The Drivers of a Super Profitable Temp Business

Last week I was sorting out my filing cabinet and I came across a piece of paper that made me stop. It was a profit and loss summary I had prepared 9 years ago for a Recruitment Solutions General Managers’ meeting.

At that time I was responsible for the temp businesses of Sydney Accounting and Sydney Business Support, employing 14 consultants in total. The P&L summary I found was for the 1997/98 financial year.

This is what I read on the A4 sheet in front of me:

Sales:                 $19.9 million
Gross Profit:    $5.7 mill.
Expenses:         $2.7 mill.
Net profit:        $3.0 mill.   (NP to GP ratio of 53%)

At the time I hadn’t really appreciated the significance of the numbers although I do clearly remember rushing into Greg Savage’s office (my boss) when I got the final P&L for the year as I was ecstatic at cracking the $3 million net profit target.

Return to October 2007 and with the passing of time and the gaining of perspective I now look at those numbers with a new sense of pride and appreciation.

In considering what made my business unit so profitable I believe the following were the most important (in no particular order):

• Specialisation: Each consultant in my team recruited for temp roles only. Each consultant had a specific geographic and industry focus. We didn’t take jobs outside of our specialisation (eg IT, marketing etc).
• Paying clients:  We always completed credit checks. Our bad debtors were virtually non-existent. Most clients on our debtors ledger were in 30 days and under.
• Healthy margins: Our mark up in 1997/98 averaged 57.1%. We avoided PSA’s. We negotiated hard with both our clients and candidates from a belief that our margins were fair and represented value for all parties.
• Sacking clients: We dumped clients if they were messing us or our candidates around, either during the job filling process or once a temp had started.
• High job filled ratio: Once a job was called in we worked as hard and as fast as possible to fill the job as quickly as possible. Our overall job filled ratio for that year was 83%.
• No resumes and client interviews: We filled most jobs over the phone by strongly presenting candidate competencies and referee comments that matched what was required in the job. We had a firm belief that as the employer we, not the client, were best placed to decide which candidate should undertake the client’s assignment.
• Reactivating candidates: We were fanatical about keeping track of good candidates that were currently working for a competitor. We had a monthly candidate calling night when all consultants stayed back and called their ‘working elsewhere’ candidates at home.
• Regular vacant job meetings: We conducted meetings at 8 am and 12.15 pm each day to update all consultants on what jobs had come in and what progress had been made towards filling each of those jobs.
• Treating candidates as valued employees: Harbour cruises, movie nights, humourous professional speakers, free drinks, beach BBQs, $100 vouchers for referrals, $1,500 travel vouchers for eligible ‘1000 hours’ club members and the list goes on. We made sure our temps felt part of the Recruitment Solutions family and would always prefer to work for us when they had a choice.
•  Teamwork: We had a strong team work ethic and sense of shared values. We trusted and supported one another.

In the time since my long-lost P&L was current the recruitment landscape has been dramatically impacted by the Internet, job boards, the skills shortage, and the resourcing of corporate recruitment teams, amongst other things.

What remains unchanged are the fundamentals of building a super profitable temp business.

This post was originally published 17 October 2007