Here is the second part of a two part series of top tips to help start-ups avoid the common pitfalls. Missed Part 1 ? – click here
6: Disruption – Niche specialist v generalist
In the animal world, the small species often effectively compete with the larger and more powerful. The same is true in the business world.
Niche businesses innovate faster than larger, slower, generalist competitors and are highly effective, incredibly nimble, highly experienced and knowledge based. The latter specifically is a key aspect as clients seek knowledge and experienced based niche suppliers.
This is very apparent in the recruitment sector where internal recruiters are predominantly generalist and supported by 3rd party generalist firms. Because of this, many clients use niche recruiters to search for specialist candidates.
On a global basis the same can be seen across many sectors. In the banking world, for example, large players are being impacted and disrupted by smaller niche players eating away at profits and offering better customer services.
Getting your strategy right at the outset is essential for finding and becoming a key player in your niche specialisation quickly. Being Niche will sometimes mean having to turn down roles in your focus area, BUT, there will be a fellow recruitment professional in that niche who won’t poach your client and relationship IF they are also a specialist, so widen your own network and look to share fees which allow you to keep your focus.
Sharing doesn’t mean giving away 100% of your fees. Retaining client control also means retaining a good share of the fee, whilst also incentivising the other recruiter
Collaboration is more than just a buzz word, so build relationships with fellow recruiters or recruitment companies who service other segments – together 1+1 often equals a number higher than 3!
7: Hiring and firing
Hire often, hire fast, hire more than one and make quick decisions. People often ‘hope and pray’ that one new hire will generate revenue, and put all their time, energy and money into that one person, when the reality is that the odds are at best 50/50 if that. You can turn the odds in your favour by hiring two or three at the same time.
With all three having similar experiences and skills the fact is that one will be great to fantastic, one will not work out and one will need more development before you can make that decision. If you do use a recruiter, much like your clients do – negotiate and have a very defined profile in mind to save them time and you money. They will likely agree a sliding scale for multiple hires that save costs.
To address skill shortages, many firms are now hiring part-time or job-share candidates as there is a wealth of excellent candidates who for many reasons need to spend time at home.
In a socially connected world your employer brand needs careful management – sites like Glassdoor enable staff to showcase what they think of your business so be aware of the right way to downsize or performance manage staff out of your business. Hiring the wrong person remains the biggest cause of business disruption impacting on growth, time, money and morale.
In our previous businesses the best recruits came from outside the recruitment market. Yes it took them a little bit longer, but the spark was there, they were hungry and they had skills or knowledge relevant to the sector they were recruiting in. However, the same model applied, one really made it, one would be mid level and one … well either they or us made a decision on them or the business.
FACT: 99% of our eventual leaders from outside recruitment ended up running significant divisions globally, or the entire office and countries. They came from outside the recruitment profession and had affinity to the sectors or disciplines that our end clients serviced.
Finally – always be looking, keep an open brief and see people who fit with what you are trying to achieve, even if you don’t think you have ‘a vacancy’ just now.
A high percentage of start-up owners are great at sales and the mechanics but less accomplished when it comes to basic bookkeeping and admin, but to be fair, why should they need to be?
It is often the case that the ‘boring stuff’ is left till the end of the year or when the receipts box gets full, but it is important to get some form of admin and accountancy support early on, if not just for your own tax return, but for the business as a whole and to help enable you to grow based on financial fact, not just gut feeling
Very rarely will a new or small business need full time accountancy support, but you will need to either start collating and building some basic records yourself and use some sort of accounting tool or engage the services of either someone part time or the services of an external accounting firm who provide bookkeeping services, if you mean to run your company correctly. It is often a false economy to ignore this. Thankfully there are a number of economical cloud based accounting systems available for the start up now and they are frequently targeted at the non-financial background people – which is good for entrepreneurs and sales types (but less so for those accountants among us as the systems are not very accountant friendly!!)
When choosing your accounting firm or partner, make sure you look above and beyond the basic expectations of an expertise in tax, VAT, payroll and monthly/annual accounts. They should be able to demonstrate experience and awareness of your sector and the issues you are likely to face and in our experience the most important thing to consider, can they give you: –
The information you are likely to need and know in order to run and grow your business, as after all you don’t know what you don’t know and certainly won’t find out if you don’t know what to ask in the first place.
This only comes from experience in the sector and therefore try to avoid a generalist, one size fits all high street firm, sound familiar? APSCo and TEAM have a great range of affiliates who can help you navigate your way ahead and we are on hand to offer any advice you may need as well as direct assistance if required
A good accounting partner should help you anticipate and plan with the end goal in mind, rather than just react or provide some basic accounts in their own format
9: Early planning for a transaction
Be it a private sale, a management buyout or a takeover, you should think and plan the various routes your business could take in the future. For many, the first time they look seriously at what is required is when they may have been approached by a potential buyer.
The goal or business plan, created long ago, is often left in a drawer and never reviewed. It should be measurable and reviewed against every quarter, tweaked and shared so that the whole team buy into the goal.
If the SME owner hasn’t identified what is needed well ahead of a potential transaction they could be leaving too much of the future value on the table or find they have not planned their tax effectively or have a business that is not yet saleable.
It could be company structure, orphan divisions, a lack of a credible management team or client concentration – be aware of the things that drive down value or could scare off a potential buyer and plan early for any future transaction, at least 2 years ahead.
An experienced non-exec or business consultant who has been there and done it before can help you ensure your business is ready and maximises value for shareholders from the start and saves you time and money as well as adding value in the future.
We hold our own views on equity for NEDs, They may not work out, the business may outgrow them, you may need different support, but importantly once you have given away equity you have given it away for life, irrespective of tenure. Think long and hard or you may be paying a monthly fee AND a fat tail of equity value to someone who was there for a year or two. Obviously NEDs vary and circumstances vary – but don’t bet the farm.
10: Social media
No business can afford to ignore the benefits that social media can bring their business irrespective of the sector. Be it a premium, high end business offering, mid-range or mass market – social media is both an opportunity and a threat so getting it right is critical.
Social media is the biggest threat to multi-nationals and larger firms – it levels the playing field. You have an opportunity to capitalise on that – if done correctly.
This starts with ensuring you know the best way to use each of the plethora of media resources that exist and having a unified brand identity across all relevant platforms from LinkedIn, Xing, GoldenLine, Ushi, WhatsUpp, Twitter, Facebook, YouTube, Quora, Hootsuite and more.
LinkedIn won’t last forever – Where are GenY and Millennia’s? They are not going on to LinkedIn, Facebook, Google+ and to an extent Twitter – look for the sites and networks that the rising stars are looking at (Whatsup?) – ask your candidates where they hang out.
Your social media investment doesn’t need to be costly but it does need to be planned and managed effectively. Not being on some platforms is akin to hanging a “closed” sign in your shop window. Getting your media strategy defined and implemented early doesn’t need to take a lot of time and it is easier to maintain an outlet than to start learning a new platform while you play catch-up with a competitor and slows you down.
Starting a recruitment business is not for the fainthearted – If you are or have already, your bravery has to be applauded.
Sales are key, naturally but when needed, a higher resource has to be put into procurement. One bad purchasing decision or agreement is worth a potential employee for 3 months!
Growing your business takes stamina and vision. To stay the course, you need to pace yourself and have the support network of a critical friend.
It won’t be plain sailing – welcome to the world. By following these outlines areas, you can increase your chances of success.
3Rinside offer early stage recruitment clients a range of advisory services.
Come in and have a conversation!