Business Advice: Dealing with 'feast or famine' mentality

Mike Beesley advises recruiters on the financial rollercoaster of running your own recruitment business.

Being successful in running a recruitment business means living lean for as long as you can to help survive what I call the ‘feast or famine’ principle.

You may recognise the scenario: one month the money is pouring in and you’re convinced millionaire status is guaranteed; the next, you’re calling the bank asking for an overdraft.

As the world tries to return to normality, even recruitment leaders who have not experienced this to any great degree out of the pandemic will now be aware of this financial rollercoaster.

Add in Brexit and IR35, and many organisations found themselves swinging between each extreme.

And it’s no wonder. Core data throughout the past 18 months period indicated a severe contraction of the recruitment market for both perm and non-perm roles – which we can call the famine. 

Monthly market information offered little hope and then: bang! Two months later, the same media is reporting exponential growth particularly in the perm sector and aggressively reporting skills shortages – the feast! 

Today all we seem to hear about is skills and talent shortages and the war for talent raging again as businesses compete for the best people who don’t just deliver a good job, but fit also with organisational culture and purpose. 

Unsurprisingly, therefore, I’ve been asked a lot recently about how to navigate this polarisation in recent times. The answer should be completely obvious, but is not always apparent to recruitment company owners, for it is simple: look after your people and your cashflow.

These things are always easier said than done, of course. But if I had a penny for the number of recruiters I’ve seen set up on their own and, as soon as there’s cash in the bank, there’s a new sports car on the drive, I’d be going straight to the bank.

Cash is your foundation; look after it, because without it your empire will fall”

This is not the road to success. The way is much less glamorous but much more gratifying in the end. So, my advice for both areas is as follows:

  1. Your people: be honest – how often have you sat in front of a client raving about inclusive hiring strategies that bring in the right people and employee engagement programmes that keep them in place, while back at the ranch your own business has high churn and staff dissatisfaction? Your hiring strategy is everything. How did you look after them during furlough? A top London restaurant reported recently (bizarrely) that they weren’t certain that they would be able to open because they didn’t know where their staff were – why not?! Employee engagement is so important in all market conditions, and effort made in difficult times will result in huge rewards in the good times for all concerned.
  2. Your money: don’t spend it all as soon as it lands. Just because it’s in the bank does not mean it can leave as quick as it came in. Saving and investing is critical to weather storms and allows you to focus mainly on hiring and keeping the right people when the chips are down. Cash is your foundation; look after it, because without it your empire will fall.

Let’s face it, no one knew what was going to happen at the beginning of 2020. And, while we are still not 100% certain what the future holds, the decisions you make now will have a big impact a year or two from now. 
Be prudent and cautious as you grow and you’ll sleep much better at night – even if it’s not in a deluxe king-size bed in your new penthouse flat (yet)... 

Mike Beesley is co-founder of TIMESTWO Consulting. He is also a serial entrepreneur and investor

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