Recruiters: Why it has never been more important to stay in control of your margins

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Recruitment professionals with an eye on current affairs will be well aware that the UK economy is finally enjoying some growth. Official estimates show that the summer growth spurt we’ve all heard so much about has fuelled the fastest advance for the UK economy in more than three years.

Economists predict the Office for National Statistics’ first estimate of growth between July and September will show a 0.8% uplift in the economy - the best improvement since the second quarter of 2010! But whilst the optimistic amongst you will realise that this means busy times ahead for recruitment consultancies, at Simplicity we are concerned by the number of agency owners who are out of the loop when it comes to their margins.

Over the past five years, UK businesses have faced a truly grim outlook. Whilst the country has seen many recessions over the years, back in June, the Financial Times went so far as to say that the most recent downturn was “different”, stating “we are in unchartered territory… the long term consequences of all this are likely to be quite profound”. For us, there has never been a truer statement spoken and in recruitment, it could be said that one of those consequences is the fact that consultancies have scaled down so much; any economic growth could be the ruin of them.

It’s ironic - recruitment consultancies have “battened down the hatches” through the tumultuous and stormy times and now that it’s time to start enjoying fairer weather; they have neither the resources nor the funding in place to cope with any increased demand. Indeed, so much focus has been put on merely staying afloat, when it comes to plans for growth; none have been made for quite some time.

In changing times, it is absolutely critical that recruitment consultancy owners are in control of their margins. This is particularly true for the specialists among you… according to The Office for National Statistics, the UK economy grew by 0.7% in the second quarter of the year and “bright spots include construction and industrial sectors”. Chris Williamson, Chief Economist at research firm Markit has been quoted as saying “Further acceleration of growth looks likely in what’s looking like an increasingly broad-based and sustainable looking upturn.”

Employment statistics certainly seem to reinforce this point. The number of advertised job vacancies in the UK hit a 12 month high in August and the squeeze on salaries eased. Whilst this sort of news should be celebrated - more jobs means more people in employment, which means more money… it’s the recruitment consultancies that need be prepared. With growth comes huge obstacles and every consultancy owner needs to closely monitor the very heartbeat of their business - now more than ever.

For a better insight to how your business in performing, take a look at the Simplicity Margin Calculator. Not only will you gain an understanding of your profits, you may also find out how to increase them.

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