Whenever you consider a staffing agency, the first thing that comes to your mind is sell as much as you can. While this may be a good approach to earn decent profits, there are other important methods that must be considered.
High volume of sales does not necessarily mean higher profits. Soon you will find other staffing agencies, your competitors, ruling over the market.
In order to make sure your staffing agency stands out; you must broaden your horizons and look for innovative ways to deal with this. Your staffing agency needs to be a skilled entity that knows their terms and maximizes profits to the best.
There are several strategies that staffing firms should consider in maximizing profits. Let’s consider some of them:
Using the power of referrals
What may seem to be a slightly out of date approach can still earn you amazing profits. Consultations or referrals are an excellent way to hire top quality talents and in turn maximize the opportunities for the business.
There has been a report published recently by Bullhorn that showed that almost 1/3rd of the businesses believe that recommendations are the best source of recruiting top quality employees from the market. The staffing agency must make sure that they link their employees to top quality firms. This not only benefits the employees but makes a good foundation for referrals in the future.
Aiming on profit margins
The main problem with firms nowadays is that they focus on the profit amount rather than the profit margin. Making good volume sales by decreasing the profit margins might seem to be a good approach in the short term. But it can be a real hit for the business in the longer run. This is purely up to the person in charge.
There can be a chance that you chance too little and end up making losses. Or you charge too much and end up losing customers. Hence, staffing agencies must go for the ideal profit margin that guarantees them excellent growth prospects. The ideal rate is nearly 5 to 10 percent as per a recent research.
Looking for the hidden costs
A major reason why people are unable to increase profitability is because they cannot find the hidden costs in the contracts. When they receive the contract, they tend to skim through it rather than paying attention on the little details. This might look like a small cost upfront, but it can cause some significant margin drop in the future.
When you are given a contract, make sure your read it in detail. There can be several costs that you won’t notice otherwise. Some of the examples of hidden costs include:
- Holiday or leave schedule
- Insurance coverage (High liability)
- High overtime rates
Decreasing the receivables period
This may seem like a hard nut to crack, but it is equally important. Everyone know that any liability beyond the normal time frame will increase chances of default. Hence, make sure you make appropriate time duration for payment based on the credibility of the customers. A customer having a bad history must be given a stricter payment schedule.
Ideally a good Skilled Trade Staffing agency should not just provide temporary workers, but also guide you through the ways to increase profitability of your business by better using their skills and knowledge.