Good morning everybody!
This week, we dropped an absolute masterclass on building a highly valuable recruiting/staffing agency to potentially sell for 8-figures. My guest was Diane Prince, who achieved that very goal by founding, growing, and exiting a company for $28 million! (several times actually)
Diane walked me through her entire entrepreneurial journey, from deciding at age 27 to "build a business to retire in our 30s" to the specific strategies and numbers that enabled her to do exactly that just 6 years later.
Here are some of the main takeways:
The Fundamentals
Identify a niche and go deep (Diane started in title insurance staffing). That is something I keep hearing from successful agency owners/solopreneurs.
Build a recurring revenue model as soon as possible to increase valuation multiples. Easier said than done, so I really pushed Diane to give a few examples that would work even for low-volume recruiting with smaller recurrence.
Diversify with at least 3-5 major "anchor" clients accounting for <50% of revenue each
Target 20%+ EBITDA margins and 3-6x EBITDA valuation multiples
On Increasing Your Agency's Value
Build an executive team so the business can run without you
Implement robust accounting and reporting processes
Focus on client services that create embedded/recurring revenue streams
On Selling Your Agency
Hire an investment banker to package and sell your company
Potential acquirers include public staffing firms, private equity, competitors
Relationships and networking are crucial for finding buyers
One of Diane's biggest tips was to religiously mine your "warm leads" and nurture existing relationships, even with candidates you didn't place. Some of her biggest clients came from people who had interviewed elsewhere and gotten hired!
There's so much more value packed into this episode. Diane draws from 30 years of staffing industry experience, multiple exits, and coaching/consulting for today's entrepreneurs. I learned a ton from her stories and tactics.
Give The Modern Recruiter #73 a listen and let me know what you think!
What were your biggest takeaways? People who don't own or lead an agency: did you find this useful anyway?.
Just hit reply and let me know!
PS: I feel this episode pairs nicely with The Modern Recruiter #70: A Pricing & Value Masterclass for Recruiters with Jon Brooks! Check it out now!
Robin
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