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10 March 2009 6:45am

Average gross profit per recruiter has fallen to well under the industry standard of a three-times multiple, according to the latest Recruitment Industry Benchmarking Report.

Among the 103 companies reviewed by MDBTWO for the RIB Report, the average gross profit for every dollar of an income producer’s salary plunged by 15 per cent in the six months to December – to $2.50 down from $2.93.

“Average” performances ranged from $2.00 to $3.00, the report said, while “good” performance multiples ranged from $3.10 to $3.30 times salary. The top performers achieved a multiple of 3.4 or more.

The average volume of gross profit per income producer (the sum of temp gross profit plus perm) fell by 14 per cent from the previous six months, down from $132,500 to $113,900 for the half year.

Average performances ranged from $82,000 to $146,000, while good performances ranged from $147,000 to $180,000. Top performers achieved at least $181,000, and the best recorded by the index was $313,700.

Only five per cent of firms averaged $250,000 or more per income producer, and only a few had individual billers exceeding $250,000 for the half year.

The report revealed rapidly changing market conditions in the past half-year, which it said “left many business owners in a state of shock”.

It added: “One thing is certain: the difficulties we are now seeing throughout the majority of industry sectors are likely to get worse before they begin to improve”.

The report’s suggestions for weathering the storm included:
“Accept that the situation is most likely to get worse, understand the severity of this fact and don’t bury your head in the sand hoping for a quick change in general market conditions. If you haven’t already done so, you can and certainly should take action now.”

“Work hard to truly reduce your operating overheads and make sure they don’t exceed your realistic gross profit projections. Analyse all your expenditure in detail and find ways to squeeze more out of your spending. Take every opportunity to re-negotiate with your suppliers and shop around for the best deal available. Eliminate as much discretionary spending as possible and consider all new investments with great caution.”

“Get involved in the collection of your debts and monitor your collections at least twice a week. Don’t extend lengthy credit terms to client that are slow in paying you, and if you are in doubt about a client, meet with them quickly. Whenever possible get a directors guarantee to provide you with more certainty. Consider purchasing insurance to cover bad debts.”

“Don’t stop planning beyond the immediate crisis. Those businesses that can take a longer term view as well as focus on the current and immediate priorities will be the ones to prosper when the economy picks up again.”


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