Staffing Venture

Hi folks, happy Friday to all. We had a lively discussion today about what is arguably the most important aspect of your staffing business: getting paid for what you do. There are so many ways a best in class collections operation will help your staffing company. First, profitably. If you borrow money, as 90% of successful staffing ventures do, the cost of that money is based on how long you use it. The lower your DSO (days sales outstandings), the less money you borrow, more to the bottom line. Second, profitability. As in, what your business is worth. Quickly, staffing companies sell for a multiple of EBITDA, fancy way of saying how much the company makes pretax. That multiple runs between 2 and 5 times that number. Let’s say a typical staffing company has an EBITDA of 10% and has sales of $5,000,000. Biggest factors that determine where between the 2 and 5 times multiple: DSO, # of customers, concentration of customers and the EBITDA, which is based partially and chiefly on the above. Other factors, location, niche, technology/systems, comp all get baked together by a buyer. Third, life or death. How big a loss can you sustain? $100,000, $10,000? $10.00? Decide and act. Credit limits are not an option, no matter how well someone pays. Are all of your eggs in one basket? Take some out, I suggest the rotten ones. Got to cut this short, so call me at 516-424-5500 to discuss my Ten Tips to an Aging You Can Eat Off

Hi folks, now that Thanksgiving is behind us, time to focus on your funding and back office for the new year. Here’s a little piece I wrote for the November issue of the Tempworks newsletter. Enjoy and call me to discuss it at 516-424-5500.

Outsourcing Makes Sense, Outsourcing to Outsourcers Could Spell Disaster

By Jack Terrana, VP TempWorks Venture
I have been around the payroll funding business for close to 15 years. My first job was with a one-time market leader who, at the time had no idea that they would one day be seen as a ONE-TIME market leader. Their service was good, not perfect. Their people were dedicated and professional and more than adequately met the demands of the customers. But like an engine losing oil, when the damage is done, it’s really done.

At the time, a big selling point was “nothing is outsourced” and it was a strong selling point in 1995. Hard to believe it still is in 2010!! Harder to believe that the majority of the payroll funding companies still outsource the very functions that busy staffing professionals turn to them for. Outsourcing to an outsourcer that you don’t control could spell disaster for your business. How? Let us count the ways.

This article has been sitting in my craw for almost 10 years, when I departed the “nothing is outsourced” shop for an “everything is outsourced” shop. So in the new scenario, I would sell the funding and back office services to the client. Here’s where you need the whiteboard to follow along. The funding co would provide the money for payroll that they would send to the staffing firm. The staffing firm would move the money from operating account to payroll account (no wires were allowed to go to the payroll account) where ADP would draft it. Simple right? No. I haven’t yet mentioned the staffing software company that had a relationship with the funder and ADP. Confused yet? .

Ok so to recap, fundco lends money to staffco, payrollco drafts money and cuts checks. Where’s softwareco? Not sure. They are providing software that tracks applicants, searches and retrieves data, parses resumes, a CRM, an ATS, all of the above. So, applicant (think payroll) and client (think billing/collections) data goes into the software yet all payroll and systems outside of the software and operating system control billing and collections. Think this is painful to read? Writing it is pretty miserable too. But neither is as bad as having to actually run your staffing company in this triple vendor hell of a nightmare.

So, without further adieu (read boring techspeak), I give you simplicity. Easy to follow, easy to comprehend and even easier to operate (and scale) your growing staffing company.

Before you choose a funding company, ask the easy question, do you outsource any of this? Do you own/maintain/support the operating system? Do you keep separate agings? Is the payroll and other key data accessible from a single system? The answer should be “yes”. If it isn’t, that company is operating as it had 10 years ago.

Just wrapped up a meeting with an exciting new company here in Dallas. Pictured with me are Christine and Brandt Barham.

Please join #Tempworks Founder and CEO, Gregg Dourgarian and me for an interesting and useful Webinar today at 11:30 EST. Gregg is a well known and successful entrepreneur in the staffing world and is quickly becoming the foremost expert on lead generation via social networking. The Webinar is free to attend, just sign up at tempworks.com

Looking forward to seeing you there!

Hello SV readers, with October almost a memory, let’s start thinking about your positioning for 2010. If you are like most staffing companies, 09 was a down year. Sales are down, margins are down and you have fewer employees than you once had. What does your marketing budget look like? Probably not great, so what are you gonna do? You’re gonna Tweet of course. If you haven’t signed up for a Twitter account, stop reading the SV blog and go do so. Now. It’s free and pretty fun once you get into it. Becoming an active member of the Twitter community is a sure fire way of expanding your business network. You will find great candidates and develop strong client relationships. Once you have joined, require your employees to do likewise. As always, SV would like to get your feedback about how you are faring and how you have used the network to enhance your business. Call mr anytime to discuss. Jack Terrana, #tempworks. 516-424-5500. Cheers!

Don’t forget tune in tomorrow to the weekly Webinar, “How to Start a Staffing Company”. Tomorrow’s host is Gregg Dourgarian, Founder and CEO of #Tempworks. I will be back next week with tall tales from the ASA Expo.

Poorly attended but keeping busy.

Hello from sunny and warm Orlando, host of the largest annual event of the American Staffing Association. We will be live blogging all week and hearing and seeing some of the biggest names in the staffing industry. Tune in for our live radio blog tomorrow or Thursday. And if you’re here, come see #Tempworks!!!

Hello and good Thursday to SV readers. I hope you are all enjoying the new color scheme of the SV blog It’s been another great week at #Tempworks. We are in the midst of a bunch of implementations including a couple that first discovered #Tempworks by way of the Friday Webinar. That’s exciting for me personally, kind of like when your kids achieve a major accomplishment.
We look forward to assisting more of you launch your new staffing business. Remember, for a small fee, you receive software, unlimited funding and fully integrated back office processing. Simply put, there is not a better package in the entire staffing industry. Just ask our clients. See you tomorrow.

Happy Tuesday to SV readers. Its October and that means the ASA Expo must be around the corner. Next week in fact, in sunny Orlando, FL, where the temperature today is 85. This year’s show is going to be significantly smaller than in the past, however opportunities still exist. For vendors, less attendees means less prospects to sell their products to. For attendees looking for a specific product or service, there will undoubtedly be fewer vendors there to visit with. #Tempworks has been a huge supporter of the industry, the ASA and the Expo. However, this year we will not exhibit, but will have a large presence at the show. Please call me at 516-424-5500 and you can meet with me or any one of the 8 other #Tempworks reps. See you in O-town.