You are 3 messages away from disaster

This is for every single person in agency recruitment.

Plenty of individuals and companies have had an excellent year, and well done to them. It’s been hard work.

However, outstanding market conditions have covered some cracks and glossed over some flaws in your business makeup, or in how you recruit.

I see vulnerabilities everywhere I look.

And yet the prevailing attitude is self-satisfaction and complacency.

It’s a recipe for disaster.

You need to ‘stress-test’ your business or your desk for ‘predictable disasters’
 
They call it a ‘Grey Swan’.

A Grey Swan is an event that is possible and known, potentially highly significant but considered not very likely to happen.

And catastrophe lurks in the last six words of that sentence.

You know what the dangers are. You know they could happen. But you ignore the likelihood. You take no action to mitigate the threat.

As someone who has made just about every mistake in recruitment and faced just about every threat, I ask you to take heed.

I have been hurt by Grey Swans countless times. (I can be a slow learner). But I got better at preparing for them. Have you?

I routinely tell my clients to run a “Doomsday P & L” where Permanent GP drops by 50% and Temp/Contract GP by 30%. Would they survive? What changes would they need to make? And how fast?

I didn’t know Covid was coming when I raised this question relentlessly in 2019, but I thought a recession was, and thank God I did, because all my clients were ready to react to a downturn. What we got was not what we could have predicted, but we were somewhat prepared anyway.

A recession that decimates our income is a Grey Swan for sure. It’s self-evident, yet many are not prepared, even now.

But what about less dramatic and obvious dangers?

Are you just three emails or phone calls away from disaster?

Seem unlikely?

Let’s start with the recruitment business owners and managers. Here are some examples of the three messages containing Grey Swans, that could decimate your company. (These are apart from a recession  – which will likely do it anyway).

• You have a client that provides you with 25% of your GP. They pull the plug. The new CEO dumps you via a three-line email. You lose the lot. Grey Swan

• You have a recruiter who bills 800k a year out of your total GP for your team of $2 million. She emails her resignation. Ugly Grey Swan

• Your indispensable Operations Manager, holder of all the knowledge. Runner of the ship. The glue that keeps your business together. Makes you look good, and you know it. He calls. Happy news. He is taking a parental leave break for 18 months minimum. Grey Swan

• Your key trusted Billing Manager. She delivers 600k a year of her own GP and also manages five recruiters who are the core of your business. A 3.5-million-dollar team! They all look up to the Billing Manager. They were hired and trained by her. They are loyal to her. The Billing Manager advises she is leaving to join a competitor where she has been offered equity. Big, fat, hairy, Grey Swan

• Your ATS is hacked. So is your payroll. You are extorted for enough to break you. Or all your candidate’s personal details are made public, and they are extorted. Massive business disruption, but also, what is your liability? As a director and owner? Deadly Grey Swan.

• Your numbers are great. You have penetrated a niche so well that you probably dominate it. But you have become very deep and specialised indeed. That can often be good, but what if something happens to your very niche market? A new invention? Change in technology? A change in the law? (How do you think the recruiters specialising in Crypto are doing now?) Looming Grey Swan

• That big client you are so proud of? 100 contractors! In one client! Yes, the margins are low, but that’s $50k in margin a week! And sure, it is irritating that the client pays in 60 days, but the bank understands and has given you an overdraft to finance it. But oh, now the client has stopped paying! For 90 days. Shit, 120 days! Now they are in administration. You have paid the contractors $3 Million and have no hope of getting paid by what’s left of your client! Massive, waddling, obese Grey Swan

• We have grown revenue for three years straight. Sure, our profit has been sluggish, but we are ‘taking market share’ (LOL). And yes, plenty of our consultants are highly paid and not billing much, but they will ‘get there soon‘ (Double LOL). Oh, but the market has gone into decline. So, my GP drops by 50% in one month and stays that way for two years! But I have all this overhead! Grotesque Grey Swan.

As a business owner in recruitment, even one of these Grey Swan events could signal the end of your business. Three of the ‘smaller’ ones could do it too.

Just three messages are all it takes. How do you sleep with that hanging over you?

Act now to strengthen and change your business to lessen the risk. I have a great deal of material on how to do this at the Savage Recruitment Academy. This masterclass (Below) launched last week is essential viewing. For your own sake, do it now.

                               Sign up for this Masterclass and all the rest on SRA here

So maybe you are a recruiter. You have had a remarkable 18 months. Hard work in the face of a massive talent shortage. Credit to you. You are feeling pretty damn good, right? Take care. Here are examples of a few messages you might receive in what will be an awful week for you

• 50% of your billings came from one client. No one mentions that much. We just love to celebrate record months and quarters. And a dollar is a dollar, right? Wrong. You have a lot of vulnerable dollars. And the client dumps you for one of the many reasons they might. If you are unaware of those reasons, you are in even more danger than I thought. So, you lose 50% of your billings. Grey Swan.

• You have a few heavy-hitting BD types, maybe even the owner, in your business. They own the client relationships. You get fed jobs. Again, we don’t mention that because you always talk about ‘Your clients“‘ But they are not yours, are they? You have never even met them, have you? You just transact, and you do it well. But conditions change. The flow of jobs is turned off. You are up a creek without a paddle. Evil-grinning Grey Swan

• You billed 800,000 last year. You are a big deal. You have a superb candidate resourcer, who finds all your candidates and manages most of the comms as well. But you are relaxed. You are doing the ‘real work’ after all, right? You get a call. The candidate resourcer resigns. Your company fears a downturn and is not forthcoming with a replacement. You are rooted. Grey Swan

There are many more looming Grey Swans, even for good recruiters. All of the Grey Swans I mentioned for Owners and Managers above are Grey Swans for the recruiters too! You can probably think of several others. Like your lack of real BD skills. Am I right?

The Savage Recruitment Academy has a 90-minute masterclass on how to prepare for the downturn, and you should make sure your company gets access right now.

                       Sign up for this Masterclass and all the rest on SRA here

I am not being pessimistic. I am this industry’s biggest optimist. I love it and believe it has a wonderful future. But there are dangers. There are risks. Mostly you know what they are. But do not allow them to become ‘Grey Swans’ by ignoring them.

Take stock. Remember the lesson on ‘Honest Recruiters’.

Look at your business like an outsider who is assessing to buy it. What would they see, and what would they say? “What are the weaknesses” is the first question. If you wish to see them, you know what they are better than anyone.

Or if a recruiter, ask, “Where am I vulnerable?” What could change that will hurt me?

Then work hard to fix them or strengthen your position.

I cannot emphasise this enough.

Grey Swans happen!

They will happen to you.

Be ready.

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The Savage Recruitment Academy is perfect for all levels in your business

Train your Rookies with this;

Prepare your recruiters for a changing market with this;

Get your management team ‘match fit’ with this;

And that’s just a tiny percentage of what’s available at The Savage Recruitment Academy.

Detail and sign up here

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