In my experience of advising well over 100 recruitment companies, planning doesn’t come naturally to all recruitment business owners.

Recruitment consultancies that maintain steady profit margins and growth will consistently outperform those that go through boom-bust cycles. Maintaining a consistent performance is easier said than done but planning will help ensure that the company’s resources are always building towards the same goal.

Work backwards from a three year vision – by starting with a vision of what the company will look like in three years’ time and then putting in place short term (e.g. one year) plans to achieve the long term plan, consultancies can develop a route map that will maximise their chances of reaching their desired destination with a minimum of detours and therefore wasted time and money.

Stay flexible – the most successful companies aren’t afraid to rethink either the ultimate destination or the route to get there, however wherever they are heading their road map will always be part of a coherent plan that sets targets for key performance indicators (typically profitability and profit margin) together with a clear vision of what the revenue streams will be.

Develop a proposition with value – recruitment businesses are valued on profit, not turnover, and this provides a framework which can be used to help maximise the return from the company. To help make your business as valuable as possible:

  • Focus on high margin activities such as interim and contract work.
  • Spread your risk by investing in more billing staff. If one member of a team of three leaves or has a slow patch the impact on the company is much greater than four members of a team of twenty.
  • Develop niche sectors. Why will candidates and clients engage with a generalist agency when there are specialists?
  • Target high growth sectors. Capturing market share in a declining market is far more challenging than growing a business where there isn’t the existing capacity in the market to service the demand.
  • Ensure that you have a succession plan in place. The less the business needs you, the more it will be worth.
Alex Arnot