Basically in any recruitment agency business, there are only two factors that determine whether the business is profitable. They are:
1) Total sales generated of the recruitment agency business
2) Total cost of operating of the recruitment agency business
For the recruitment agency business, the main bulk of the sales revenue comes from the placement of candidates; as such, the key clients are the companies who are paying the service fee for the placements. Some recruitment agencies also charge candidates a service fee, but in most of the cases it will be the companies who are paying the fees.
Today we will focus on the two sectors, generating sales and reducing costs.
How to Generate More Sales for the Recruitment Agency Business
- Increase Your Recruitment Agency Service Fees By 10-20% of Your Current Price.
Some people may argue that they should reduce their price instead. However, when you are providing a great service, most clients will be very willing to pay an increase of 10-20% (although some may not like it), and when you increase your fees, you will automatically filter out those who are not very serious. In addition, you will be indirectly pushing your brand and status higher compared to the other players.
- Find an Industry For Your Agency Where You Have Plenty of Connections.
They key is this: focus on your best industry or function. If you have plenty of contacts in a specific industry or function, put all your effort into that area. Not only will you be perceived as a specialised consultant in that area, you will have less competition, and you will be able to close more sales.
- Build Credibility For Your Agency.
To have more clients, you will need to be perceived as very credible, be it your company logo, design, layout, the content you put inside the webpage, your business card, your business agreement content, the company letter head, the email signature or every other thing that the clients see that will have a direct or indirect relation to perceiving your credibility. This is especially important and critical because without good perceived credibility, you will never able to win a client over to your side. Some questions to ponder: would you do business with anyone who does not have a good website design? Or uses a free email such as Hotmail for their business correspondence? The answer is quite obvious. Credibility counts a lot.
- Delegate Agency Work that You are Not Good at.
If you are very good in operations, then you better stick to what you are doing and let other people do the other functions, such as sales, business development, customer service, or accounting. The very fact that you will take a longer time to do the work you are not familiar with or good at makes your productivity very low. Hence, with low productivity, you will not be able to generate more sales and clients.
- Shorten the Credit Terms for The Clients
Given a choice, ask for cash payment upon service rendered. Reasonable clients will be able to agree with it. Of course, there are many customers who will ask for the longest credit period possible, and you will have to weigh whether to accept the terms or not. In my manuscript FSRI, I have written about how having a good cash flow is very important, because having sales does not mean the money is in your bank account. You may have to wait for a while before the cheque is sent over. Without cash, you will not be able to pay the bills, the rent, or the salaries….and that will be the last thing you want to happen.
How to Reduce the Operating Cost of the Recruitment Agency Business
- Go for The Basic Necessities For Your Recruitment Business
You do not need a very high-end computer such as APPLE or a super laptop that has powerful memory or RAM. As long as you have the basic equipment to use, that will be good enough. Once you have more cash on hand, then invest in better equipment. The higher end your items are, the more you will need to commit every month. For example, you do not need a laser color printer if a mono color printer can do the job. You also don’t need to rent the best office if you are able to use a basic office that is cheaper, and if you are able to share an office, then do so. It will make your monthly running cost lower.
- Paying Excessive Salary
A good staff generally requires better salaries. You will still be able to get a good staff if you are careful and search hard enough, and better still, their expected salary will not be as high as those high flyers whose results are usually not very interesting. Pay a basic salary and reward highly based on performance; this will ensure that you will not commit too much in the cost of salary.
- Looking for the Real Expert
If you need someone to do BRANDING and MARKETING or any specialised job for the company, generally people have the belief that it will cost a lot to hire such people. The trick is that you should not engage a company; instead you should look for a freelancer who has the expertise and is still able to do a much better job at a fraction of the market price. You just have to look out for them in the market.
To achieve the above, you will also need a lot of discipline to carry them out. It will not be easy for you and your recruitment agency business, and it may not be pretty at times, however, for the sake of the business agency profits, sometimes certain sacrifices are needed.
Wishing you a great profit every year! Cheers!