Pots of Gold

Stefan Ciecierski - Director and owner Nakama Global

We are a spoilt lot in recruitment sometimes! It seems to me that most established recruiters in times of stress will at some point talk about setting up their own business, either as a reaction to something they don’t like in their current job or when they see someone else apparently having done exactly that and then make a lot of money selling their business. I guess living in a time when so many people in the internet world seem to make so much by doing so little other than being in the right place at the right time with a basic idea, and at the same time the idea of becoming a celebrity overnight and having all that goes with that is driving the media so fast, it’s not really surprising that in our industry consultants and managers often think they can find fame and fortune doing it for them selves.

Setting up your own recruitment business is not very difficult really as long as you don’t mind a bit of hardship for a few months and you have a good pipeline of business. However, it is not always the best way to either make money or find job satisfaction. Being the owner carries with it a lot more stress and a lot less security than building up your personal equity with your employer who will not want to lose you if you are contributing well.

Clearly recruitment is a great place for some entrepreneurs to make a lot of money after a comparatively short time and change their lives. That’s not the case for everyone though, in fact I think it’s only the case for a very few. The big question you have to ask yourself if you feel you might benefit from running your own show is this,” Are the skills I will need to create something worth selling better invested with my employer or will I gain more from investing them in my own business”. To create something to sell you will need to build a substantial body of people and business that a purchaser would be happy to buy on the basis that post acquisition it will make more money than the cost of the deal, with or without you. That means, winning business, hiring staff, motivating them, organising them and creating a vision and reason for being that is compelling and long term. All that is exactly what a successful manager in a recruitment business has to do anyway, but with the considerable security and resources of an employer.

So, how do you make the decision to go it alone or not? The answer is simple if it’s based on a desire to make money. Do your own thing if you think you can make more value out of your skills than you can earn doing it for your employer, and also if you think you cannot just handle, but thrive in your own business.

If it goes well you could make a great deal, pay some bills and have to worry less about the future. However, most people will still need to work post deal! It’s not uncommon for the successful payoff to have been preceded by years of low income and reduced benefits as the entrepreneur gears the business up for a potential sale, and don’t forget the tax, that is going up not down at the moment, you could find yourself giving up half of what you made!

On that miserable note you should also consider whom you go into business with. It is not uncommon to find partners who start something together disagreeing about not only what each of them does but also when to sell and how much for. It can happen that the lifestyle of the company owner can be seductive and the freedoms that go with independence can become a hindrance to the gung ho that was at one time going to drive you to riches.

All in all, those big payoffs are few and far between and don’t come without much stress and often don’t come at all! So, the answer s to making the best you can from your opportunities are always based on being very best you can be for as long as you can, having a dose of luck and being true to yourself. You can become as wealthy and happy in someone else’s business as well as you can in your own. Good luck!

Building a creative services and marketing recruitment business

Rob Sheffield Director and owner of Nakama Global

In London there are over 150 creative services, marketing and digital recruitment businesses, these range from 1-person organisations to companies that number up to around 80 people. Very rarely do they go beyond this, largely due to the fact that the market sector they operate in is smaller, more bespoke and specialist than their larger more traditional recruitment counterparts and a focus on agency clients rather than building a robust mix of clients across sectors.

A lot of these businesses in existence today carve out successful niches for themselves but struggle to grow after the first 18 - 24 months. You tend to end up with a large number of businesses numbering 5 - 20 people. Having interviewed around 50 people in the past year for various consultant and management positions in our business I was struck by the fact that they were all educated and capable people but even at management level none of them had been exposed or had the guidance around the commercial aspects of growing their business and business sectors. The mantra seemed to be more sales equalled more billings. All well and good but if your going to ask people to grow your business it makes sense to give them some insight into the type of thinking required when looking at growing a business. This can be applied to all aspects of a recruiter’s job, not just management and business owners.

We had a reasonably successful 1st year trading and I was asked by one of our team what we based our growth predictions for year 2 and 3? and how we expected to achieve those. My response (below) was to talk to her about the thought process behind how you grow any business, to take this and apply your market knowledge and to constantly review and assess.

We talked about a couple of key focus points. There is a plethora of crap on business growth and how to achieve results. In terms of achieving growth year 2 we agreed we had momentum, a bigger brand and more business so a level of natural growth occurs there, after that its a combination of factors:

More sales, more profit if your margins are right and better/more people and better processes. That's the standard response from most of the people we met over the past year. If your working in a business, managing people, being managed or running a business you need to think beyond that and it has amazed me how many people in our sector don't.
 
So when we set the budget for this year we asked ourselves several questions:
Where are we now? , What is our potential to grow the business? , Where do we want to go? , How are we going to get there? And What do we need to do?

We then looked at measuring current performance
Financial performance is a consequence of marketing and staff performance - in our business that is selling (consultancy and being more like an account manager for us) (another post on that later), and delivering creates the money, so focus on the financial figures but look behind them.

In our Business we look at:
Financial performance, Revenue, Profit (not GP - OP) and Cash flow
Marketing performance.
Operations performance. 

We then Measure the capability of the business itself, potential of the business for future development. What are our key resources (people, intellectual, financial, technological) our controls and systems (they give us the information we need to make the best decisions). Making sure we have experience appropriate to what we think we are trying to do, at levels of the business. We are always looking to our staff, external resources and the market for ideas and innovation (processes and the way we present our product) and leadership (how clear are we about where and how we are taking the business).

Where do we want to go?
So, where do we want to be in three years’ time (Turnover? Profit? Employees? Product lines? Number of customers?)  Because if we know where we want to be in three years time then we know where we want to be in one year’s time. And, if we know where we as a business want to be in one year’s time then we know what we need to do now!

How are we going to get where we want to go?
Strategic planning is fine, this should always fall in line with a focus on what it is we want the business to become.  So we take a look at the following:
What do we want the business to be?
What is our vision?
How will we know we are there?
What are the numbers, the targets for turnover, profit, staff, number and size of clients
How are we going to do it? 
What’s the ‘strategy’?  Are we going to be cheaper, faster, higher quality, employ/acquire the best staff, buy out the competition, focus on small contracts or what?? In our case the primary focus is on quality, delivery and superior staff.
What are the steps and hurdles on the way?
What are the major obstacles on the way that we need to do before you can move on? 
What and how will we be measuring to assess our performance?  To often in recruitment the focus revolves around just the numbers, forgetting that good staff development plans, giving people autonomy and support enables them to grow and in turn the business.
What things do we need to measure on a day-to-day basis… targets that will mean we, as a business will achieve success. 

What do we need to do?
When we started we knew we would need a system to measure how we were doing; a system that measures the key indicators so that we could focus on the big stuff. Hence why in recruitment we look at results, figures, activity but people rarely focus on staff turn over, development and culture. These are equally important if not more so because they enable the people you have to grow. Very few businesses that get this right don't grow their revenues and profit.

The key to growing any business is down to motivating staff, a great product and thinking innovation, yes businesses do not turn profit, grow and continue to exist if you are not looking at the numbers, at the heart of the business needs to be numbers.  Everything should be tested and measured so that you know what works and what doesn’t so that you can systematically think about how you can do things better. Another area recruiters in our industry take to far with KPI'S, weekly reports and micromanaging productivity out of people.

You need to know how the 80:20 rule works in your business.  80% of profit comes from 20% of customers.  Do you know who your best customers are? These never the big one off accounts, they are the regular, loyal and trustworthy bill paying kind. Where can you find more?  And what about your worst customers, the customers from hell, who make you no money and are a pain in the backside?  Why do you keep them? What would happen if you got rid of 50% of your customers!

You need to streamline and have systems in place so that you don’t keep making things up as you go along. A common problem for new businesses and in my opinion especially in our recruitment sector.

Think about what you have to put in to get how much out? You must look at every step of your sales process ( we are always focusing on quality of our networking and referrals this generates more potential leads and business opportunities than asking people to make 30 cold calls, I cannot remember at any stage setting cold call targets in our business) , and make improvements at every stage… get better at spotting and converting your opportunities, keep customers for longer, they will spend more if they feel the relationship adds value, delivers quality and is valued by you.

Use more ways of reaching potential customers.  Most businesses use two or maybe three of the possible fifteen or so available channels only and ignore the rest.  Your brand, growth and success depends on you getting to as many people as you can in the right way with the right message so consider all avenues: word-of-mouth, networking, advertising, PR, banner ads, referral systems, seminars…

Going back to looking at growth any business owner, manager, leader will state: really great businesses are obsessed with three things:-
Where are we taking this business? (While being aware of the outside environment) (Strategy)
How are we going to sell our product? (Marketing in all forms)
How can our people get on better? (Teams and people)

More importantly, and something I think we have become good at and why we are looking to develop our staff and is the big issue for owners, have we got the bottle to overcome some ‘owner fears’? Often its owners themselves that hold back the growth of their business because they are:

Frightened of letting go of financial control – sharing ownership with others, taking external funds to fund and fuel the growth
Frightened of letting go of management control – sharing power with others (delegation)
To grow a business, any manager or owner needs to recognise that they cannot do it all themselves. We have people in our business who are much better than my self and my business partner when it comes to certain aspects of the business. Secondly always bare in mind and that you will probably need some more money quicker than you think because growing a business is like haemorrhaging cash.

Day to day we never forget the following: How we follow up on all leads, other complimentary things to sell to existing customers (our fixed cost production model). We check every step of our customer journey – how can we make it better for them as well as checking every step of our delivery and sales function – how can we improve the results that you get as potential customers head towards being customers.
 

Try and measure and test everything it gives you standards to evaluate performance. We ask ourselves can we and all our staff identify and deliver to a client, employee, someone that wants to work with us information on what we are and what we stand for? Can they identify and recognise a problem or opportunity, can they deliver or sort it out for themselves, do they understand the benefits of doing being able to do this?. Our reality check is why should people bother to work for us, buy from us if we are the same as the competition? Is this a good industry to be in? What do our customers think of us? And what do we need to do differently from other businesses?

I think all of the above should and can be applied to any business and job but it just seems that within the creative, digital and marketing recruitment sector that it very rarely is.

MISSING THE POINT

 Stefan Ciecierski - Director and owner Nakama Global

I know it’s risky but I want to talk about discrimination and prejudice, because I am not at all sure that the laws we recruiters work to are doing what they are supposed to. It seems to me that in trying to do something positive the powers that be have achieved very little as people still make the decisions that they do based on personal judgments that remain unaffected by the legislation supposed to safeguard equality.

I write a lot of notes, and this year I have been told by recruiters trying to get around the law, for some reason known only to them, and unprompted that:

“ I’m not racist or anything but I just thought I would let you know his family is of African origin, do you know what I mean”

“ Just in case you were wondering we did talk about families and she is not intending to have any children in the near future”

“He doesn’t look his age and is very energetic”

“He isn’t married and is not the type to be considering that, if you see what I mean”

apart from being quite staggering, all the above are unnecessary misleading, breaking the rules and unhelpful, but are these the statements of the criminal and the morally debased or are they the statements of poor recruiters trying to be helpful and getting it wrong?

It did actually say on the African gentleman’s cv that he had been educated in Africa, but it did not say his nationality, only that he had the right to work in the UK.I could have estimated the age of the lady apparently not planning to have children by looking at the dates she was in education. I could see that the energetic gentleman had been working for more than 40 years and I have no interest in the marriage preferences of the gentleman currently not considering union.

We all know that the low barriers to entry in our sector mean that some fairly unsophisticated people exist within it, but doesn’t our rather ham fisted set of laws on this subject just make things worse?

It seems that on occasion this is just a branch of political correctness with no obvious benefit. Is it much more helpful than those ridiculous “customer service” announcements on the trains that inform us that due to “inclement” weather (what is that?) the platform maybe slippery, or that in hot weather we should stay hydrated, or if you feel unwell tell a member of staff. Surely we are not far away from being advised that if we do not dress appropriately for the conditions the transportation authorities cannot be held responsible if we catch a cold. All these warnings go in one ear and leave the other without any impact on the meager grey matter in between. We are in danger of being de-sensitised to all this stuff.

Who amongst us is not unusual for some reason? Diversity is to be celebrated not hidden. Of course that is over simplistic and of course we must protect the vulnerable and the perceived minority, but what we currently do does not achieve that. According to the statements above some recruiters seem to think that I need to be warned if they send me candidates who are from an ethnic minority (whatever that is), are female of child bearing age (14 to 50?), are older and wiser than most or might not be heterosexual. Thanks but no thanks for the warning as who does that leave me to recruit? And how does the recruiter know that I am not in one or more of those categories? And why is that people that are not in any of those categories are presumed to be great hires.

We have laws to prevent discrimination and they should be enforced, rigorously, but it seems to me that in the UK in 2010 we are paying lip service to stopping discrimination. Those that represent us to the legislators are limp at best, the rags we read pay some attention but it’s not their job. If you read this and agree or disagree please do us all a favor and write, blog, shout from the rooftops or engage your colleagues in conversation as the only way to create the freest and fairest environment is to talk openly about these issues and educate. Avoiding discussion and covering our backsides will only drag us down into the media promoted slush of superficiliality we are too often slaves to. Amen.

UNHELPFUL STATE OF AFFAIRS

Stefan Ciecierski - Director and owner Nakama Gloabal

Our industry has a lot of entrepreneurs in it, and we have more recruiters per square 100 yards in London than anywhere else in the world. There are many many owners of businesses big and small who have taken the risk to create their own recruitment company, some stay small and independent and some go on to grow and grow, but directors in our business are almost always business starters. However, I find it amazing that this is mostly done with very little support and encouragement from the state.

My partners and I started our company Nakama at the end of 2009.We funded it ourselves and a year later have offices in 5 countries, we have employed 25 people and we made a tidy profit. All well and good, but with absolutely nothing that could be construed as help from the state.

In the same period I can think of 5 different recruiters who started their own businesses in mainland Europe, all of whom were given major cash incentives by their countries. The most frequent incentive seems to be that the state pays their last salary for a period of time without ever asking for it back. In one case for two years! In all cases the entrepreneur had to submit a business plan, stay off benefits and employ at least one person when profits allowed. In the UK we hunted high and low for some kind of help but found nothing, not a tax break, a tax holiday, an incentive to hire people, nothing. We did get, and still do get, hundreds of letters from different tax, VAT and employment bodies around the country all demanding their wedge, with absolutely zero sympathy for our struggling start up cash flow situation. Finding space without coming up with a colossal deposit was a major challenge, as was finding a factoring company who would entertain a new client conversation in the teeth of the recession. The banks were miserable too, I spent many hours trying to find a home for a cash deposit and all I had were refusals and lectures about money laundering and terrorism until I was referred to a friendly banker through a personal route.

So, maybe all that pain is a good thing as if you can survive starting a recruitment business in the UK you must be pretty good. However, I think it is more likely that our poor business support environment puts people off at the start or helps them go bust! I can think of a few businesses right now on the verge of going bust, but all they are suffering from is cash flow difficulties rather than not enough profit. We were stung twice last year by clients deciding to go bust rather than pay their bills and they started up next door the next day with just a slightly different name, and that is legal!

Entrepreneurs will always be there trying but too many will fail unless they get help.