Navigating a Recession
WHAT YOUR STAFFING FIRM CAN DO DURING A RECESSION TO SURVIVE
"During the last recession, if your business was all in finance, you were going to have a tough time. There was not a lot of hiring going on there. But at the same time, if you had had a good roster of candidates in regulatory, you might have done well. So, I think it’s important to diversify your client roster and be prepared to change when the winds change.”
Ways to Survive
1. Find Other Ways to Help. If no one is hiring, what core competencies can your staffing business offer? Can you help with resumes and outplacement? Can you offer your clients advice on staffing or recruiting? Don’t be afraid to shift gears or think outside the box in order to keep your business going.
2. Manage Your Roster Wisely. Your staff is the most important asset your business has. Unfortunately, it is also your largest cost. Be honest and be transparent, but sometimes layoffs are the only way to survive. The best thing you can do is to be strategic about who stays and who goes, thinking forward to who can help you when the economy turns around. And if you received a Paycheck Protection Program loan in order to have to not make layoffs, be sure to understand the forgiveness rules. It is probably wise to seek legal or accounting help, or both.
3. Practice What You Preach. Many staffing firms equip themselves for economic volatility by using flexible labor themselves. If a certain number of your recruiters are contingent workers, you can more easily scale down and back up to adjust to swings in demand, just as your clients can. 4. Watch the “Danger Zone”. Despite what you might think, the most dangerous period for staffing firms is not the beginning or the middle of a recession; it’s the end. As business gradually improves, growing your headcount will suck cash out of your business precisely when you are likely to be in your weakest position to fund growth. Having enough working capital available during growth periods is extremely important. 5. Update Your Business Plan and Budget. As the pandemic and response unfolds, things are changing fast. Some of you have orders to fill because certain industries are booming, other of you have candidates and no demand. You need to refresh your business plan and budget to update for this current reality, and visit it often.
6. Request Better Terms. In a recession, cash is king. Talk to your current clients regarding payment terms, because better collection equals more cash on hand to cover emergencies and keep the doors open.
7. Diversify. If the verticals you are currently in are struggling during this downturn, consider what verticals are not. It might be worth it to expand your offerings in order to turn a bad situation into an opportunity.