In any business, there are different strategies for growth and for keeping flexible. One of the main tools you can use is diversification.
This holds especially true with staffing. In the case of cyclical businesses, diversification can help regulate cash flow throughout the year. For instance, if you have one service line that tends to ramp up in retail for the holidays, you might look to other lines at other times to keep your staffing associates busy and engaged.
It’s important, however, to do your research before you make a step into diversification. Here are some tips:
Tip #1: Figure Out the Method You Want to Use for Diversification
There are typically two approaches to diversification: vertically and horizontally.
If you’re thinking vertically, that can be a great approach. You need to think, “How can I go deeper to give my clients what they want?”
If you’re operating in a particular niche, you need to start by asking yourself and your management team or advisors some questions. How can you drill down and provide even more to your customers? Or how can you step up to the next level of product or service offering? What is the next “step up” in your industry?
Acting horizontally is another way to diversify. Here, you need to think in a different way than vertically. Here you need to envision your opportunities and your playing field. For example, what are your competitors offering that you are not offering? What are the related businesses in your industry? What niche is directly connected to yours? What product or service offers a complementary fit?
Whichever method you choose, horizontal or vertical (or perhaps both), your customers can be a great resource here. Having a close relationship with them, and understanding their needs, allows you to deepen your services (i.e., the vertical) or add a suite of services that grows with your customer organically (horizontally.) Listening to your customers’ needs is crucial here and will help you take the right steps.
This comes down to thinking about your customer. What will bring them added value, and how can you meet that demand?
Tip #2: Expand Your Expertise
Another tip is to become an expert in the market you hope to expand into. You can do this by networking, by research, and by looking at what general trends in your area or region are.
Another tip is to make sure that the new services that you are providing are in your wheelhouse. There are a lot of great ideas for staffing firms, but not all are worth pursuing. Does your expansion meet with your experience and expertise? If not, are you willing to hire a recruiter knowledgeable in this lateral field? Do you have systems and a team in place to manage this new avenue?
At Madison, we have our finger on the pulse of the industry.
We can help you succeed in your diversification plans, and meet your goals. We offer solutions that cater exclusively to the staffing industry, including better support for your back office; 100% funding to ensure positive cash flow; and sound advice from industry professionals. This allows you to use our expertise while simultaneously freeing you up to focus on diversification and your plans.
Contact us today, and we can help you meet your goals, together.