Is your recruitment business healthy?

It’s Monday morning, and depending on what side of the bed you woke up, as a SME recruitment agency owner you’re either thinking “I’m invincible, LFG..” Or “Am I going to make it through another quarter?”

And I think of both these thoughts are seeded in how well you understand and manage your own business.

If I asked you right now: "Is your recruitment business healthy?"

What would you look at first?
- Revenue?
- Placements?
- Cash in the bank?
- Outstanding invoices?
- Team size?

I've been running a recruitment business for long a time now and after speaking with several peer agency founders the one thing that continues to surprise me is how little we talk about the mechanics of running our businesses.

When we meet (“network”) we’ll happily discuss:
- sourcing strategies
- recruiters
- client delayed payments
- ATS
- AI

But very few of us openly discuss the numbers, frameworks and operating systems we use to make decisions.

Questions like:
- What’s your concentration risk by client (if your top client goes can it takeaway 50%+ of your biz overnight)?
- How are you balancing getting new biz, sourcing for key positions, managing recruiters, and also having an eagle eye on your numbers?
- How do you measure recruiter productivity?
- What’s your average revenue per recruiter?
- Have you found a method to decide when to hire / when to work with freelancers?
- How do you know if you're actually growing or just busy in busy work?
- What numbers make you uncomfortable?

Over the last few years, I've been gradually building and refining a management system for datavruti.

Something that’s taken shape because I didn’t understand the health markers of my business.

Over the next few posts this week, I'm going to share some of the frameworks and reports that have become part of how I run the business.

I’ll talk about:
1) Why Net Fee Income became the most important number in our company.
2) Why every recruiter should be viewed as a business unit.
3) How I think about client concentration and dependency risk.
4) Why forecasting is more useful than reporting.
5) And finally the operating dashboard that ties everything together.

I don't believe there's one right way to run an agency.

But I do think we need more conversations about the business of recruitment agencies, not just recruitment itself.

So I'll ask again:

When you want to know whether your agency is healthy, what's the first number you look at?