By Scott Winicour, President of Gibraltar Business Capital
Staffing companies, particularly those with a strategic niche such as IT, medical, industrial or warehouse staffing, are positioned to thrive in the current business environment, which supports outsourcing employees rather than bringing full-time employees on board.
A common question that is often asked by small and mid-market businesses including staffing companies is how can business owners successfully manage and finance growth while steering their business and focusing on day-to-day operations?
Here are four insights to help your staffing company thrive.
- Planning ahead: The business plan you used to launch your staffing company may not be right for you now. It’s important to revise your strategy to accommodate new circumstances.
- Leveraging new tools and technology: Efficiency is key for long-term growth. Increasingly, staffing companies are using tools and technology to streamline communications, improve productivity, and search for job candidates and clients; companies are also leveraging customer relationship management (CRM) systems.
- Managing cash flow and payroll: Finding the right financial partner is key to survival as well as growth. Winicour breaks down three options and includes the benefits of each, including traditional commercial banks, community banks, and credit unions, as well as alternative lending in the form of staffing factoring.
- Traditional commercial banks can be a source of funding, but business owners must be prepared for the rules that go with those loans. Banks tend to be stringent in looking for good credit scores, dependable cash flow, and collateral that might include personal guarantees. A great banking relationship is important, but there are alternatives if you are not finding a partner that can help in the short term.
- Community banks and credit unions are another options. These institutions may be more flexible because the lenders are more likely to know business owners ahead of time. The track record and character issues have already been set, which could make up for shortfalls in other areas, like cash flow and collateral.
- Alternative lending in the form of staffing factoring is a lesser-known tool that can provide access to working capital when banks and other funding sources are limited or too restrictive. Traditional factoring, or invoice financing, works on an invoice-by-invoice method that can be costly. However, some factoring companies offer a factoring product that works like a revolving line of credit, using a pool of accounts receivable as the collateral to establish a borrowing base. Businesses can tap into their lines of credit on an as-needed basis. This type of factoring can be less costly, as you only pay for what you borrow.
- Welcoming change: Contentment can be a threat to a high-growth business. Revisiting your business plan allows you to assess market conditions and identify any number of actions ranging from upgrading technology and renegotiating contracts to ramping up marketing efforts or expanding your team with trusted new hires.
Running a staffing company isn’t easy. But there are countless resources and tools at your fingertips. Business owners are advised to find a handful of trusted advisors, and when needed, find a financial partner who will work in your best interest to provide stability during periods of growth and transformation.
Learn more on Gibraltar Business Capital