It’s time for budgeting and planning for next year. Yay!
What is always an arduous task under the best of economic conditions is much more so as we look to 2024 amidst a pandemic and a presidential election year.
The good news is the picture appears brighter for the Staffing Industry.
My clients report a weekly sequential increase in new job orders and revenue. And Staffing Industry Analysts predicts that after taking a beating this year with a projected 17% decline, the industry will grow 11% in 2024.
Indeed, COVID-19 has fueled an increasing trend toward contract and gig work – good news for the Staffing Industry as we look forward, and reason for optimism as employers resume hiring.
Perhaps the best approach for budgeting and planning this year is to embrace the optimism but be prepared if trouble strikes.
Drafting two budgets reflecting best and worst case scenarios will increase your confidence that your business will thrive despite economic conditions.
First the best case, Budget A.
If you’re like many, your firm has benefited from the stimulus and weathered COVID-19 better than expected. If you’re in a strong cash position now, now is the time to fund investments you’ve been putting off, such as:
• Hiring additional sales and recruiting staff
• Investing in training and a talent development program to attract and retain top producers
• Engaging a marketing firm to create an integrated strategy to automate lead generation
• Launching that new service offering you’ve been waiting for the right time to do
• Upgrading your ATS / CRM
• Making back-office improvements that drive efficiencies to reduce non-revenue-generating headcount
Now for Budget B with the lower projections we hope you won’t need.
The best way to manage a sales slump is to get creative to recover margins.
Where is the opportunity? Is there a skill that’s in high demand that your team could fill even if isn’t in your wheelhouse? Is there direct hire business you can get at a reduced fee? Can you inch bill rates up? Can you reduce temp and contractor pay by even a few cents per hour?
Of course, the other way to preserve profit is to cut expenses.
To maximize net income, the guiding principle for Budget B is that it reflects gross profit growing at a faster rate year-over-year than expenses (or declining at a slower rate). You’ll have to make some hard decisions.
• Prioritize the investments planned in Budget A with the highest potential ROI in 2024 and eliminate the rest.
• Consider putting underperforming producers on a Performance Improvement Plan. Especially if they’re not paying for themselves.
• Scrutinize all non-revenue-generating roles. Can they be eliminated or outsourced?
• Examine your lease(s). Do you really need that brick and mortar, or has the pandemic prove your team is just as productive working remotely?
• Where did you get the best ROI from your sourcing strategy? Do you really need two or more job boards when you could amp up your referral program and save money?
Finally, remember that business in the Staffing Industry is cyclical and a slow start to 2024 doesn’t spell gloom and doom for the entire year. So mid-January, if you’re not seeing the numbers you projected resist the urge to immediately abandon Budget A for its ugly cousin Budget B. It will be waiting there for you if you really need it.
