Projections for a recruitment agency can help give a targeted plan for the directors, so they know what they need to achieve over the next 12 months by hitting the sales targets and what they can spend. These projections can help set targets for internal staff members, indicate when new consultants can join the business and demonstrate how much the directors and shareholders can expect to take from the business. Once completed, they can also be used alongside the management accounts to ensure that the business stays on track to achieve the targets set.
Here are the top 6 things Directors should take into consideration when planning for the next 12 months:
WORK BACKWARDS, STARTING WITH HOW MUCH THE DIRECTORS NEED TO TAKE
It is always a good idea to know the expectations of the Directors on how much money they are hoping to take from the business when building the projections. This amount should be the target figure shown once the projections are completed, and this may mean that sales need to be increased or costs cut for this to be achieved.
BE REALISTIC WITH SALES AND STAFFING GROWTH
Ensuring that the sales targets and staffing numbers are realistic on a set of projections is crucial, as it can be very demoralising if you get 3 months into a year and find yourself behind the target. Understanding that new staff members can take time to make that first placement also needs to be worked into the projections.
TAKE INTO ACCOUNT SEASONAL TRENDS
When building projections, it is important to ensure that you are considering any seasonal trends that could impact sales, such as holiday months like August and December or whether the industry has periods of shutdown, such as in education or the industrial sector. This may also be due to internal staff holidays if you know they will take a vacation at a particular time.
UNDERSTAND ALL STAFFING COSTS
When adding a staff member to projections, it is important to ensure that all the staffing costs are considered. This includes the Employer’s National Insurance (bandings may change each April), pension contributions and employee benefits. For every staff member, there will be an increase in overheads such as desks, computers, telephones, software, etc., which will also need to be calculated as more staff members are hired.
BUILD IN A CONTINGENCY FOR ADDITIONAL SPEND
For each overhead within the projections, it is advisable to build in an additional monthly contingency to account for new services the company may want to use or the increase in existing services being provided. If this cost is not used each month, then it will increase the profit line if the sales are still being achieved.
CREATE A FIRST DRAFT AND THEN TALK IT THROUGH WITH SOMEONE ELSE
When producing projections, it might be a good idea to build a first draft, come away from it for a while and then sit down and talk it through with someone else. A good place to have this discussion would be at a Board Meeting where each part of the projections is discussed and justified as to why the numbers were inserted. Talking them through can sometimes give more clarity on whether the numbers are achievable and ensure that nothing is missed in the process.
Mayachi Ltd can help recruitment agencies with the production of their company projections using experience gained over the past 20 + years in the industry. We can help you create projections to plan a new recruitment business, set targets for the new financial year, arrange invoice finance, or be required for the future sale of the company.