Way back in 2013, I wrote that the staffing industry had been growing by leaps and bounds over the preceding few years. This growth continued through 2014, and as 2015 gets underway it shows no signs of slowing.
During this time of rapid growth, many companies have had to address two pressing issues: developing their plans for ACA compliance, and finding talent in light of the ongoing skills gap. Because missteps in those two areas could have tremendous negative impacts, companies have devoted much of their resources to managing them. Because they’ve focused so heavily on trying to stay on top of their day-to-day operations, however, many staffing firms may have overlooked some of the new threats facing them. The big one: having all their eggs in one basket.
Ask yourself this question: has your firm’s growth occurred mostly in one industry or with one client? If so, you could be setting your business up for failure—even if your revenues are higher than they’ve ever been.
For example, consider the many startups that failed when the dot-com bubble burst in 1999–2001. A huge number of those new companies were funded by single investors (organizations as well as individuals). When those investors saw their own finances take a hit, they often reacted by investing less in new endeavors. A startup that was dependent on funding from one of those belt-tighteners didn’t stand a chance to survive.
Or take a look at what happened to Kodak. Once a company whose name was synonymous with photography, Kodak continued to rely almost entirely on its analog photography customers well into the digital photography era. As mass-market film photography all but disappeared, Kodak lost its main client base—and was forced to file for Chapter 11 bankruptcy in January 2012.
In light of these cautionary tales, I have one important piece of advice for you: if more than 10% of your business is with one client or if more than 50% of your business is based in one industry, your top priority for 2015 must be to diversify your business portfolio.
At the same time, however, becoming a “jack of all trades, master of none” shouldn’t be your target. In fact, diversification to that degree—where your firm is competent in multiple areas but not outstanding in any of them—can actually be bad for your business. Spreading your firm out too thin (and consequently not having the resources or expertise to provide top-notch service) can damage the good reputation you’ve worked hard to build.
So instead of expanding your client and industry bases by accepting any job (in any industry) that comes your way, consider building out one or two niche staffing brands that fall under your corporate umbrella. Niche staffing has the potential to help you diversify your business by expanding into different industries and placing people at higher margins. At the same time, however, it lets you stick with the areas that you know best (and in which you can excel), so you can continue to provide the same high level of service that your clients and prospects already expect from you.
Check back in next week for suggestions on how to develop a niche staffing division in your organization!