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  • Writer's pictureNick Andriacchi

Tell Me About That Better Mousetrap Again?

And use it to gain an advantage over the competition.

There are so many things we cannot control. The economy. Consumer tastes. Demand for talent. Interest Rates.

Speaking of interest rates, the rapid rise in borrowing costs is something the staffing industry hasn’t experienced in a very long time. Every lender is borrowing money at a higher cost and the cost gets passed on to the staffing agencies. This affects every staffing company as our industry extends credit to all its customers.


Janet Jackson’s 1986 album Control is an excellent testament of taking advantage of things you can control. Prior to recording, she changed management and started working with a new songwriters and producers. The album was praised as both an artistic feat and a personal accomplishment.

  • She took control and her career soared to new heights.

Before delving into specific areas of a business that can be controlled, its important to know a key economic theory.

Law of Diminishing Returns

This is an important economic principle that every staffer should use.

The law of diminishing marginal returns states that when an advantage is gained in a factor of production, the marginal productivity will typically diminish as production increases. This means that the cost advantage usually diminishes for each additional unit of output produced.

A good example of this leads me back to my grocery days. A 3-person crew was the most efficient and cost-effective crew to clean up our processing room. If the crew was less, it took too long to complete the task. If we added a fourth person, the task wasn’t completed much quicker. The additional cost didn’t produce better results.

  • Inefficiency is cost that is tough to pass along to customers.

  • This principle can work well when building a value proposition for your client.

Now for the mousetrap

Before building it, know your marketplace and niche.

· How large is the market?

· How many potential customers exist within that market?

· Source of potential candidates?

· Is the market growing?

· How many competitors?

· What are the average margins?

  • What will my piece of the pie look like?

Now decisions can be made on how many sales/recruiters are needed to carve out your piece of the pie. Again, to few you won’t get there. Too many, your piece probably won’t get any bigger unless the market is expanded.

Automate With Industry Experts

Another example for staffing owners exists in the back room. It’s not about hiring a bunch of non-revenue producing employees. Productivity gains diminish with each additional employee hired.

Certainly, taking advantage of technology is a must. Electronic on-boarding, time clocks, time sheets or an app that integrates with back-office software is a must. This really cuts down on manual entry and improves the contractor experience.

  • Getting the most productivity out to each employee and the management team is a huge advantage.

In other words, do more with less.

A staffing company that uses a third party to handle basic back-office functions such as payroll and billing has an advantage over one that doesn’t. The cost is known, and management doesn’t have to spend time replacing employees that leave. Have we learned nothing from the great resignation? 😊

And if that company provides payroll financing that gives the staffing company the unlimited ability to scale (remember our industry extends credit) – all the better.

So, there’s the better mousetrap that gives the staffing company a competitive advantage. Lay out some cheese and have at it!

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