Let’s start with a question. Is your staffing firm making the most money possible?
Chances are the answer is no. After all, staffing firms are run by people, and people can only do so much in a day. Even if you are profitable, most likely there are ways that your staffing agency could get more customers, send out more temps, and be more efficient.
One thing to consider when thinking about efficiency is having the right funding source for your staffing company. Having the wrong funding source could be losing you money without you even realizing it. Here are three ways that you could be losing money without the right funding option.
1. Having to Pass on Big Projects
Have you ever found yourself in a position where a big business opportunity strikes, but you can’t afford payroll for the temps it would take to complete it? Maybe your bank credit line isn’t enough to cover it, or maybe your current funder doesn’t have the resources to help you with the extra back office support it would take to accomplish it. A staffing firm looking to grow should never have to be in a position to turn away big projects when they arise, because that means turning away revenue.
One example that we encountered with a client who faced a situation like this was “PDQ Contractors,” a skilled labor and disaster relief firm based out of Louisiana. When the Deepwater Horizon disaster struck in 2010, the increased temporary labor to help clean up the oil spill meant a surge in business.
“Our business can fluctuate significantly at a moments notice, and we need to be prepared to take on the project and payroll. Within a very short time, we placed over 1,600 employees across four states. We went from $200,000 in weekly billings to $2-3 million a week. Never had we come across a project like this.” – R.O., VP of Operations
As their partner, we had capacity to fund the increased payroll volume and also to send an on-site team to support operations including software integration, payroll, invoicing and tax functions. PDQ’s annual billings increased from $10 million to $60 million due to the oil spill cleanup, and Advance provided the payroll funding cash flow and operational support they needed.
2. Not Being Able to Hire Enough
Finding and placing high quality temps who want to work is one of the biggest challenges for temporary staffing firms. But with major talent shortages occurring and expected over many industries, staffing as a whole is growing and there is a big pipeline for staffing firms to help fill, especially in engineering, technology and healthcare.
Because of the difficulty involved with finding and keeping temps, any barrier could be costing you big. If your current funding source does not give you the flexibility to hire all the help you need, that is money down the drain. It’s also important not to lose the good ones you do have by not being able to pay them on time when you are waiting for outstanding invoices.
3. Wasting Too Much Time on Office Functions
Doing back office tasks like payroll, invoicing and taxes are vital functions of a staffing firm, but not necessarily vital for you to be doing. According to a study from The Alternative Board, entrepreneurs spend 24% of their time doing administrative tasks. You probably didn’t get in to staffing to spend a quarter of your week doing payroll and taxes. Time is money, and your time is better spent focusing on drumming up business for your staffing firm.
If your funder doesn’t have a back office help component for you to consider, it might be time to look elsewhere. The bank isn’t going to help you process your payroll each week. However, a funding company that also provides back office services can help you free up your time and focus on driving revenue for your staffing firm.
Advance Partners is a payroll funding company uniquely positioned to help you solve inefficiencies that affect your bottom line and enable you to do what you do best. To start the conversation, contact us and we will get back to you shortly.