How To Make Your Recruitment Agency More Profitable in 2024

In today's video, I'm going to share why it's so important to stay close to the money. So it takes just as much effort to start a big business as it does a small one. The only difference is your perspective. I know that's a controversial one, but it's true. You'll be working 60, 70 hours a week or more just to make maybe 50 to 100k a year. And for pretty much the same amount of effort, you can work 60, 70 hours a week and make more than a million dollars or pounds a year. And obviously with this type of business model you can scale it back when you choose to. Because the big difference between like these types of businesses is how you use leverage, which is what I call like leverage is other people's time. So for example, like by hiring virtual assistants and outsourcing the more mundane tasks and the repeatable processes, you can keep yourself focused on the high income generating tasks. Eventually you want to scale your business to a point where everything can or will be managed by someone else, whether it's systems, automation or someone else in your team. Your client outreach, project management, sales systems, the client delivery, the candidate process, the sourcing, the day to day operations, the finance, all of these things can be outsourced and delegated. But the one area that you shouldn't delegate until right at the last moment should be your client sales. So that's when you're pitching exclusive or retained business. Because you should be the face and brand of your company at the start in order to attract the best clients and to work with them time and time again. And that's one thing I did with my recruitment agency, Ronald James. I delegated and outsourced every single thing from candidate delivery, day to day operations and everything else. But I was always pitching with the key clients until probably year four. And then that's the last thing that I outsource. Now. Apart from that, the only other thing that I oversee and look at is the financial objectives and management of the business. Because there's an old saying that cash is king and you want to stay close to the money. So I've always made sure that I still check my business bank accounts every single day. Because you need to know where your business is financially. That is the closest thing to being on the pulse of your business. And if you don't know where your money is going or where your costs are going, it's very hard to maintain control of your business if you don't understand that aspect. Because without cash you have no business. Now I'm not necessarily talking around like just bookkeeping or filing your corporation tax returns. I'm talking around like the actual financial oversight of your business. So looking at the P and L, looking at your 30, 60, 90 day Runway, looking at what cash you've got in the bank to make sure that if however it's a rainy day and you might have six months, no billings, which is very, very unlikely, you know what sort of Runway you have. You can hire accountants both locally and internationally remote and they can run pretty much the day to day books for you and bookkeeping and that's going to save you dozens of dozens of hours per year. We use a tool called Xero and that's where pretty much run our agency business through and a lot of our clients inside the agency blueprint use Xero because it's really up to date, cloud based and you can get on the pulse of the business in terms of profit and loss and known where your business is financially very, very quickly. But what I'm talking about is you need to know your expenses and your different income streams. You need to know exactly what is in the bank account at any given time and predictably where it's going to be in 30, 60, 90 days. And I learned this the hard way because when I try to hand this off and delegate this responsibility like what you'll tend to find is like two things are going happen. The first is you're going to start to lose money each month and that's because you've taken your hands off the wheel. If it's a case of like a few weeks, you'll start to realize that maybe the costs have started to slip through. I've seen far too many business owners get in this difficult position because of this. And number two, your business is going to stagnate because you probably didn't realize it has a potential for growth because you don't know if you can make a couple of hires, if you can delegate some more systems or build out your team. This is why most business owners are stuck on six figures a year because it's feast and famine. They don't know predictably when the fees are coming in and when they're getting paid and what the average time from invoice to actually paid in the bank physically cash. You need to know all of these numbers so then you can make more strategic business decisions in order to grow your company and basically either stop growing or you shrink. And no matter what type of business you own, like capital is the number one thing that can supercharge your Business to grow and remove you away from the day to day. And we all need cash in terms of running a business. So in order for you, the owner or CEO or whatever you call yourself in terms of your company position, you need to be on the pulse of the business so you can make a decision very, very quickly. Whether it's making a hire, making a strategic move on some software, or like building a different part of the business, you need to be on the pulse knowing what your cash flow forecast is going to be. And while you may have some amazing people in your business that could take responsibility for this, whether it's a PA, office manager or someone like you might have someone dedicated in the finance department, which I don't really recommend unless you pass like 13 employees, no one really knows your vision as well as you do. You have a vision for your business that no one else can adhere to. So you're the best person that can explain it and express it and make those strategic decisions based on your financial numbers. So like reverse engineering back to your business model of what it is the business that you want to create. What does your business look like? Start a look at like how many people do you want in your team? What is your office environment going to be? Are you going to have a remote team? Are you going to have a hybrid role where you've got office and remote, or are you going to go all office? What type of risks levels are you at in terms of your business levels? How much you can invest in, like new stuff, new training, new tools and software for a chance to like get faster growth. And then looking at the end result, what is it that you want from this business? Do you want to sell and exit the company? You want to merge it? Do you want to do a management buyout? Do you want to sell it to a competitor? Or do you just want to keep it growing as a cash generating asset? A bit like what I do with my recruitment agency, it consistently turns over seven figures a year, makes high six figures profit year on year consistently. And I can use that money and vehicle to invest in different property strategies and different other investments. And when you're really building your vision as a business owner, it's really deeply personal because every business is different and we've all started businesses for different reasons. Now a lot of the reasons come down to like financial freedom and the freedom normally to have more time back. So when you get that emotion attached to like the end goal vision of where you want that business to be, the likelihood of achieving that is going to be A lot more vast once you've assigned that vision and you stick to it. And then these financial numbers will all make sense when you look to grow. Because sometimes when you make more profit in the business and take more income, you think, okay, let's keep expanding. When you look back at where your vision is, where what you want from the business, you need to make sure it adheres to the model that you want to create for your business business. So in terms of financial management like I personally still make all the financial management decisions as such, we don't make a single hire in my business without my say so. We don't do salary increases without my say so, bonuses, etc, even to a point where if we're committing to a longer term software, whether it's a CRM, ATS system or something else of those sorts, I want to make sure I know about that because it's very important for me to make these decisions to make sure. As you, as your business expand, expands, whether your business has been going just one, two years or maybe five, 10 years, what you'll tend to find is probably got a lot of fat in the business that you could trim. And that's when we start to streamline things. So one tip that I do, and I do this normally around about every four months or so, so I normally do it four times per year. What you'll tend to find you get a lot of subscriptions, a lot of tools, a lot of costs that you adhere to, your company credit card or charge card or debit card. What I do is I cancel that card every quarter. And the reason for this is you'll tend to find that you might, when you're over hired, you may be paid for more software, LinkedIn license and different things that you're paying for that you thought you needed and your business probably didn't need. So that's one way that you can really streamline the operation cost is by canceling that card every quarter and then you're going to get a list. So basically I send to my PA anything that flags up where the payment isn't made, she will put together in a new Google sheet spreadsheet. Just really simple, all of the costs and then I make a decision, okay, do we need to renew that? Again, this is the simple, most cost effective way because before you know it, months and months will go by and you'll probably pay monthly payments on some tools or software that you probably don't use in your business anymore. Another tip is make sure you've got, you've got all of your banking apps on your phone and religiously every morning I check them. So I like to know what cash in and cash out is. That's the number one metric to measure because when you measure that over time, so say when I get my financial reports to me every month, I can see how much cash we started with at the start of the month, how much cash have we ended in the bank at the end of the month. And that trend really needs to be going up because if that's starting to dip, then that means you're not making any profit. Maybe it might have been a month that you've over invested in the business and you understand that. But really you want to see a trend, a green line of light starting to go up and then when you built enough capital reserves. So I always say first thing, with any business that's starting up or you're in year one, year two, year three, you should be having at least 100k net cash reserves at all times. That is your minimum standard threshold that you will ever be able to withhold. Now you want to make sure that's your new standard because going below that a lot of fear comes in a lot of panic. You make the wrong decisions. So you want to make sure that is the minimum standard and then you raise that to 250 and then you can go to 500 and then you can go to a million. You want to make sure once you build up those cash reserves it gives you more confidence. That means you can start to make decisions about investing in your business to either buy you back your time or to scale up. So whether you're scaling up with new staff members, new sources, new VAs, new salespeople, or maybe even like an outreach expert or copywriter, like all of these different investments is at a point, once you've reached a certain level of capital reserve, once you understand that when you get your monthly report and you're watching the numbers, when you're not really cash positive every single month, that's when you start to look within the business and see what is going on wrong. Now the areas that I would analyze when we're losing money is, is every delivery consultant. So the person that is doing the recruitment and doing the deals, are they profitable. So if we're paying them a 30, 40k basic, they should be at least as a rule of thumb, like generating at least as a minimum three to four times their salary minimum. If they're not, that's a problem that you need to address. When we look at that and analyze staff Members as well. Fortunately, I'm in a position now where I've went through a lot and I've got a great, fabulous team now. But at the start we ended up giving people a lot more time than we should in the business. Business and the business, like when they're supposed to be a revenue producing asset and they're not producing revenue, you need to make a decision whether it's in the second or third month of poor performance, they're gonna have to go. Because you can't carry dead wet in the business, especially if it's a boutique agency. Owning a lean business requires you to be very, very tight on the budgets and finances because you always want to keep a micro eye on this. And like I said, the best way is changing a card every quarter. Remember like when you're running that lean business and it's hyper profitable, the idea is, is once you get more freedom back is to start buying back that time. So you're going to use that money to invest in systems, more efficient processes, more outsourcing. Whether it's beers, marketing sources or delivery consulting in your team, the business has a more self managing functioning around it. So once you buy your time back, you can be more strategic on the business and then you can choose if you want to grow it or not. Because some people don't want to grow past 1, 2 million a year or 5 million a year. You might want to go into different areas, but it gives you the freedom to do that. That's one thing that I would say. I hope you found this video useful. Stay close to the finances. No matter how long you've been in business, you still need to be on the pulse. And one thing that I wouldn't outsource or delegate until the last last moment is the sales winning the clients. But once you've done that, make sure you're keeping control of understanding the finances. Whether you do bring someone in house. Personally, I don't think you need that unless you pass 2,3 million a year in terms of gross profit revenues and make sure you like and subscribe to the channel, making a conscious effort to record more value and process more YouTube videos for you over the coming weeks. Thanks for watching. My name is James Blackwell and I'll catch you soon.