Disaster Strikes: Three Ways to Kill Your Agency
We’ve worked with hundreds of recruitment agencies over the years. Some have been successful beyond their Directors’ wildest dreams, some have gone on to be sold for a high return on investment, some have done very well, and others… well, others have either seen the trouble coming in time to save themselves or not caught it in time.
Let’s be clear here; some of those now-defunct agencies were doing well for years. They had a hidden Achilles heel, but so long as nothing hit it, they were fine.
Then disaster struck – but it wouldn’t have been disaster if anyone had caught these problems ahead of time.
Here are three mistakes we’ve seen bring down companies when disaster struck.
This is a big category, but one core issue comes down to failing to get contracts locked down ahead of the contractor’s first day. We recommend your contracts include a clause stating that the contractor beginning work constitutes acceptance of the contract for just this reason – to make sure that you can’t have this problem.
There are far more errors to be made with contracts, but most of these are ones you should tackle in partnership with an employment lawyer – everything you do about contracts should be reviewed by lawyers!
Anyone who works in the recruitment industry and is active on LinkedIn knows the Starbucks Recruiter; regular updates and posts to LinkedIn and other social media, always updating from a coffee shop.
It’s a great life – until that one big client you need to land finds out. Many major companies aren’t comfortable doing business with recruiters who don’t have their own official offices; there’s a concern that things may fall through, and some outdated concerns about professionalism.
There can even be a legitimate concern – smaller agencies have fewer points of contact to take over in the event of a badly-timed illness. Either way, presenting that smaller, free-spirit image is a fun life to live but it comes with the risk that a deal will fall through just when you can’t afford for it to.
Losing a big contract at the wrong moment, much as we hate to admit it, can be a company killer, knocking out your cashflow when payments come due.
One of the things we offer as part of TBOS Complete is the opportunity to use our offices to represent your own; it’s a way to protect your agency from this sort of doubt. There are other solutions – but have one ready to hand.
Leaving Credit Control in the Hands of Others
Not just credit control, of course; current HMRC legislation means using umbrella company payments has no benefits over PAYE and can be more expensive, and there’s a whole host of other ways to lose money – not managing your invoice finance agreement carefully, sending payslips and invoices through the mail rather than electronically, etc. – but your credit control should always be handled by your back office or by someone who doesn’t profit by playing loose with it – or you’re paying them to make a profit on you.
Any of these mistakes can be that final straw that breaks your company if you have a run of bad luck – but getting them solved ahead of time makes your agency much more likely to weather a storm.
If you’d like to learn more about how we can help you resolve these problems, please get in touch today.