Probation periods, customer diversity and inflexibility of outgoing are three problems in the recruitment sector that can affect cash flow… but you can avoid those issue altogether.
Three big worries about setting up your own recruitment business – solved!
In a recent article Tracy Ewen, managing director of invoice finance specialist IGF, outlined three reasons that the recruitment sector is susceptible to cash flow problems. It caught my attention because one of them, probation periods, was something I’d also touched on recently.
Tracy Ewen’s list included probation periods for exactly the same reason as I had. All too often, even with temporary staff, there’s a time lag between placing the candidate and getting paid as the recruiter. That can really hit the consultancy’s cash flow.
The other two problems in her list were ‘customer diversity’ and ‘inflexibility of outgoings’.
The customer diversity point is an interesting one. In most business sectors having a wide range of clients is a good thing. It’s best not to have ‘all your eggs in one basket’. But, as Tracy Ewen points out, within recruitment, having a spread of clients can cause problems. With most clients only recruiting sporadically, as demand for temporary staff varies for instance, and often without a long term, fully committed relationship with one consultancy, the conditions for smooth cash flow are not exactly wonderful.
And then there’s number three. The question of ‘inflexibility of outgoings’. You could say that this is a fact of life – in business and at home. Domestically, your outgoings – the mortgage, the bills – have to be paid and the dates don’t shift. In a recruitment consultancy it’s the same. No matter how many gaps there are in the income flow, you’ve got to pay your salaries and the rent – on time.
Now, there are ways to combat these problems and the article I read was forthright in its encouragement to plan for them.
My point is though that I bet there are many, entrepreneurially minded, recruitment consultants who have thought about setting up on their own and then not gone ahead because they’ve identified those problems and found them too daunting a prospect.
That’s a shame. Because there is way to start your own recruitment business and avoid those issues altogether.
At Recruit Ventures we have a business model aimed at professionals just like you. If you’ve got five years plus experience, and active in your current role, we can help. We’ll provide you with 100% funding, a guaranteed salary, no personal financial risk and access to a complete back office support function of Accountancy, Payroll, HR, IT and office support services to help your start up business.
Don’t let possible problems put you off. See the potential and start up
Contact me on jbuckman@recruitventures.com and let’s have a confidential chat.
You can find out more about Recruit Ventures unique business model at www.recruitventures.com
Author
John Buckman is chairman of Recruit Ventures and a true entrepreneur himself. Having launched and grown many successful businesses especially within the recruitment sector, John’s expert knowledge and experience grants him the opportunity to offer advice and support to others in the industry considering setting up on their own.