Dealing With A Cashflow Crisis, I've Been There As A Recruitment Agency Owner
It's a crisis! It's a crisis.
Keep calm and have a coffee.
Keeping your head up during tough times is one of the hardest things to do when owning a recruitment agency. Keeping your head, motivation, and momentum during a cashflow crisis in a recruitment business is one of the hardest things in store. While I have been running my business a couple of times while being profitable, I have found myself in a position where cash flow was not keeping pace with business needs.
The first time I went through this issue I was hardly able to stay together with my motivation, and momentum. However, keeping your head and acting are essential aspects of any cash flow crisis. Below we have outlined seven steps you need to take during a cashflow crisis.
Keep your head in the game
Keeping the leader in the game is one of the hardest things in business during a crisis like this. Personally, I have always found the head match the hardest part of running a recruitment business.
But keeping it is vital. Getting perspective is also critical. The word of Winston Churchill is always worth remembering at a time like this: “Success is not final, failure is not fatal: it is the courage to continue that count.” - Winston Churchill Even if everything goes wrong. This is not the end of the world.
Understand the costs to the business
This is a vitally important step. Understand the up-and-coming costs to the company. Once you understand and know when money comes out, for how much and what operations it feeds into the business. Put every price into one of three columns – vital, beautiful to have and not needed.
Vital – These are costs are keep the wheels turning. Rent, salaries and ats and software costs.
Nice to have – These are costs that feed into the business and can have an impact, but the company will keep turning without them.
Not needed – this is the stuff that just has no effect on creating sales or making placements.
Prioritise spending and cut, cut, cut costs and then cut some more
Money is going to leave the business. Use the cash you have to pre-pay for specific items and ringfence significant money.
Every crisis is an opportunity. Use this crisis to cut costs from the business that does not help or produce an adequate return.
Look at every price and decide if it really is worth keeping.
Use the cash flow crisis to make the business as lean as possible.
Get on the phone with old interviewed candidates
Pick up the phone to candidates you sent to talk over the last year. This should just take a day to go and check out what they are up to. Look for those behind-your-back placements and
Get on the phone with old clients
There is a saying “sales solve all problems” and getting on the phone in recruitment is the only way to solve this problem. Get on the phone with everyone who has bought from you in the last 3 years. People who have purchased from you in the past are more likely to buy again.
Get on the phone about outstanding invoices
If the cashflow crisis is severe enough to warrant it, get on the phone with outstanding invoices and explain the situation and see if there is any way to a partial advance payment.
You may have to offer a small discount, but it could well be enough cash to keep the light on.
Oh and relax
Trying to relax in the evening and not worry too much about business. This is of course much easier said than done. My ultimate suggestion would be to switch off your emails and leave your laptop at work. Cashflow crises are a real stain how always remember that the Phoenix needs to burn to be reborn.
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Thank you for reading this article.
Please note that I have written the book Recruitment Hacks that you might find interesting: Recruitment Hacks you can find it available on Amazon.