Rhys sold out of his previous recruitment businesses in 2012 to focus solely on helping recruiters set up and build recruitment businesses. Follow Rhys on LinkedIn or contact him direct here for help with your start-up recruitment business or for coaching to grow an existing one.
As coaching is the new word for training, business owners now want to ‘scale’ their business, rather than ‘grow’ their business. But just as training and coaching are very different, scaling and growing your business are also different. It is actually very difficult to truly scale a recruitment business, hence why I felt this would be a good subject for a blog.
So, what is the definition of each and why is it so hard to truly scale a recruitment business? The technical explanation for growth is adding new resources to your business such as staff, liquidity and equipment and increasing revenue as a result. Whereas scaling is where a business increases revenue without the need for a substantial increase in resources. Explaining it another way, for growth your costs increase as revenue increases, however if you scale, the revenue goes up, but costs don’t rise in line with that increase in revenue. You can see why scaling is the more appealing, which is probably why it’s now the buzz word for growth. The question is, can a recruitment business truly be scaled as the increase in revenue in recruitment businesses is almost always achieved by adding more staff, predominantly billers, so the costs do go up in line with the growth in revenue?
Scaling is not really appropriate for a service-based business because more work generally means more staff. Scaling is far more suited to, say, a software business. The software businesses have designed a great product, so the growth is then really achieved by taking it to market, selling more of it. They don’t need to manufacture more costly products and need very little additional manpower for each new client, so sales go up, but resources don’t – that’s scaling in its most obvious sense. Read on though – I can give some advice on scaling a recruitment business!
I’m not one for getting too technical on definitions because you can just drift into semantics and lose sight of what you are trying to achieve – the badge or name for it isn’t really important. Plus, I don’t think definitions need to be exclusive. As an example, with coaching, when you are spending. . .