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Diverse vs. niche - What is the best way to grow your recruitment business?

by LAURA MOULD / Thursday, 8th December 2016

Money

One of the questions we often get asked is ‘what is the best way to grow my recruitment business – to specialise in one sector or to diversify and cover a number of sectors?’

The answer really is, it depends.  And no, that’s not me sitting on the fence – it depends on what your end goal is for the business and is different for each company.  So, what should I be considering to help me make that decision?

An asset vs. an income

Your development plans if you are growing the business for sale may be very different to your strategy if you are simply developing the business to provide an income.  Traditionally, niche specialist recruitment businesses are more appealing to vendors than broad, multi-sector businesses.  Not only do they appeal to a wider range of buyers (private equity firms, established businesses who want to diversify themselves into a new sector, and so on) but they also demonstrate specialist knowledge in their field.

For an ongoing income though, recession-proofing becomes more important so that the business owner has the security of knowing their company will be more able to ride out any peaks and troughs in certain sectors, by compensating in others, thus delivering a more stable income. 

Skills and people

As the business owner, your skills and experience generally lead the way when determining the sectors that your business covers.  There is no point taking an education recruiter and asking them to recruit specialist helicopter engineers after all. 

But, there is an element of diversification possible with either the right recruits or a complimentary sector.

Sometimes the right person comes along at the right moment with just the right blend of skills and experience.  Other times, it requires more planning and persistence.  The key is to have a plan in place and an end goal in mind, but with an element of flexibility to allow you to take advantage of any golden opportunities that arise.

Supply and demand

An important first step when considering whether to diversify or specialise is, of course, to identify demand.  Do you see a gap in the market for a specialist recruiter in the events market, for example?  Or is there an opportunity for a local recruiter to target a number of types of businesses within a small geographical area?

Ask yourself:

  • Is there a need for the particular area of recruitment I’m looking at?
  • What are the difficulties faced by employers recruiting in this area i.e. what pain can I fix for them?
  • What other companies are working in that area?  If there are none, is there an obvious reason why not?
  • Is there an opportunity to make money in this area?
  • What specific skills or experience or tools would be required to be able to successfully recruit in this area?  If there is a cost associated with these, does the potential income outweigh the cost?

Saturation and internal competition

If your business is particularly specialist, there will come a point when you simply have too many consultants working the same niche sector in a naturally limited geographical area.  Short of splitting each consultants ‘patch’ even further, causing internal competition and potential conflict (and possibly not actually increasing billings), the answer may be to diversify.

By bringing in consultants who work in different sectors, competition within the team is managed, due to the lack of crossover in area and sector.  And the earning potential is increased by selecting sectors which are performing well. 

What next?

For ventures supported by SSG, talk to us.  We are happy to discuss your plans, and work with you to develop the business in the way you want using our years of experience.  Schedule a business review with your Account Manager today.   

 
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