The most simple and disarming answer that people receive regarding the stock market is buy low and sell high. If we were all prophets and could foretell the future, we would all be putting a lot of money into the market. Sometimes opportunities like these are staring us in the face even when we do not realize it. Many executives in the temporary staffing industry have gone through substantial cost cutting measures to survive the severe economic downturn. Going hand-in-hand with dropping revenue, slashing operating expenses has been one of the leading trends in the staffing industry. In essence, many of you have achieved a low cost of operating the business – you have achieved a low entry point to be doing business at this time in the life of the company.

Leveraging undervalued stock - a simple strategy for the temporary staffing industry.

What if you could leverage that cost against growing revenues similar to the way an investor leverages an undervalued stock against future growth?

Building on this strategy, you want to build an operating model that keeps your operating costs to a minimum during an uptick in the economy and your business. This might seem obvious, but in reality it takes good planning and execution to implement this type of strategy. Few staffing operators spend the necessary time on process improvement during down times for improved operating ratios when the temporary staffing industry trends up. Operators were willing to use older inefficient models because profit margins and economic “V-shaped” rebound hid the waste. This recovery is looking very different then past downturns – more “L-shaped” than “V-shaped”.

This will mean that staffing operators will have to find profits in places that they historically ignored. Margins will be as tight as ever… maybe even tighter forcing executives to recalibrate their business finding more and more profit dollars below the line.

What the Temporary Staffing Industry Can Learn from the Manufacturing Industry?

Manufacturing companies have used automation to increase the output per worker by 300 times over the past 30 years. The independent staffing operator needs to embrace similar types of process reengineering strategies to move from financially surviving to thriving. This means whole new levels of operational discipline and efficiency to achieve high levels of productivity – imagine the rewards if this became the staffing industry’s #1 trend!

The challenge for every operator will be to buy the cost of operations low and sell/leverage that low cost of operation at acceptable sales prices in the marketplace.

Contact us if you want help identifying areas of inefficiency that could be improved to achieve a scalable low cost of operation.

Dave Reiss
Founder and CEO
Applied Systems Technology
845-534-7100 X1102
dave@astusa.com
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