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