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(Note: This is the first of a two-part article contributed by Barb Bruno, CPC/CTS of Good as Gold Training and Development, Inc. Barb is a guest writer for this blog, and we look forward to many more of her contributions in the future.)

If you specialize in direct-hire placements, I’m sure there have been months when you’ve felt like your production pretty much resembled a crapshoot. If you know your personal ratios (recruiter’s stats) and have a good level of activity going into the following month, you know your chances of having a great month are dramatically improved.

Now think for a minute about the months when you closed every single deal. While you celebrated your success, you also realized that you needed to get activity going if you wanted to repeat your performance the next month. After all, if you can’t get activity going early in the month, it becomes a challenge to hit your goals by month’s end.

Quick-start-CTAA money-saving survey
How would you like to start each month with thousands of dollars in sales? That’s a reality when you offer both direct hire and contract staffing to your client companies. Contract placements give you residual income month after month after month. The important words in that last sentence are “residual income.”

I started out in contracting when I initially opened my firm in Indiana. That’s all I did. But I noticed that a lot of my contractors were getting hired direct and I thought, “Wait a minute; I’ve got to figure out how to do this,” so I went into the direct-hire business. Then, when I moved my business to Illinois, I made the decision that I only wanted to do direct placements because the profit margins were higher.

We survey our clients every year. Whenever they would ask me for a contractor, I used to refer them to others because I have a lot of friends in the business. I was still getting requests for contract business, but I would refer it out because I decided that I only wanted to work direct. The reason I went back into contracting is because the requests were increasing, and my clients kept asking, “Why aren’t you doing contracting? We’d really like to use you for everything.” So they wanted us to be able to do both direct hire and contract staffing.

My main reason for doing contracting again was because my clients wanted me to do it. If I’m going to be the person they go to, I’ve got to give them additional services to maintain my number-one vendor status. And I’m very client-driven. I provide what my clients want. Also, when I looked at how much business I was referring to other people, it was pretty bizarre that I wasn’t doing contract staffing myself!

We want clients to view us as a consultant. And the neat thing is if they have to hire a contractor, they would rather work with somebody they already have an established relationship with. If they’ve got special projects or if they’ve got certain expertise that they need, it’s much easier for them to hire a contractor than to hire somebody direct. They’d like to use you for more than just direct hire. At the same time, you’re increasing the value of your business and making more money. So it’s win-win.

People just want flexibility
I got back into contracting due to a combination of three things. First, my clients asked for it when I did my surveys. Second, I realized that by offering contracting, it opened doors to a lot of clients that I didn’t have before because they wanted to do contract-to-hire (or temp-to-direct). What’s funny is that even though they still do a lot of contract-to-hire, they’ve also come to me for direct positions, as well. Third, if you’re going to sell and put a value on your business, you should have a contracting side.

I always knew that contracting was a good business, and I always knew that down the road I’d need both direct placement and contracting. I wasn’t surprised at all. I’m amazed at the margins that people are willing to pay. People just want flexibility. Clients don’t want you to only do one thing. Sometimes I think that as owners of a direct-hire firm, we look at contracting as kind of a distraction rather than a very viable profit center. When you own a business, it’s all about making profit, and contracting provides you with profit and residual income.

(In our next post, Barb will discuss the specific benefits associated with adding contract staffing to a recruiter’s business model, as well as explain why outsourcing the back-office duties is a wise business decision.)

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