Dear Barb:
I’ve been in this business for more than 15 years. Now, our sales are decreasing. We have reduced our fees over the years, and our margins were quoted low to beat out our competitors. With increased costs, we are barely breaking even on some business. I understand the low margins on our light industrial and clerical business, but I think we should be charging higher margins for IT and engineering.
We are only filling one out of every 15 orders we write and only one out of every 18 temp assignments. I would like to hire, because the two people I have can’t handle the order flow, but I don’t have the money to take on additional overhead. Any advice you can give me will be greatly appreciated.
Michael J., Detroit, MI
Dear Michael:
It sounds like you are trying to be “everything” for “everyone.” As a result you and your team are spread too thin to be effective. The firms that are making the highest profits are firms that have selected a niche. You are writing orders in light industrial, clerical, IT and engineering, but there are only three of you. The order-to-fill ratio in your business is extremely high. Think for a moment of all the orders and temp assignments that you worked that made you absolutely nothing.
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The margins charged for light industrial and clerical are significantly lower than IT or engineering. When you are placing IT or engineering contractors your clients must realize the bill rates will be significantly higher. It sounds like it is time to upgrade your clients.
Barbara J. Bruno, CPC, CTS
