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Money, money, money

Nelson Mandela once said that ‘Money won’t create success’ but ‘the freedom to make it will’ and although Mr Mandela was not a budding recruitment entrepreneur, I think he is 100% right!

The truth is that SSG has been called a lot of things over the years, but my favourite is that we are just an ‘enabler’ – we simply enable motivated recruiters to launch a business. We make it possible, providing the investment and the expertise. All that we are really doing is creating the environment in which you guys can go on & create success - & money. You just need the freedom to go out & do it.

Great sentiment of course, but for all of that, you still need to know how you are going to physically pay the bills whilst your new business ramps up. No doubt, you still need to pay the rent, eat, keep warm, take the kids to school and do all of the things that we all need to do, every day. So, how much money do you need to have set aside? How long does it take to get going, what is the average experience of SSG Clients since 2003?

Once you know how much money you might need to set aside to survive the ‘baked bean period’ of your business ramp up, you then  need to solve the Money Puzzle – in other words, where is that money going to come from?

Ok – so only you can accurately estimate what you might need to cover your bills during the ramp up phase of your new business. To do so, you need to make an educated guess of two key variables: how much money you need you cover the absolute basics each month & how long it will take you before you start to make placements.

Two facts that might help: Since 2003, the average Recruiter working through SSG placing Perms has taken just over two months to invoice and get paid (so, call it 3 months). The average Temp Recruiter will have GP available after 21 days (let’s call it a month). Our advice is to assume that you will get average luck and therefore probably be ‘average’ ... makes the maths easy too!

There is no need for you to worry about money in terms of the potential cost of launching your business. As you will no doubt have gleaned from our web site already, SSG provides a free business launch service. So, we meet with you, understand what are the tools & facilities that need to get started. We present back to you our Working Agreement which lists out all of your requirements and we commit to provide all that you need free of charge. You have no business launch costs. You only have to consider a solution to the Money Puzzle of the ‘baked bean period’ – i.e. how to pay your domestic bills whilst the business ramps up. That’s it.

To help you estimate what you need to set aside to cover your baked bean period, you need a pen, a pad and a hot drink. Just list out the fixed costs you cannot avoid each month (mortgage, kids, heating, lights, Porsche Service costs...) & consider if you think that you will be an average Recruiter, an above average Recruiter or an unlucky Recruiter – in other words, will your Perm placements take 3 months to happen (i.e. the SSG average) or will your Temps be quicker than 3 weeks to generate GP? Don’t be optimistic or pessimistic, just brutally honest with yourself. Once you know how much you need in your fighting fund, you now need to solve that Money Puzzle!

The Money Puzzle

We guess this might seem the most obvious solution in the world? Maybe SSG would think it strange if a successful Recruiter could not magically produce enough to cover bills for an opening period? Maybe SSG would prefer to see that commitment from a motivated recruiter? Maybe, but we have been at this for a long time and there are often very clear reasons why this simple save up & wait logic is flawed. Successful Recruiters still have commitments – saving money is just not that easy. What if an opportunity to launch your business presents itself right now, before you have had the chance to save? Perhaps you need the security of an income for the sake of your children? Whatever the reasons are not to have the money already saved, we know that in the real world, it is not easy and sometimes just not practical.

Whilst none of like to be officially in debt or actively want to approach a bank, it is of course a very obvious solution to the baked bean period. The funny thing is that if you approach your bank and explain that you want the money to start a business, they will be less inclined to help than if you approach the very same back and say that you want to use the money for a holiday. But at the end of the day, for those with a decent credit history and strong stomach, asking your bank to loan you (maybe) £5,000 over three years might not seem such a hardship. Naturally enough, SSG can help you if you want advice on how to present that request. A bank loan is certainly cheaper than raising the same money via a credit card!

Mum & Dad love you. Your brother thinks you are great. Bob knows that you will do well & Sally would do anything for you. Why not accept their sincere, well intentioned support? After all, you are going to do your best and be 100% honest from Day 1 – what could go wrong? You did say that you think that you will be successful, not that you will be successful. If it all goes wrong, they understand that it would take you a long time to repay the money. But, for many understandable reasons, so many other people would strongly advise never to mix family / friendship with money. It can be devastating if things go wrong. Is it really worth the risk?

Long story short: SSG will provide Salary Support for you to cover you for the baked bean period. In exchange for this extra financial investment, we would ask for a Minority Share in the new business (typically 20%). In the long run, this works well for SSG and it provides yet another solution for our budding entrepreneurs. This is a loan to your business and not some kind of weird and wonderful financial transaction – it is a simple, open & transparent offer of help. SSG would end up owning a small, minority stake in your business – it gives us no legal ‘say’ and we don’t want any power whatsoever! Your business, you are the Boss! Check it out and call for a chat if you want more detail.

  • The costs associated with the launch of your new business are covered by SSG – that’s a fact. The Launch is free. So, you only need some money behind you to pay your bills whilst your new business ramps up. With the best will in the world, you are unlikely to make a placement, have SSG invoice a placement on your behalf & for your client to pay your invoice in the first month of trade, so you need to think very carefully about how to survive this ‘baked bean period’. Only two variables to focus on really – how much physical cash you need to have available each month to cover your basic outgoings & how long do you think that it will be before you start to generate revenue? Since 2003, the average SSG Client trying to place Perms has needed between 2 & 3 months money behind them whilst the average SSG Client working the Temps market has needed to wait 21 days before seeing any GP. Something to think about.
  • Unless you have decided to go down the SSG Equity Investment route (whereby SSG guarantee you a monthly Salary during the opening period of your business), you will only get paid when you make a placement – such is the life of the Recruitment Business owner. So, you make a placement, SSG does the paperwork for you (raising the invoice & completing the credit control on your placement) & your end-Client pays the bill. The money goes directly into your Company bank account (not SSG’s – it’s your money after all). You then settle the SSG Service Charge & the rest belongs to your business. So, keeping it really simple - SSG will chase the money for you working against whatever terms of business you agree with your client (& of course we are very happy to advise you regarding what is reasonable). If it makes you feel any better, can you imagine how motivated SSG is to get you paid? SSG only gets paid after you get paid!
  • Imagine the scenario; SSG invests in the launch of a new business, we spend the money, commit the physical resources and try really hard to help our new Client to succeed. Unfortunately, our lovely new Client struggles and a lack of hard cash threatens the very existence of the start up. Not only is this horrible for our Recruiter Client but it is really bad news for us too. So, obviously we want to help - & not just because we are such nice guys! You might be surprised how we can get you through these tough times. You need to talk to us, explain what is going on and ask for help. Might we be able to advance you money against a placement or look at the SSG Equity Investment option for you? We could perhaps find you an investor, be your investor or arrange bank finance – long or short term. Remember, we have been doing this since 2003 and know that any problem can be solved if everyone really wants to solve it.
  • They say that Cash Flow or rather the lack of cash flow kills more businesses than anything else. Whilst we might argue that being a lazy or poor business owner is more of a threat, we get the idea. So, what can we all do to make sure that the lack of cash flow isn’t a problem? Well, it all starts with you guys making a placement & letting SSG have all the details that we need to ensure that your end-client pays the invoice on time (for example, it is great if you have a purchase order number & if the placement details are accurate obviously). SSG then makes sure that the invoice lands on the right desk without any confusion. We then hit the credit control button really hard and get that money paid to you. Sounds great, but what can we do if the process fails or your end-client won’t play nicely? Well, we have been doing this since 2003 & by now we know two things – the first is that we will always behave with 100% professionalism & the second is that we will never, ever, ever back down! Remember, SSG does not paid until after you have been paid. Is our motivation clear?
  • Money is always a problem if there is not enough of it. Whatever strategies we help you to apply, the bottom line is that you need to make money. Any business will go under if it doesn’t make money. So, obvious though it sounds you need to stick to your business plan & your business plan ought to be just three words long (i.e. make a placement). SSG wants to help you make sure that you generate invoices for SSG to chase. You need to work with us, engage with SSG & let us help you – we have the tools, we have the talent & we have the time. That’s the first lesson. The second key lesson is that money is not money until it is in your back account! Your end clients might be really nice people & appreciate the help that you have given them but they do not want to pay a recruitment invoice – deep down, you know that. So, we must never give an end-client a reason to delay, procrastinate or argue! We need to follow an agreed & clearly defined process. We put dots where they should be and cross what ought to be crossed. We are polite but firm. We need you to be the same. Together, we can make sure that you make a placement and that you get paid for your placement.

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