healthy is your pipeline moving into Q2?
- Margins: how do your profit margins compare to competitors or industry average?
- Cash flow: how much cash do you have to meet expenses.
- Cost per deal: tells how much you have to spend to do a deal.
- Debt: one of the most common debt measures is the quick debt ratio – current assets (excluding inventory) divided by current liabilities. A quick ratio of 1 indicates that you can exactly meet your obligations, and the higher it is above that, the more flexibility you have.
- Accounts receivable turnover: shows how long it takes you to collect money from customers – linked to cash flow.
Key finance statements to review
- Income statement – this report reveals the financial performance of your business for the entire reporting period. It begins with sales, and then subtracts out all expenses incurred during the period to arrive at a net profit or loss.
- Cash flow – this report reveals the cash inflows and outflows experienced by an organisation during the reporting period.
- Balance sheet – this report shows the financial position of a business as of the report date (so it covers a specific point in time).
- Working capital – the money your business has on hand to cover the day-to-day costs and expenses in your business such as purchases, payroll and overheads.
Reviewing your finance provider
If you’re engaged with a financier, it’s a good opportunity to pair the key findings from your finance statement and supplier review to evaluate performance.
Did the finance enable you to
- Do more deals?
- Hire and retain staff better?
- Maximise short-term opportunities?
- Enhance supplier relationships?
- Have a healthy cash flow?
- Increase profit?
- Have flexibility to use when you need?
Overall, is the finance fit to meet your financial goals, sales targets and short-term and long-term business vision? Taking time to examine its ability to meet your goals will enable you to identify key priorities and inefficiencies that you will need to tackle in the new financial year.
- Perform a finance SWOT analysis. Review the strengths and weaknesses of the finance. Evaluate the external opportunities (i.e. what’s on offer elsewhere) and list the threats to your business.
- Do your due diligence on financiers. How are they setup to support your goals? What is the pros and cons of their offering? What do you need for growth?
Planning for every eventuality
Every business needs a plan for the event of a market downturn. This may be business related (i.e. cashflow is squeezed as debtor days climb) or macro-economic (i.e. global economy slowdown puts brakes on business investment, deferring projects and impacting hiring).
Planning in advance can help reduce the financial blow and ensure your cash flow stays strong even in the tightest months. It can also help you spot opportunities to increase efficiencies.
- Review you overheads – rent, salaries, etc. How would they be affected if you experienced a downturn?
- Similarly, reviewing your overheads presents opportunities to see where you have operational inefficiencies. What’s the ratio of fee generating staff to back-office?
- Review how much cash you have in reserve available to cover future overheads, salaries and tax liabilities. Could this be used more effectively to generate revenue?
- If your business relies on contractors, or you have significant costs incurred in advance of sales, then review asset-based lending options to boost cash flow.
- How would your business relationships be affected if debtor days climb as the result of a downturn? Think about how you can strengthen client relationships, and improve your cash position in a period of a downturn.
Maximising opportunities and efficiency
New year, new budgets
The start of a new financial year means new sales projections, operating budgets, programs and usually a review of the company’s structure.
In short, companies are likely to be hiring!
And, with placement value increasing, your business is set to increase its topline too!
Latest data from REC, indicates that the average recruitment fee for permanent and contract placements rose in 2017/18 to £4,238 and £34,976 respectively.
In a separate report, LinkedIn Talent Solutions revealed the roles, industries and sectors experiencing the highest turnover rates, worldwide. Key findings:
- Average turnover = 11%
- Top three industries for staff headcount turnover; 1: Tech (13%), 2: Retail (13%), 3: Media (11.4%)
Combining REC and LinkedIn data means that if your business filled 11 roles (SME with 100+ employees) it would generate a minimum £46k from perm and £385k from contract in fees.
- Ensure team has setup and met with all potential hiring managers in their market.
- Ensure team has set up alerts for positions advertised with niche skill sets, difficult locations or time restricted project based hires. Pitching the client an interim contractor whilst they continue their search for perm may create an exclusive opportunity for your business.
- Ensure team contacts all of their candidate network. Are they in new roles, new projects? What are their plans for coming quarters?
Reviewing your suppliers
If your business outsources work or uses vendors, it is essential to review their performance to help you:
- Monitor compliance with agreed KPIs and SLAs
- Identify performance gaps and areas where the service doesn’t meet expectations
- Pre-empt issues that lead to underperformance
- Measure ROI
Don’t focus purely on price, focus on quality of service and value. A supplier can have the lowest price and the lowest quality of work, too. The goal is to identify and measure value-add each vendor brings to your company.
Group each area you outsource and evaluate independently. This can include; ATS, CRM, insurance, finance, accountancy, umbrella companies, training, website, SEO, advertising, PR, networks, events and groups.
- Establish performance indicators
- Devise an evaluation method
- Cut weak links
- Draw up a list of similar providers and invite them to pitch
Maximising your channel efficiency
Advances in digital technologies has made the world more connected and created more opportunities for recruiters.
As a business owner you need to receive reports on where your leads and deals are coming from. The emphasis should be on diversification and quality of your leads. If you’re relying solely on one source, like job boards, then you risk putting all your eggs in one basket. What happens if the quality of the job boards drops due to lack of applicants?
Recruitment will always be an art and a science.
The art is how you communicate.
The science is using data to know where, when and what to communicate.
- Review your channels. Where are your leads and deals coming from.
- Review your advertising effectiveness. What’s the ROI?
- Maximise LinkedIn:
- List your target companies and follow them on LinkedIn – let the information come to your team. Use the information from releases to make new introductions or develop relationship with managers.
- Ensure your team makes an introduction to each hiring manager at target company.
- Ensure your team is attending expos / conferences and networking events happening in your sector.
- As the quarter comes to a close, ensure teams are prepared for urgent requirements, particularly in Europe, as clients go on extended vacations.
Take time to reflect on your personal goals as you work through your business goals. If you want to take a formal qualification, learn a new skill, include it in your plans. Self-development enhances professional development.
- Review your finance statements
- Review your finance provider
- Review suppliers and set new SLAs and KPIs
- Ensure team are ready to facilitate increased hiring demand
- Ensure team are maximising channel opportunities