SHOULD I BUY AN EXISTING STAFFING FIRM?
When you enter the Staffing and Recruiting Profession, you have five options:
- Invest in a Franchise ($75,000+)
- Purchase an existing Staffing Firm (Depends on value of the Firm)
- Work for someone else, learn the profession and then go out on your own (starting from scratch due to non-compete agreements)
- Open your business and learn as you go (high failure rate)
- Invest in our Start Up Tutor (Under $5,000 investment)
Let’s discuss the pros and cons of buying an existing staffing firm:
PROS
- You can determine if the business is profitable by reviewing financial statements
- Established location, reputation, clients and candidates
- Trained Team
- Training
- Reputation is established
- Niche or Area of Specialization is Determined
CONS
- You don’t know the “reputation” of the firm or the word of mouth in the market
- You will pay much more if you buy an existing business than if you start out on your own
- There is no guarantee that one person will stay after the sale
- Their margins may be low and if you buy this business, clients will expect the same pricing
- Often clients are loyal to a person – not a firm. There is no guarantee the current clients will do business with you.
- Often there is not a structured training program – so you end up learning OTJ
- There is little or no movement to “sell” staffing firms right now – so make sure you do a thorough due diligence process.
- You have instant overhead that must be met each month
Depending on the niche you select, you don’t need to necessarily have an office and a high overhead when you begin. You can work from home until you are profitable. Much depends on which choice will help you achieve your short and long-term goals.