Growth Hurdles to Overcome
If growing your staffing firm were easy, everyone would do it. Growing your firm requires commitment, sacrifice, and tackling the challenges that arise. Here are a few common challenges that we see staffing firms face, and how to overcome them.
Challenge #1: Can't find the talent
As of March 2022, the US had 5 million more job openings than unemployed people in the U.S. With numbers like these, you’d think finding a suitable person for every job would be a snap. Said no staffing agency ever. The skills gap – the gap between the specialized skills that jobs need vs the available talent, makes for an increasing talent shortage in the US and that can encumber your growth as a staffing firm.
Solution: While there is no easy solution for this issue, some things you can do are to encourage candidates to train for highly sought after skills, narrow your scope and focus on areas you know you can win, and be creative when sourcing your candidates.
Challenge #2: Capital tied to unpaid invoices
If your firm is growing, you may be receiving payment on invoices for 10 temporary workers, but now you have 20 of them that need to be paid. The more you grow, the bigger that gap becomes, thus, the larger your need for working capital. Not to mention, you’re looking at payment 40 to 45 days after invoicing, and we are even seeing that stretch out.
Solution: You can cover your working capital needs by self-financing through your savings or credit cards, you can go the traditional route of financing through a bank, or you can explore alternative financing options such as payroll funding.
Challenge #3: Banks don't always like staffing agencies
Traditional sources of working capital typically don’t understand the staffing industry well and are not comfortable lending money to a company that doesn’t have hard assets like inventory or real estate. The main asset a staffing firm has is its accounts receivable, and that tends to fluctuate based on vertical or seasonal needs. There isn’t always the consistency that a bank is going to want to see.
Solution: Access to working capital doesn’t have to be a limiting factor, and the right working capital program can help staffing firms grow. Work with a vendor who understands the industry and can provide a flexible growth solution..