| What is the scariest part of opening a new | | | | working capital crunch. |
| temporary staffing or contract staffing company? | | | | So what are your options? You could continue to |
| In a word, I would say PAYROLL. Once you have | | | | service your smaller clients as usual, then try to |
| gotten to the point of getting the business set up, | | | | take on one to two additional employees per |
| contracts in place, and are at the point of sending | | | | week for your new prospective client, if they are |
| out your first employees, the first major business | | | | willing to wait several months for the new |
| hurdle hits you immediately: paying your | | | | employees. The chances of that client waiting on |
| employees for that first week's work. Then, with | | | | you are like waiting to win the lottery - probably a |
| the realization that your clients will not be paying | | | | pretty slim chance of that happening. If you can't |
| your invoices for 30-60 days, the next reality | | | | supply the employees within their time frame, |
| sets in - how do I come up with the cash to pay | | | | they will certainly be on the phone with your |
| my employees and other expenses including | | | | competitor to fill those open positions. I suppose |
| advertising, rent, telephone, etc. without sufficient | | | | you could turn down the business all together, but |
| working capital? You mean to tell me I may have | | | | what sense would that make? You are trying to |
| to "float" my own payroll for 4 - 8 weeks before | | | | grow your business, and can ill afford to turn |
| I start seeing dime one from my efforts? That | | | | down new business. |
| can create some stress in your life. | | | | A fairly easy solution would be to find a funding |
| Now let's take the more established firm that has | | | | source to partner with that understands your |
| been plugging along with one to three small clients, | | | | business and allow you to pick up the additional |
| and the clients are paying their invoices for | | | | business without having to worry about meeting |
| services provided in 2-3 weeks. The staffing | | | | payroll. As a matter of fact, one that would let |
| owner started with enough up front capital to | | | | you pick up any amount of additional business so |
| ensure payroll would be met for that amount of | | | | long as your clients were credit worthy. The |
| business, and didn't need to worry about a funding | | | | opportunity cost of turning down additional |
| source to run their business. Then the staffing | | | | business due to lack of cash flow can be very |
| owner gets a call back from a client he or she | | | | damaging to your business. Hopefully you got in to |
| has been pursuing for quite some time that is | | | | the staffing business to grow, not to maintain |
| now ready to utilize their staffing services. The | | | | status quo. If you have to pass up business, then |
| only "problem" (if you want to call it that) is the | | | | your company will not reach its full potential. |
| client needs 20 new employees from you in the | | | | Having an unlimited funding source that truly |
| next 2 months, and their payment terms are net | | | | understands the staffing industry, and wants to |
| 45 days. In reality, you won't see your first | | | | work in partnership with your business to ensure |
| invoice payment in your hands until probably 50 | | | | your growth can make all the difference in the |
| days, which means that you have to "float" your | | | | success (or lack thereof) of your business. |
| own payroll for over 7 weeks for 20 new | | | | Whether in a start-up or expansion mode, staying |
| employees! Anybody see where we are going | | | | ahead of your payroll is essential in the staffing |
| here? This could create a small cash flow / | | | | industry. |