Building a High-Value Staffing Business || Season 1 Episode 2

In this episode, Sameer tells Andy and Scott his 4 key factors for success when it comes to building and growing a staffing business. 

Spoiler alert: size matters and so does your expertise.

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Transcript

Scott Montminy: 0:13

Welcome to Now Hiring! A podcast about staffing, recruiting and talent. I'm Scott Montminy, and I have with me Andy Weiss and Sameer Penakalapati, and in today's podcast, we would like to talk about how to build a high value staffing company. And really, this is a topic that is near and dear to Sameer's heart, that is one of, if not, his greatest professional passions. It ranks up there. I'd say, anywhere. Is that fair? Sameer, yeah,

Sameer Penakalapati: 0:44

absolutely. You know, I always talk about, you know, entry into this staffing industry is much easier, but the scaling the business is and fact, I always say, is this as tough as building a SaaS tech company, when sometimes even harder. And the number says that, like, you know, you have less than 2% of the staffing companies are over 100 million in revenue. Even to cross the 50 million in revenue, it takes a good planning and strategy in the business. So, so it fascinates me.

Andy Weiss: 1:25

So, so Sameer with that, like, how, how'd you get your start? Like, how, how would would somebody like, let's say I'm not going to do this, but let's say I wanted to start a staffing company. How would I go about doing that? How did you get get your start? And we'll use that kind of as jumping off point to get to that high value.

Sameer Penakalapati: 1:45

Yeah, no, I think you know, as I said, it's easy to jump in to be a very generalist staffing business, but I think it's always good to have some niche technology side based on your experience, or your technical expertise, or your industry exposure experience, like somebody work in the aerospace defines so somebody is in, you know, electronic manufacturing or some utilities space, who understands the type of roles that bring in type of needs for the businesses you know, that's a tremendous knowledge to have and build business and explore in that space have in definitely has a high value than just creating some generic staffing business. Because one thing, it's hard to scale, and second, it's hard to create a value.

Andy Weiss: 2:42

So we've got, so we're diving into an area category that we know to start the barrier, you know, the barriers to entry are kind of low. So we're starting to kind of gain some, you know, we've got a customer or a client or two. How do we start to kind of build more traction on that? Because my assumption is you don't, you don't go from zero to high valuation overnight. Like, what's, what's that traction component? Yeah,

Sameer Penakalapati: 3:11

no, the high violations really depends on the revenue that you would build over time. Like, you know, I think high violation doesn't come by just one, number, right? You are year on your year on year, growth on the business and your you know your identifiable niche for the business, like you, you are known for what that's something that, let's say, if you're like a expertise in SAP success factors, the snowflakes, or, you know, some other new technology AI specifically into it. Or if you are expertise in building, you know, a staff, or aerospace defense, utilities, manufacturing, electronic manufacturing, you know, stuff like that. You, I think you strive to identify, associate to one of these niches, right? And then you build around, because you always have niche players are identified as an expert in the space. And then you go after building the client base, and go after building your talent in those space, I think would, would probably you would rise up quickly, because you are constantly, you know, when you I mean, as as we have seen in industry, when you are going in, you know, going after with the aerospace defense clients you have in expertise, and talk to them and start somebody else is going in, I can do a staffing. It's a huge difference in building the customer. So over time, you build a customer's base, you build a revenue, you build a competency. All comes together, but it's a lot of hard work, and that's exactly what I was talking about building and scaling is as hard as building any tech company. So

Andy Weiss: 4:52

I have to assume, like, at certain points you you have to say or be willing to say no or turn down opportunities, like, what was one of the. Yeah, was there something that strikes you as you were building, scaling gaining traction that, hey, I had to say no to this, or I had to walk away from from this and like, what was it? What was that feeling like?

Sameer Penakalapati: 5:12

Yeah, you know, I have, I've come across like, building the businesses myself, and I've seen lot of others, if you have a very core focus on building a business and staffing business space. You just really tied to it. Because, you know, when you are in the space and you might come across and say, hey, you know, I have this piece of work to be done, or it's just a one off, two off placement in a very generic space. And I'm just saying, if you have, you know, you don't have much margins, you don't have much business and revenue coming in, and it's amount of time that you put in that you could better build your talent. You better build a relationship with those very niche clients. Your value over time is very high because you are constantly nurturing. That's that scale of the business. And I have many cases saying I have this project in you know, I want you to guide. Can you guys work on it? And we said, No, that's not what we're focusing on, and I don't want to do it. And we'd be happy to give you references who have niche expertise in the space. So we have turned down many, many opportunities like that, just so we could realign and focus on servicing clients. Like, for an example, one of the business I built was focus on aerospace and defense clients, you know, and, and clients that have, you know, facility clearance and, and and those are very niche spaces, and, and then you, you would get the first customer. You would you would build your profile, you build that security clearances for the business, and then we continue to go after and provide a quality over time. You build a team around actually knowing how the aerospace defense industry works, how the utility business works, and what type of roles they hire. How cyclical is the business? You know, who are their competitors and how you help them. You build the use cases. You know. All this stuff really helps you to add a great value to your business. So, and I have seen it's tough, you know, it's it's not because, you know, you it's a low it's not a low hanging fruit. You make a concerted effort to build a business. So that's why it's a high value. I mean, otherwise,

Andy Weiss: 7:24

yeah, so I think Scott, I think we've got it, maybe the makings of a cliffhanger, because I know I feel like Sameer is teeing this up for the magic sauce at that high valuation thing.

Scott Montminy: 7:37

How do we get, how do we get over the 100 million dollar barrier? I think, is the million dollar question or the 100 million dollar question, I guess in this case, and we're going to get to that in another episode that that you'll be able to find. And also, I think maybe we'll touch on how automation might be play a key role in that smear. Because I think smaller business, like we talked about that low barrier to entry and building through niching and having and build using specialists. But also, you know, how much does technology play an important role when you're trying to scale the business and get to that big, 100 million dollar barrier that we talking about the next time? But until then, I want to thank you guys for taking the time to record this episode, and I want to encourage everyone who's listening and or watching to check out the other episode, particularly that one, as it dovetails off of this conversation right Here And until we see there we are Now Hiring!