QUESTION: Mike, I am beginning to think about my 2021 business plan. As a solo operator, what are the key constructs I should have as part of an annual plan? – Mary, San Jose, CA
ANSWER: The thoughts I will share apply to solo recruiters and firm owners creating annual plans with their recruiters. When I did my yearly planning with my recruiters, who were, in effect, solo operators, I used a template that starts with getting crystal clear on what the income goal the coming year.
The reason I begin with getting clear on desire is in my experience; people do not plan or do not commit to a plan because of a lack of clarity on what they want. People will throw out a number of $300,000, $400,000, $500,000, but there is no context or ‘why’ tied to that goal. There is nothing wrong with a number itself, but generally, when I find somebody that wants to bill $300,000, after a year of billing $150,000, and I ask this question, why is that number significant to you? What does that number allow for that you do not have now or that you want?
If a recruiter said that they want to bill $300,000, and I ask how they would feel if they billed $225,000, they would admit at that billing level it would be a really good year. The reason they give is that $225,000 is $75,000 more than they did the previous year, which is exciting to them. That excitement at $225,000 means they will not do what is necessary to break through to $300,000. If you are passionate about achieving the billing goal, any number below it should bring forth some feelings of regret or remorse.
If you are going for a level that you have never hit before, you will encounter challenges you have never faced in the past. My experience is, without a passionate reason to make it happen, you will settle for good enough. The #1 litmus test I use when determining a revenue goal is always: Is there a passion for that number? If there is passion behind that goal, you will work through rejection, try out new techniques, get support, and push yourself to activity levels you may not have done so in the past because there is a beacon.
Once you settle in on and are committed to your revenue target, the next step is to run it through a free tax program, something like Turbo Tax. Figure out how much after expenses you are going to keep. This is how you gain even greater clarity on what that billing goal will yield in personal income.
For example, if you bill $300,000, you will have other expenses such as a LinkedIn subscription, internet, website, etc. associated with your business. You will also have to pay your state and the federal taxes out of that revenue. What’s left is net money in your pocket. After all, the net will drive you because it will make the difference, such as reducing credit card debt, building on a retirement account, new homes, cars, vacations, and stuff like that.
Once you know your net income, there is a straightforward equation to determine the needed metrics to achieve it.
If you billed $150,000 and your average fee was $25,000, that means you made six placements. If you do not know your first time interview to placement ratio, it is safe to use a baseline of 8 interviews to a placement. That is where I came up with about two interviews per week, at an average fee of $25,000, netting $300,000. With eight interviews a month, in theory, that results in one placement per month.
You will then want to determine other benchmarks to gain more clarity on your metric goals. These include the number of marketing conversations to get a job order and the number of candidates conversations you need to get the first interview. If you do not have this data already, you can use 15 candidate conversations to one interview, which means a rhythm of 30 candidate conversations per week, or six per day.
If your job order to placement ratio for contingency recruiting is 4 to 1, you will need one job order per week. My clients see 10 to 12 marketing conversations per job order, an additional two or three per day. You know that a successful day is when you have completed six recruiting conversations and two marketing conversations. If you do that every day, you will have had a successful week.
Now that you know what a successful day and week look like to meet your revenue goal, you can begin to decide what changes or systems need to be in place to support you. Determine gaps in information, knowledge, and execution. That could include an upgraded applicant tracking system, a better LinkedIn subscription, outsourced research, or content marketing. All of these enhancements then get layered in as monthly and quarterly targets.
Fantastic question, Mary. We do hours and hours on planning, but unless your goal is something you are passionate about, will you be able to make it happen in your business?