Here, we highlight the difference between growing and scaling your recruitment business, along with tips on ‘smart marketing’ and new technology suggestions to help you achieve growth. Rhys JonesWritten by Rhys Jones Managing Director – Davidson Gray Rhys sold out of his previous recruitment businesses in 2012 to focus solely on helping recruiters set up and build recruitment businesses. Follow Rhys on LinkedIn or contact him direct here for help with your start-up recruitment business or for coaching to grow an existing one. As coaching is the new word for training, business owners now want to ‘scale’ their business, rather than ‘grow’ their business. But just as training and coaching are very different, scaling and growing your business are also different. It is actually very difficult to truly scale a recruitment business, hence why I felt this would be a good subject for a blog. So, what is the definition of each and why is it so hard to truly scale a recruitment business? The technical explanation for growth is adding new resources to your business such as staff, liquidity and equipment and increasing revenue as a result. Whereas scaling is where a business increases revenue without the need for a substantial increase in resources. Explaining it another way, for growth your costs increase as revenue increases, however if you scale, the revenue goes up, but costs don’t rise in line with that increase in revenue. You can see why scaling is the more appealing, which is probably why it’s now the buzz word for growth. The question is, can a recruitment business truly be scaled as the increase in revenue in recruitment businesses is almost always achieved by adding more staff, predominantly billers, so the costs do go up in line with the growth in revenue? Scaling is not really appropriate for a service-based business because more work generally means more staff. Scaling is far more suited to, say, a software business. The software businesses have designed a great product, so the growth is then really achieved by taking it to market, selling more of it. They don’t need to manufacture more costly products and need very little additional manpower for each new client, so sales go up, but resources don’t – that’s scaling in its most obvious sense. Read on though – I can give some advice on scaling a recruitment business! I’m not one for getting too technical on definitions because you can just drift into semantics and lose sight of what you are trying to achieve – the badge or name for it isn’t really important. Plus, I don’t think definitions need to be exclusive. As an example, with coaching, when you are spending one on one development time with a staff member, you will often have some training involved, and some coaching. In this way when you increase the revenue in your recruitment business, it can be part scaling and part growth, to be fair though, it is in the vast majority of recruitment businesses mostly growth. However, we try to help our partner businesses have a higher percentage of additional revenue achieved by using methods closer to scaling. Incidentally, if you are interested in the differences between training and coaching, and why coaching is a bit like scaling, i.e. the more favourable of the two, check out my blog on the subject here. Ways you can scale your business The below in isolation won’t necessarily achieve the true goal of scaling, i.e. revenue going up without costs following, however a combination can do a pretty good job. Scaling your workforce This is where we touch on the definition again, and for me yes, growth is where you add staff, so not scaling, but for me I’d rather focus on the bigger cost picture and by scaling your workforce’s skills you can, if done right, increase revenue faster than a traditional recruitment business staffing model. Looking at the math of how this could work, if you have 3 recruiters on £50k a year, all billing £150k each, £450k revenue in total. The business makes 3 x every £ on wages in revenue (excluding operational costs for this example.) If you add another staff member to do the labour intensive lower skilled work for the recruiters, mining LinkedIn, looking on job boards etc e.g. a resourcer, and pay this person say £25k, if done right, this is a form of scaling. The reason is because the resourcer helps each well-paid recruiter delegate some of their work, leaving the biller more time to do the stuff that only they can do that generates more vacancies and closes more placements. If we say each biller then bills an extra £50k, this means an extra 3 x £50k i.e. £150k for a cost of £25k. So rather than add another billing recruiter at a cost of £50k the business gets the same revenue for half this cost by adding a resourcer, so revenue goes up twice as fast as the cost of hiring a recruiter on this new member of staff because you’ve scaled the skills of the recruiters. The scaling method works on the basis that staff at the various levels in your business only do the work they delegate down because no one who is paid less has the skills to do it or do it as successfully. This way the higher paid members of staff only do the highly skilled work their salary justifies. Now this falls loosely into the definition of delegating, but as I said, definitions don’t need to be exclusive, this is delegating AND scaling. As a working example for a SME recruitment business, if you imagine the business owner of the recruitment company takes on the role of the brand leader of the business as Richard Branson has previously done for Virgin, admittedly on a much smaller scale. The owner speaks as events, commands respect on social media as a thought leader, plays golf with all the industry’s big names, sits on panels of sector governing bodies etc and all round raises the brand of the company, driving revenue across the board of the company. Only the owner can do this, but the owner then doesn’t close the deals on PSLs, managed service agreements, retained work etc – a lesser-paid sales manager type does this. A sales manager doesn’t recruit for the roles that come as a result of closing this committed work, the lesser paid recruiters do this. And in turn the recruiters don’t do the grunt work on this, they have a lesser paid resourcer to do this. The resourcers also delegate where they can to admin staff. So, as you can see in this very basic model, each pound you spend on salary gets more value for the business as each staff member only does the skilled work they are qualified to do, and do not do the work a lesser paid person can do. In industry, this is called the Runners, Repeaters, Strangers model, and is how manufacturers scale. The scaling of skills will help your business raise revenue at a lower cost than just adding lots of 360 recruiters, but only as long as it’s done well, and you keep an eye on the numbers to ensure what works in theory is working in practice. Smart marketing Where I feel that the recruitment industry fails massively is scaling through smart marketing. I call it smart marketing because it’s so easy to do it ineffectively. John Wanamaker, who is considered the first pioneer of marketing, is widely recognised for this quote “50% of my marketing budget works, I just don’t know which 50%” and that’s the key to marketing, knowing what works and what doesn’t. If you don’t measure and manage your marketing well, you can literally throw away money. Smart marketing is a job in itself and even outsourcing it can waste just as much money with some marketing companies willing to spend your money and not measure the return. If you hire in a Marketing Manager, you do also need to understand marketing yourself to some level. I have seen from experience so-called good Marketing Managers flatter to deceive. Don’t get me wrong, I have a huge passion for marketing but there are bad marketeers out there that enjoy successful careers simply because those who employ them don’t understand marketing, so can’t tell if they are doing a good job or not. The best tip I can give you is if you can measure all your incoming leads, incoming calls, enquiries to your website and CVs that come to your website and leads on LinkedIn, this will tell you how your marketing is working. You must ask as many of these incoming leads as possible, “how did you find us?” Simply logging this data will tell you what parts of your marketing are working. I mentioned earlier that we help build recruitment businesses that are a lot more along the scaled model than most. The reason is because we are, excuse my French, shit hot at marketing. We appreciate that strong marketing can produce a much better return on investment than staff, plus it can’t walk out of the door, unlike staff. Also, if it helps make billing a lot easier, staff are less likely to leave and staff attraction becomes easier, so making your business both more resilient and easier to grow. Each strategy we build is designed around the business and bespoke. Some sectors thrive through LinkedIn marketing, some get nothing, some get great results from SEO but for some sectors Google doesn’t have the traffic, so it’s critical that you understand your market and test and measure everything. Marketing strategies can include PPC, SEO, direct LinkedIn messaging, chatbots, podcasts, blogs, sponsored updates, re-marketing advertising, social media management, brand building strategies, the list is very long, which is why I feel most recruitment companies just play it safe and do what they are good at. And to be fair to them, if they don’t really understand marketing, that can be the best option. Using new technology to save time and produce better results. You can use technology to save time and get better results at a relatively low cost. Both time saving and getting better results i.e. improving efficiency is classed as scaling, however what I can say with first-hand experience is that whatever tools you invest in for your business, they will only work if your team buy into them and actually use them. Just because you feel a new tool would and should help, and the benefits are obvious, you have to bear in mind that everyone thinks differently.  Recruiters can be awful at embracing change, especially successful ones. They’ve been successful, so they are often reluctant to change what they see as a winning formula. Plus, if it’s free to them, and you ask if they want it and will use it, 9 times out of 10 they will say yes. Whether they actually use it is a totally different matter. Here are some examples of technology I’ve come across that can improve your business’ results and give you a great return on investment:- JobAdder – www.jobadder.com The CRM that most of our partners are using is JobAdder.  The feedback that we get is about how much time it saves recruiters.  Everything is in one place, reducing the need for hundreds of spreadsheets and even white boards.  It’s a multi job poster, and it’s customisable, so it’s suitable for all our recruiters, in all sectors. Suneese – www.suneese.com Especially helpful during a job-led market, this vacancy intelligence software finds leads for recruiters by identifying new vacancies advertised.  Set up alerts and when a new job is advertised, you’ll be notified, which has been a great way for our partners to find new clients. Dux-Soup – www.dux-soup.com Davidson Gray and our partners love this.  It generates leads by plugging in to LinkedIn and sending automated messages to a target audience.  It’s great for reaching out to potential clients and candidates, plus keeping LinkedIn connections updated with your business.  We’ve tested a range of LinkedIn automation tools, but this…

 

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