Payroll factoring within a niche is a great way to provide more personalized and tailored staffing services with a deeper understanding of a specific industry. However, there are some things to keep in mind when selecting your niche.
“Regardless of the niche, the greatest overriding concern is the risk involved,” TemPay Chief Operating Officer Marc Mellman says. “There are certain industries generally known to be higher risk than others, and there is growing risk in every industry in staffing today.”
- Transportation is one niche known for its high risk. Truck maintenance and damages, delayed schedules and fluctuating rates make the industry a tough sell, although those with the experience and know-how may find it lucrative.
- Another such industry is agriculture. Weather and climate, food storage and transportation problems make this a risky venture, although again, those with the skills to navigate the industry can achieve great success.
“There are certain niches TemPay doesn’t do business in because they are riskier than others,” Mellman says. “When selecting a niche, staffing firms should keep in mind that it may be harder to find funding and support for these industries.”
Staffing firms also face the risk of fraud, which is harder to identify in a niche with which you are unfamiliar.
“The risk is that the client may be unscrupulous, and you will lose time and money,” Mellman says. “This is a big problem in the staffing industry in general, but it is more common in niches that staffing firms do not understand.”
So what can you do to protect yourself and your agency?
- Thoroughly investigate potential clients. In addition to a routine Internet search, which can unveil unhappy employees, customers and peers, and relevant news articles, examine clients’ credit rating and debt history to gauge any possible issues.
- Routinely compare the client’s timesheets, invoices and billable hours against your numbers.
“It can takes weeks or months to figure out a client is committing fraud, especially in a niche with which you are unfamiliar,” Mellman says. “Make sure you understand your risks and continually monitor your accounts.”