Managed Staffing: A Cure for “Cashflowbia”

August 22, 2011
Posted by Link Staffing Services

Nearly every business rides the roller coaster from peak selling periods down to valleys, then (we can only hope) up again. It’s a dizzying ride. And while it’s easy to make money when the roller coaster is at the peak, the ride down can cause a severe case of “cashflowbia,” the fear of running low on cash before the roller coaster heads back up the hill.

It’s a fixed cost problem

The problem, of course, is that your fixed costs—mainly labor and leases—don’t fall along with your sales volume. That’s what makes them “fixed” costs, after all. Even if you fill in with part-timers, contractors, temps and overtime during the peak season, you’re still probably left at the bottom of the ride with a base of workers, who spend the time twiddling their thumbs or doing things well below their pay grade, while collecting checks. It looks kind of like the graphic below, with money being wasted down in the stripey valley, where cashflowbia is can be extreme.

 

Managed staffing turns fixed costs into variable costs

The solution to the problem is something called “managed staffing.” “Managed staffing” is when you outsource a whole layer of labor—generally the positions of least value during the slow periods—to a third party, thus turning those fixed costs into variable costs that disappear when demand disappears. It looks something like this:

 

Managed staffing gives you the flexibility to handle unexpected peaks and valleys, too. Plus, turning a fixed cost into a variable cost gives you more price flexibility when you need it. You’ll also find your core labor force will get an added feeling of security when they don’t run low on work during the slow periods.

There are a number of staffing services that offer Managed Staffing solutions. If you’re suffering your own case of cashflowbia, you may want to check one out.

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