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3 indicators that should set your alarm bells ringing!

Posted by Nigel Harse FRCSA on 26 March 2024

A common inquiry from Directors and Senior Executives in the staffing and recruitment agency sector pertains to key indicators signaling potential financial loss. Here are a few telltale signs:

1. Below average productivity, indicated by a gross profit per income producer sitting below industry norms, can pose a reasonable risk to profitability. However, if this figure hovers around the lowest quartile, it is likely to cause significant concern. In the Australian context, maintaining a gross profit of $20,000 per income producer per month is seen as a threshold for stability and the probable onset of some sleepless nights

2. When Management & Staff expenditure surpasses 70% of Gross Profit and shows an upward trend, it is a clear warning sign that requires immediate attention.

3. Another critical metric is Gross Profit per $1 of team remuneration - falling below $1.70 and continuing to decline indicates a pressing need to review productivity levels or operational costs promptly.

Did you pick up the common thred in these metrics? It is of Course Gross Profit, your lifeblood.

By keeping a close eye on these key metrics, organisations can proactively identify areas of concern and take timely corrective action to safeguard their financial health and viability.

Nigel Harse FRCSAAuthor:Nigel Harse FRCSA
About: Highly regarded and widely sought after for his knowledge, unwavering passion and innovation, Nigel is a 40-year veteran of the recruitment industry.
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Tags:Business ProfitabilityRecruitment Agency ProfitSuccessful RecruitmentStaffing and Recruitment

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