Should your staffing service stay small or seek expansion?

Sooner or later, every staffing service faces the same fork in the road — take the fork that keeps the business small, or the one that leads to a path of growth and expansion? Which is best for you and your business? To help you decide, we’ve assembled a list of pros and cons.

 

Staying small

Pros:

  • Your costs stay lower because you don’t need to hire additional personnel, pay additional utility costs and purchase additional space or equipment.
  • If you have fewer than 50 full-time or full-time-equivalent employees, you do not need to provide health insurance.
  • You are able to build a niche staffing service that serves a small section of clients, to whom you can provide top-notch attention.

 

Cons:

  • You eliminate potential additional revenue streams from expansion.
  • Having most of your business coming from only a few clients means the loss of a client could be detrimental to your business.
  • As an owner or manager, you most likely need to wear more hats, as opposed to delegating responsibilities to other employees.

 

Expanding:

Pros:

  • With more in-house and temporary employees, you increase the amount of business your staffing service can access, improving your chances for profitability and growth.
  • You can access increased geographic areas, providing additional business opportunities.
  • With a larger and more diverse client base, the impact of losing a customer is not as devastating.

 

Cons:

  • If you try to enter a niche or location with which you are unfamiliar, or enter before you’re properly staffed, you risk supplying the wrong talent, and not meeting your client’s expectations could hurt you.
  • Your staffing service can grow too large too quickly without the capital to support it.
  • With increased size, you may not have the time or resources to stay on top of competitors’ activities or industry trends.