We’re all desperate for good news and finally, some may be coming our way. Economic growth, it seems, could be on the rise. The International Monetary Fund (IMF) has raised its growth forecast by 0.2% and it’s the service sector that is leading the way. With this in mind, it is imperative that recruitment agencies are ready to cope with what is ahead.
The last time the IMF raised its forecast was in April 2012. The rise from 0.7% to 0.9% shows that the economy, according to a Treasury spokesman, is moving from 'rescue to recovery'. The revision of the figure is only small, but it does show a step in the right direction.
So why the revision? It may be down to the services sector which accounts for around three quarters of the UK's economy. Using a purchasing managers’ index (PMI), the financial services information supplier Markit has forecast the economy to grow by at least 0.5% in the second half of 2013. New orders and job creations are happening across all sectors but the services sector is showing the most strength and seems confident that this growth will be sustained. Markit's research indicates that the service sector grew at its fastest pace for two years in June.
Manufacturing has also shown some signs of improving. A PMI survey in June - a study to indicate the conditions of the market- showed the strongest growth in two years. Another study by the British Chamber of Commerce found business confidence at its highest level for six years.
Of course, with growth in the economy comes growth in the recruitment sector. Consultancy owners need to be prepared for the likely increase in workload but caution is needed. The rise in jobs may only be slow and while recruiters will be impatient for the business, agencies need to be sure that their business plans are flexible enough to cope with uneven growth.
It would be tempting to take on extra staff in case of a sudden surge but the market remains very unpredictable. Expansion can cause major cash flow problems even if the gamble pays off in the long run. Consultancy owners need to ensure that they are able to cope with the growth in demand from one set of clients and perhaps no growth or a reduction in demand from another. And they must do this whilst fulfilling their existing obligations and meeting the cost of their overheads.
In this instance, the first port of call is usually a factoring company. Recruitment consultancy owners should pursue this avenue with caution however, as the so called “solution” was never intended for the recruitment industry. Instead, they should consider a real solution designed and built by recruiters, for recruiters - a solution which allows for controlled, sustainable growth. The Simplicity group offers a variety of different services and they cater specifically for the recruitment industry. From funding and administration to full back office outsourcing to an umbrella scheme - they are a business which speaks the language of recruiters and can do a great deal to help in these changeable economic times.
Any plans to up-size a recruitment business will always need to be controlled and measured. While the UK economy is showing signs of recovery, it has been in this position before and the 'green shoots' have come to nothing. Recruiters need to be prepared for growth but also have a back-up plan in case that growth fails to materialise. Give Simplicity a call and find out how they can help you to put progressive, adaptable plans in place.