Candidate selection. Inbound recruiting attracts the best active candidates on the market who feel that they’re a good fit for the vacancy. That’s a great start, but it’s still only a portion of the potential candidates for that position. Outbound recruiting, meanwhile, enables you to supplement that candidate pool with those you target directly — candidates who have specific skills and experience that other applicants don’t, and candidates who were never aware of the opening because they’re not actively on the market, but are open to having a conversation about a new opportunity. In both of those cases, those are candidates you’d never have access to with inbound recruiting alone.

Candidate alignment. Using inbound recruiting alone puts you at a disadvantage in terms of finding the right candidate for the role. This applies to both employer and employee; in both cases, each party is often choosing to move forward despite the fact that the alignment isn’t perfect. Outbound recruiting changes this. Recruiting teams can be more creative in seeking a tailored fit for positions, particularly those that have a critical role to play in the organization. Just as important, this helps the employer truly understand what a candidate is hoping for in their future career.

The consideration in this case concerns the techniques and approaches — and possibly the skillset — of your recruitment staff. Outbound recruitment requires sales skills.

PREMIUM CONTENT: North America Internal Staff Survey 2022: Recruiting internal staff: Most effective recruiting methods, industries and social media groups target, what to say to candidates

Employer brand. Outbound recruiting provides the opportunity to build awareness of your employer brand, particularly among candidates who possess experiences and skills that are uniquely relevant or necessary in your company. I liken it to the difference between advertising and sales. Advertising reaches a large number of people, a significant number of whom may not be targets for your business. The advertising message is “one size fits all,” meaning that there’s no opportunity to tailor it to the individual receiving it. In those respects, inbound recruitment is like advertising. Outbound recruiting is more like sales. You reach a smaller number of people, but they are specifically targeted for your message because they’re a qualified prospect — one for whom your company’s message may have particular appeal. The salesperson owns the narrative, too; in contrast with advertising, the salesperson can customize the message to each and every prospective customer. Outbound recruiting is the same. The people you reach with your employer brand are those you specifically target, and the messages you deliver can be tailored specifically to highlight the aspects that are of greatest appeal and interest to that person.

There are two considerations to take into account here. The first is your employer brand itself. When candidates apply for positions, they’ve essentially taken on the lion’s share of responsibility for understanding the company’s employer value proposition, leaving less onus on the shoulders of recruiters. That being the case, it’s essential to maintain a high level of understanding of your brand. What are the things that make your company unique as a place to work, what do you offer that other employers don’t, and how can those things be lined up against what high-potential candidates are looking for?

The second — and closely related — consideration here is your recruiters’ ability to be good representatives for your brand. When reaching out to potential candidates (versus responding to candidates who’ve applied to your company), it’s critical that the conversation is handled well. There’s a greater level of responsibility, a higher expectation, because the recruiter is the one initiating contact.

I am a vocal advocate for the benefits that companies can realize by incorporating outbound recruiting platforms as a means of augmenting their inbound recruitment efforts. I’m confident that the investment your company makes in identifying the right outbound recruiting platform will provide a significant return. Broader candidate selection, better alignment, and a greater awareness of your employer brand are worth it in a competitive market for top talent.

MORE: The future of talent acquisition

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Cash Flow.

In fact, the need to meet payroll in advance of collecting receivables has put many staffing companies out of business. Bad debt, a slow-paying customer, or even rapid growth can all tax your working capital beyond its limits.

When you started your staffing agency, obtaining a line of credit from a bank to help with cash flow may have been a logical choice. Today, staffing owners can take advantage of the increased specialization in the lending and funding world to achieve greater flexibility and, in some cases, a more cost-effective solution to their business needs.

Let’s look at the some of the ways to address your cash flow needs.

Option 1: Traditional Banks

Banks really don’t understand the industry. We don’t have brick-and-mortar or other tangible assets they can lend against. While many banks will offer a line of credit supported by receivables, they will typically only lend up to 75% of the receivables’ balance, up to a fixed limit. And if you don’t have a multi-year track record as profitable business (and a strong balance sheet), they won’t touch you at all.

Most staffing firm owners perceive bank financing as  less expensive, but in reality, the total costs can be much higher and difficult to gauge; there are usually application fees, examination fees, unused line fees and required covenants that you will be required to hold to and report on. Beyond that, there are certain circumstances where bank financing will not work:

1. When you are growing very quickly. The unfinanced receivables that the bank doesn’t cover has to be funded somehow
2. When you need to take on a new major account. Banks like to have a history to rely on.
3. When you have customers (like Fortune 500 companies) that take 60, 90 or even more days to pay. Most banks will exclude receivables that are in excess of 60-90 days.
4. When a major account defaults on your receivable.

In all these situations, you’re likely to need more than 75% of your receivables balance in working capital in order to keep your doors open.

PREMIUM CONTENT: North America Staffing Company Survey 2021: Frequency of pay and methods of pay for internal staff and temporary workers

Option 2: Credit cards and Personal Lines of Credit

While credit cards and personal lines of credit have been used by entrepreneurs everywhere to fund startup operations, they are generally inadequate to support the growth of a staffing business. The cash flow demands are simply too great and the risks too high.

If you are in a rapid growth situation, none of these solutions will allow you to scale your payroll, and ultimately, your lack of access to working capital will put your business at risk.

If you need financing because of a slow-paying or high-risk customer, these options could put your future personal financial well-being at risk.

Option 3: Funding Companies

A funding company provides working capital (and often other services) to businesses. They will purchase your receivables at the time you send your invoices, so you get immediate access to the cash you need to pay your payroll. The funding company then takes care of collecting the receivables, and they will charge you a percentage of the invoice value for their services.

While some funding companies fund 100% of your receivables, a typical funding company will give you instant access to 80-90% of your receivables. They hold back the remaining percentage until the receivables are actually collected. Once collected, they will pay you the remaining balance, less their service fees.

Fees can range greatly, and the cost will vary by provider and the riskiness of your business (i.e., the specialty niche markets you serve, the type and size of customers you have, and your firm’s credit history).

The biggest advantages of funding companies include:

• Immediate access to cash to finance payrolls.
• Greater scalability – no limit to your growth.
• A partner in assessing customer credit and managing collections.

Beyond Cash

While options one and two get you access to a line of credit that can be used to fund payroll or for other purposes, cash is all you get.

Back office services. In addition to funding, a premier provider offers a full range of back-office support services that relieve staffing firms of significant amounts of administrative burden, so they can focus more time and energy on sales and recruiting.

These additional services save time, ensure accurate processing of invoices, payroll and payroll taxes, and keep you in compliance with federal and state payroll regulations.

Cash flow is essential to your growth. When deciding on a bank or funding company, look for a firm that specializes in the staffing industry — one with a long history of supporting organizations that are similar to yours. Look for a firm that is committed to helping you become more successful.

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What Do You Need In Place Before You Launch Your Staffing Startup?

1. First, get a good financial partner. Meeting payroll, as a staffing firm, is a must. If you don’t have that, you lose not only your workforce but your credibility and whatever reputation you are trying to build. Also, your ability to raise capital pre-launch also facilitates your ability to put together resources like your career site, sales collateral and more.

2. Remember that software is key. You want to do your billings on time, and be professional in your payments, statements and service. Also, look into ways to automate processes like client and candidate communication to retain your best clients and applicants. A functional applicant tracking system is also a strategic investment that can include lots of other features to help you recruit more effectively.

PREMIUM CONTENT: Global Staffing Front Office Software Landscape

3. Don’t forget about marketing. A strategic marketing plan is essential to your business strategy. You should develop goals, strategies and tactics to reach both your recruiting and sales goals. You should have a basic plan in place at the time of your launch. Keep it manageable and lean. Measure numbers for each tactic to evaluate whether you need to increase your efforts with that tactic or shift to different tactics. The market and economy are constantly changing. Your marketing plan should be able to pivot to meet new challenges. As a startup, you don’t have time to do everything. Consider outsourcing strategic parts of your marketing strategy.

4. This leads to sales strategy. Have you done research and figured out who your ideal clients are? If so, great. You should also get the message to your sales staff and recruiters. Everyone should be on the same page. Your marketing should be integrated fully with your sales strategy. Whether you are going to use cold calls or, inbound marketing techniques, keep track of your sales data and conversions to see what is consistently working and what is not.

 5. This brings me to recruiting strategy. You need your internal staff to be dependable, engaged, and enthusiastic. You can scan resumes, but the best idea is to monitor job trends in your area and then come up with a list of attributes that reflect the role you want your new hire to play. Of course, you also need to keep an eye on what your competitors are paying and pay what’s appropriate. When you look at resumes, keep in mind the candidate’s experience his or her job record, and the skills that fit the position. Again, your marketing strategy should be fully integrated with your recruiting efforts. Especially in this candidate-driven market make sure to research Recruitment Marketing best practices to make sure your recruiting is as streamlined and profitable as possible.

Implementing these five strategies will have you well on your way to starting a successful staffing company. It’s time to get started.

MORE: How to speak to your customers’ pain points

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What problems can you help your customers solve?

 Types of Pain Points

There are four main types of pain points. Financial pain points involve your customer wanting to spend less money on their provider/solution. Productivity pain points include your customer wanting to more effectively use time than their current provider/solution allows for. Process pain points occur when your customer wants to improve internal process like assigning leads to sales reps or nurturing lower-priority leads. Support pain points revolve around your customer not receiving adequate support during critical stages of the customer journey or sales process.

Identify Pain Points

Uncovering customer pain points lets you determine how to position your company as a solution to their problem. For instance, if your customer’s pain point revolves around financial issues, you can point out how your services cost less than the company’s current provider. Or, emphasize the increased ROI your customers experience after doing business with you. Keep in mind that each customer’s problems are layered and may combine several of the above categories. Therefore, you need to holistically view a customer’s pain points and show how your company can solve them as a trusted partner.

PREMIUM CONTENT: Companies Looking to Acquire Staffing and Workforce Solutions Firms: 2021 Update

Detail Pain Points

Although your customer may experience pain points similar to another customer’s, the root cause most likely is different. Because your customer’s pain points are highly subjective, you need to talk with your prospect as well as your sales and support teams to receive individualized, detailed responses to open-ended questions. For instance, “What’s the biggest challenge you’re dealing with?” “What will happen if the problem remains unsolved?” “What has prevented you from solving the issue?” “How would implementing a new system solve the problem?”

Show You Can Resolve Pain Points

Once you’ve gathered the necessary information, you can detail those pain points and show how your company can relieve them. For instance, if a customer’s pain points are financial, you may be able to emphasize your lower price or average savings of your customer base. If pain points involve productivity, you could point out how customers increased efficiency through your user-friendly features, such as a centralized dashboard. For pain points involving processes, you could mention current or planned integrations with existing services. Regarding support pain points, you can demonstrate your after-market support to help the customer feel like a partner.

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However, with more than 10 million open roles in the US, many firms are struggling to keep up; they simply can’t hire recruiters fast enough — nor do they have enough hours in the day — to work on the volume of new job orders coming in.

The greatest challenge facing recruiters is fillability. SIA’s Staffing Industry Pulse Survey Report has found difficulty recruiting has increased steadily over the past six months. In terms of productivity, 40% of staffing firms are reporting an increase in unfilled orders and “ghosting” by candidates, creating more work.

Direct Sourcing: Opportunity or Threat?

Meanwhile, pressure is mounting on the client side, as contingent workforce program managers are tasked with the urgent challenge of filling roles in a timely manner to take advantage of the economic bounce-back. In response, the most progressive program leaders are looking into direct sourcing as an option to solve their talent challenges.

In fact, direct sourcing is the No. 1 trend in contingent workforce management today. According to Staffing Industry Analysts’ latest research, a staggering 60% of contingent leaders say that direct sourcing will be implemented in their programs in the next 2 years, more than any other workforce strategy.

This begs the question: Does direct sourcing represent a threat, or an opportunity for the staffing industry? And how can staffing firms leverage direct sourcing to drive rapid revenue growth and gain a competitive edge?

PREMIUM CONTENT: US Staffing Industry Forecast: September 2021 Update

Role of the Curation Partner

Early indications suggest that direct sourcing represents a genuine opportunity for leading staffing suppliers. The opportunity is this; 58% of contingent workforce programs outsource their direct sourcing programs to dedicated staffing suppliers that act as “curation partners,” along with a direct sourcing technology provider.

From a definition perspective, direct sourcing is the process whereby companies leverage their own brand and network to attract and engage contingent workers. As such, they create a private talent cloud of candidates for temporary employment roles at their company. This is where preferred staffing suppliers become critical. The candidates in a company’s talent cloud still need to be curated into talent pools and the benefit for innovative staffing suppliers is that enterprise organizations only need one curation partner.

When a staffing supplier becomes a direct sourcing curation partner, they typically gain access to a much larger number of jobs and are able to operate at scale, leading to increased revenue and profitability for the staffing supplier, while also offering reduced fees to the end client. Further still, the curation partner develops deeper relationships with enterprise customers for cross-sell opportunities and has a new innovative service to take to existing customers.

Curious if direct sourcing will get the results your customers are after? According to SIA’s “Achieving Excellence in Direct Sourcing for the Contingent Workforce” report, contingent workforce program leaders in this space are outperforming laggards by an average of 4:1 across all measured outcomes. Thus, you can take the direct sourcing solution to your customers, armed with data demonstrating it drives performance, with the kicker that you are best positioned to enable their success.

By offering the direct sourcing solution on an exclusive basis, you have a golden ticket to capturing a large piece of the contingent pie and outgrowing your competitors.

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Whatever your goal, there is sure to be an application to make it happen. The problem is that unrelated applications tend to compete with one another. Rather than a brilliant beginning, you can usually expect a frustrating “getting to know you” period. In other words, implementation can be painful – unless you transition both your thinking and your solutions from customizable to configurable. When you build your tech stack on a powerful, single-source enterprise platform, you can ease implementation headaches and gain out-of-the-box security, performance, reliability and scalability.

What’s the Primary Cause of Technology Implementation Pain?

Like the fine print in advertising that tells us “Some assembly required,” “Actual results may vary” or the classic “Don’t try this at home,” some technology implementations are easier than others. That is because prospective users often have unrealistic expectations about what technology can do for them. They don’t fully understand either the capabilities or the limitations of the technology solution they’ve selected. As a result, users often ask for more than what the implementation team expected to deliver. Sometimes that leads to disappointment; other times it leads to over-engineering the solution to meet expectations.

PREMIUM CONTENT: North America Staffing Company Survey 2021: Initial Findings

Understanding the Difference Between Configured and Customized

Every technology solution offers some basic functionality that can be either minimally configured to work for your business or highly customized to your every requirement. With a configured solution, you select options from a set of available choices. With a customized solution, you design features and functionality tailored to your unique needs. Like the differences between multiple choice vs. fill-in-the-blank testing, the first implementation requires a series of clicks to get it ready for launch, while the second requires coding. Configurable solutions are developed to meet the needs of a broad audience. They are easy to adapt to individual needs. Customizable solutions are far more complex. They require lots of decisions and generally come at a higher price and take longer to implement.

Isn’t There an App for That?

The iPhone was introduced in 2008 with 500 apps to enhance the user experience. Two years earlier, Salesforce introduced 575 apps built on its platform to help businesses operate more effectively. It now offers a robust partner ecosystem with 5,000 different apps that businesses can simply download and quickly configure instead of customizing. Cloud technology, coupled with all of these plug and play options, offers easy ways to integrate new technology solutions into your technology stack with little to no setup or complicated implementation. This allows for changes in near real time when there is an immediate need to solve.

Build Your Tech Stack on a Powerful Platform for Easier Implementation

Some staffing businesses may have a highly sophisticated technology roadmap to guide every technology decision. Those are exceptions to the rule. A more likely scenario is multiple applications and separate systems cobbled together over time. They are typically difficult to integrate and often require constant maintenance and legacy oversight. Building your technology stack on a single-source integrated platform solves all those integration headaches. It eases data sharing among applications and shortens implementation timelines. And the bonus? It allows your business to benefit from ongoing investment and millions of hours of research to ensure reliable performance, top-notch security and the ability to scale with you as your organization grows.

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Provide your team with details on why the contract went to someone else. In many cases, a client wanted to save money or have a family member or friend complete the work. Or, perhaps the client wasn’t completely satisfied with your output. In any case, assure your team the client appreciated their efforts. Help them manage their emotional response as you manage your own.

Let your team know whether the client agreed to keep the door open about giving you the contract down the road. Perhaps the company that received the business gives a price increase beyond what your company was charging. Maybe the family member or friend who took over the work isn’t reaching expectations. Keeping the lines of communication open means you may secure the business again in the future.

PREMIUM CONTENT: https://www2.staffingindustry.com/Research/Research-Reports/Americas/US-Pay-Rate-Rangefinder

Collaborate with your team to create notes about what you learned from working with the client and facts about why you lost the contract. Spend time reflecting on the experience and use it to guide your decisions moving forward. Before taking on new clients, think about how you can avoid losing one down the road. Include your team’s unique combination of talents that differentiate them from the competition and make them irreplaceable. Encourage your teammates to visualize a future where they deliver significant results for new clients who remain with your company long-term. Be grateful you got to work with the client.

Talk about how losing the contract frees up time for new opportunities. Reframe the loss in a manner that respects both the client and your company and brings your team excitement about the future. Remind your team of the value they provide clients and how that will continue long into the future. Your track record is full of significant wins and will continue to grow and diversify to include even more big contracts.

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I want to congratulate these remarkable change-makers and salute SIA for honoring them. This recognition couldn’t be more timely. Events of the past year have made DE&I a major concern for virtually every business. While no one yet has all the answers, it’s time to recognize those individuals — and their organizations — for working to make a difference.

Well-designed DE&I programs tackle prejudices, increase employee satisfaction, diversify creativity and thought, and positively impact business culture. But they also strengthen employee and business performance. McKinsey’s latest diversity report describes how companies with increased gender, ethnic, and cultural diversity and inclusion outperform their less diverse, less inclusive competitors by 48%.

As companies increasingly recognize the value of workforce diversity, they are beginning to understand the impact that the extended workforce — the non-employee workforce comprising contingent staff and contractors — has on it. And considering the size of many companies’ extended workforce, the impact can be significant. According to a recent research, 20% of the average enterprise’s overall workforce was considered ‘contract,’ ‘contingent,’ or ‘non-employee’ a decade ago; “today, that percentage has more than doubled to 43%.”

Within just a few years, the extended workforce may represent more than half of the talent in most enterprises. This means that companies that are only tracking employees to measure diversity are missing about half of their actual workforce in their measurements.

PREMIUM CONTENT: Diversity, Equity & Inclusion in the Contingent Workforce

Companies need to have a DE&I strategy for their entire workforce, not just full-time employees. This comprehensive strategy needs to look at both employee and non-employee workers together, not in silos. Organizations need to first benchmark the current state, set goals, and establish reporting to show improvement. Only by implementing a comprehensive strategy can companies take advantage of the superior performance a diverse, equitable and inclusive workforce can provide. Your technology partners can help in this endeavor.

Recently one of our clients wanted to go further than simply tracking supplier diversity. They wanted insight into the diversity of their contingent workforce that would match what they knew about their employee workforce. To give them the transparency they needed, we created fields within Beeline that allowed them to collect voluntarily disclosed diversity data at the onboarding stage, after hires had been finalized. This allows them to see clearly whether diverse candidates are being hired, and if diversity goals are not being met, the client is able to act quickly to remedy the situation.

With companies placing increased emphasis on DE&I, we’re delighted to see so many of our clients and partners honored as DE&I Influencers; we are grateful for the opportunity to work with these individuals and companies. We applaud all of the DE&I Influencers because we believe diversity, equity and inclusion belong at the forefront of today’s corporate agendas. By developing new programs to help their organizations become more diverse, more equitable, and more inclusive, these individuals will not only move their own companies forward, but also influence their industries and our society to progress in the right direction.

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Learn how lowering your staffing firm’s expenses in three areas can result in greater profits.

Customer acquisition costs. The cost of acquiring a new customer is high. So, be sure you build and maintain relationships with the customers you have to encourage repeat business. For instance, maintain direct, effective communication. This includes finding out whether each customer prefers to be reached by phone, email, or text. Also, be a trusted resource. Let your customers know about the trends you see, what the hiring landscape is like, and how your business is doing.

Margins. Your gross margin is the percentage of your total billable revenue that is available after the direct cost of each revenue dollar that is available to contribute to your indirect cost and ultimately for profits. This is one metric that shows how much money your staffing firm is on track to making. When you include this and other financial data with data from your applicant tracking system (ATS) and customer relationship management (CRM) system, you can start to calculate your profits at the level of each contract or placement. This lets you rank and determine how profitable each line of your staffing firm will be approximately, how your margin differs by candidate source, and what your estimated profit per requirement is for a specific team or segment. Understanding the levels of success of each segment and activity of your staffing firm lets you prioritize your strategies and set goals to decrease costs while increasing growth and profitability.

PREMIUM CONTENT: US Geographic Opportunity Atlas 2021 Edition

Profit and loss. Your P&L statement shows how your staffing firm’s revenue becomes its net income. Because profit and loss are the key factor in the health of your firm, they have a substantial impact on your business decisions. This includes whether you have enough profit to launch another brand or service line or whether you need to focus more or less on a certain segment. When analyzing your P&L statement, pay close attention to your mark up and direct costs, which represent approximately 75% or more of your revenues. Find ways to drive down these costs for the greatest return. Also, focus on ways to reduce indirect costs. They, too, have an impact on your bottom line just not as dramatic.

Hold onto more of each dollar by analyzing where you lose margin. Study every line of your P&L monthly, at a minimum. Pay attention to small items that add up on your P&L. Left unchecked, indirect costs will add up and affect your bottom line. Customer acquisition costs are high. Focus on relationships to retain customers.

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While many companies have focused their diversity, equity and inclusion efforts on their full-time employees, they may be missing mark if they don’t also extend inclusion initiatives to their contingent workforce. That’s because, for many companies, temp workers, contractors and consultants make up as much as 50% of their workforce.

It’s time to meet the moment: If your DE&I initiatives focus only on full-time employees, this is an amazing opportunity for you to bring your employees together to advance inclusion across your entire workforce, including contingent workers.

When I began this journey two years ago, launching Consciously Unbiased at CWS Summit and highlighting the need to go beyond diversity spend to diversity hiring, I was humbled by the response. It’s time to collectively make that a reality.

As enterprise leaders, especially those in HR and procurement, you have the power to lead the change for creating diversity and inclusion roadmaps that will materially have a big impact on your organization – and, in turn, on our society.

This is not one-size-fits-all; each company has a unique culture and set of needs. Here are some ideas for getting started.

Start from the top down. Your leadership needs to get behind the mission to make it successful, so focus on the competitive advantage for greater buy in. The U.S. will be a “minority” white by 2045, according to Census projections. If you’re not prioritizing DE&I across your entire workforce, your company will be less competitive than those that make it a big focus.

Stories matter. It’s important to connect the heart and mind in order to build the empathy needed to create change. An important step is highlighting the stories of employees and allies in your organization who are building belonging to help inspire others to do the same. You might encourage your marketing and HR departments to collaborate on ways to amplify the stories of your employees through internal communications, social media and in town halls.

Tie DE&I goals to compensation. If diversity is a goal, then treat it just like any other business goal and tie it to managers’ and leaders’ compensation and bonus structure. Track the metrics that matter, such as hiring and retention of diverse talent, pathways to advancement and closing pay gaps.

Change doesn’t happen overnight, but with a commitment to making steps, both big and small, you can help build belonging for your entire workforce. Doing so can have an impact on your company, and on our society. I believe there is a place for both profit and purpose in the business world.

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