Founders’ Initial Sacrifices Lead to Big Gains at Staffing Agency
Benjamin Smith, 27, started a staffing agency in a spare bedroom of his apartment with some funding from his parents and the help of three colleagues. Six months later, he was opening a second office in Chicago. Adhering to an extremely aggressive growth plan for his small business has been both exhilarating and exhausting for Smith, who says he has learned many lessons that will help when the company expands to Miami, Atlanta and Minnesota by next year. Smith was interviewed by freelance writer Karen E. Klein.
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I majored in public relations and speech communications and worked for two years out of college at a staffing firm. My job was with a large, successful agency. But my parents funded an independent staffing agency in Michigan, and when that took off, I decided to open one here. It was very difficult and cost a lot more than I had anticipated. Three guys worked for me for free to get the company started. At one point, among the four of us, we had about $60 in our bank accounts--combined.
Because we are all so young, we figured we’re either going to make a billion or go out of business. Every dollar that was extra, over expenses, we dumped back into the company. I still subsist on $600 a week. For us, the goal right now is to hire more people, pay a fair salary and attract the best talent. The sacrifices have paid off: Net income growth for the Los Angeles office in our first year is running at 796%, and that does not include the Chicago office. It should be close to 1,000% by year’s end.
Our business plan calls for us to establish offices on the West Coast, in the Midwest and on the East Coast. We opened our Chicago office after six months of operations in L.A. I probably should have waited longer and gotten things more established here. If I had it to do again, I would wait until the debt from opening one office was under control before expanding. But since we opened Chicago in August, they’ve billed out a little over $100,000. In their second month of operations, they posted a 6% profit.
I found that it’s very difficult to expand without killing your money-making office. We sent one of our best salespeople and one of our best recruiters to Chicago, along with another salesperson, and we hired a recruiter there. That meant that I lost three people who were producing here. It’s very difficult to hire and train new people. It was very risky and we didn’t replace them quickly enough, so our sales were lower in Los Angeles the month they left.
Also, I went to Chicago and spent 2 1/2 months getting everything set up there. Meanwhile, I was still running the L.A. office, which was experiencing unbelievable growth. Next time, I will get the new office up and running more quickly, be more efficient at it and spend less money. It’s very difficult when you are preoccupied and concentrating on too many things at once.
Thankfully, our sales have just continued to increase and increase and increase, so everything worked out, but I feel that we got lucky. We were balancing an entire house on Pixie Stix while we were waiting for the cement to dry. Our payroll in L.A. was running $25,000 a week, plus we had about $5,000 a week in expenses. Meanwhile, we were bringing in $35,000 or $38,000 a week. If anything bad had happened, our whole world would’ve come crashing down.
The most important thing in my business has been picking the right people. They work very well together and are extremely dedicated. The people who open new offices for me will get equity in the company, which helps to motivate them. The office leaders I have in place in Chicago think the same way that I do. They have the authority to make decisions about the business there because I know they will make the same decisions I would.
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If your business can provide a lesson to other entrepreneurs, contact Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016 or at kklein6349@aol.com. Include your name, address and telephone number.
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AT A GLANCE
* Company: Intelitech Employment Services
* Owner: Benjamin Smith
* Nature of Business: Employment staffing and services
* Location: 1611 S. Pacific Coast Highway, Suite 305, Redondo Beach
* Web site: https://intelitechstaffing.com
* E-mail address: recruiting@intilitechstaffing.com
* Year founded: 1998
* Employees: 15
* Annual revenue: $1.7 million
