As a staffing firm, you constantly worry about your clients and the candidates who come to you for jobs. But what about your own business? Are you spending enough time on fundamental back-office functions like budgeting?
Getting your finances in order lets you provide a better service. It also sets the stage for long-term success, providing the basic foundation for your staffing firm to thrive.
Don’t ignore key topics like expenses and cash flow. These concerns have become even more prominent in an environment of inflation and an uncertain economy. With that in mind, here’s a basic guide to staffing firm budgeting, outlining what you need to know to get the most out of your recruiting business.
Making the Most of Your Staffing Firm with a Budget
How to Set a Budget
Creating a financial plan for your staffing firm will help you get the most out of your limited resources. By carefully drafting a budget, you’ll make sure your key expenses get paid, while still investing in longer-term growth projects. Here are the general steps you need to follow to craft a strong budget:
Set Goals
Going into a budget discussion, have broader conversations about your goals for the upcoming fiscal period. This will help you prioritize various discretionary funds. You can direct your resources where they will have the most impact.
Estimate Your Incoming Revenue
A budget starts by knowing how much you have to spend. This takes some guesswork. Gather data and make educated estimates about your revenue. This takes a detailed knowledge of your own operations, as well as information about current market dynamics and the overall economy.
Identify Fixed Costs
Some expenses are impossible to avoid. These represent your fixed costs. You’ll need to cover these no matter what. Here are some examples:
- Rent
- Loan Repayments
- Some Salaries
- Insurance
- Utilities
Calculate Variable Costs
Variable costs change with the amount of production a company has. Say you pay for sales leads for your staffing firm. Those might represent variable costs — the more sales associates you have, the more you’ll pay for leads.
Since these can change, you have additional discretion over these expenses. Unlike fixed costs, you aren’t locked into these expenses. As such, as you budget, compute what these costs would be at various levels of activity. At the same time, think about ways you might be able to limit these expenses.
Leave Room for an Emergency Fund
Don’t expect to spend every dollar that comes into your company. First off, you want your firm to remain profitable. More than that, you want to build up a cash reserve. Leaving room in your budget for an emergency fund leaves you prepared for whatever happens.
This cushion also gives you some budgeting flexibility. If an unexpected opportunity appears, you have the ability to pounce. Meanwhile, if you misjudge some portion of your budget, you won’t necessarily run into a crisis.
How to Stick to Your Budget
Making a budget represents just one step in the process. You also have to execute your plan effectively. Here are a few steps that will help you stick to your budget over time:
- Routinely Process Data: The more you know about your business, the more accurate your budget becomes. To increase visibility, set up processes to gather and analyze as much data as possible in real-time.
- Stay Disciplined: Create controls to help your team stay on budget. Checks and balances within your organization will prevent over-spending.
- Get Everyone Involved: You can’t enforce a budget alone. It takes buy-in from every level of the company.
- Have Backup Plans: Sometimes things don’t go according to expectations. (Just think about all those well-planned 2020 budgets that were blown apart when COVID hit.) As much as possible, have contingency and backup plans in place.
Financing represents a key tool in making your budget reactive to market changes. Having flexible funding options lets you respond to evolving economic circumstances.
Frontline Funding can provide that for you. You’ll get additional alternatives to protect your cash flow and stay ready for whatever the economy throws at your staffing firm.
Want to Know How to Get The Most Out of Your Budget?
Contact Frontline today to learn more.
