Case Study - Recruitment consultant: Rapid start up
Two Directors, with extensive experience in the IT and Telecomms Recruitment Sector started their own business just two years ago with the intention of becoming a sector leader and grow the business to £30milion within 5 years. They placed Consultants on six or twelve month contract for blue chip clients. Whilst their market place included the UK, their specialist knowledge was in the growth areas of The Middle East and Africa as well as countries in Europe. As with most recruitment companies it is vital, when achieving growth to have access to reliable finance facilities, which are confidential, in view of the blue chip clients they are working with.
Growing the Business Quickly
The previous experience in this market meant that the Directors and their Sales Ledger staff were highly skilled at obtaining payment from operating companies in say, Nigeria, although this was likely to take 45-60 days when their Contractors required payment of their fees either weekly or monthly. So, to achieve their goals quickly it was the instant availability of funding that was important to this new Company because, the faster they grew, the more important the funding became.
In the early days, if they were to succeed, it meant that at least 90% of invoices needed to be paid within 48hours.
Niche Market
The involvement (and heavy involvement) in countries such as Nigeria and Saudi Arabia meant that many of the Providers are not prepared to provide any form of finance facility, so a small number of more specialist companies were approached with a full business plan illustrating the way in which the company would expand and the involvement the anticipated in each country. Two liked the approach and the potential of this company and following negotiations, terms were agreed with one of them for confidential Invoice Discounting, once the Directors had met with the senior staff of the Provider and ensured that they could work effectively with the administration staff. It is important to understand that this type of development is a long-term commitment and a relationship of understanding and service has to develop quickly between the Recruitment Company and finance Provider to ensure that growth is not held back.
Future Expansion
It is significant that, although the Business Plan was ambitious, this company was running six months ahead of its target within five months of operations.