The year ahead for the recruitment industry

The kind of year that recruitment agencies will have in 2003 will be defined by how successful a strategy they chose, according to financial analysts Plimsoll Publishing.

In the 2003 edition of their UK Employment Agencies Industry Analysis -, Plimsoll identifies four types of companies and suggests strategies that would best suit them individually in the year ahead.

1. Survivors
For 143 (16 per cent) companies, success will be mere survival: Recent years have seen these companies deteriorate. Levels of debt are dangerously high at 11.9 per cent of sales. They are also suffering from declining sales with a fall of 10 per cent last year.

2003 success strategy for survival: Consolidate to reduce debts by cutting costs and people. It is essential to return to profitability. The only other option is to consider being acquired by a stronger company.

2. Sales growing but woeful margins
2. For 101 (11.3 per cent) companies, success will be to improve margins These companies are exceptional in their ability to take large market share increasing sales by 34.8 per cent on average last year. Yet woeful margins and high debts have left these companies with very little to show for their success.

2003 success strategy for improving margins: These companies must slow down on sales growth to allow margins to improve from a current average of 0.3 per cent to at least a 2.7 per cent margin in 2003. These companies will need to consider costs more carefully to stay competitive.

3. Growth too slow
For 420 (47.1 per cent) companies success will be to get back into the market Market performance in recent years for these companies has been poor, sales rising only 1 per cent last year. Although focused on profits, these companies need to get back in the game for long-term staying power.

2003 success strategy for gaining market: : These companies need to stop playing it safe. To compete these companies need to attain to at least the industry growth average. This may mean spending some of their 2.7 per cent average margins now to expand in the future.

4. High-performance winners
For 227 (25.5 per cent) companies success will be to maintain high performance These companies are every business owner's dream. Leading the industry, these companies are winning on all fronts with a strong balance sheet, 29.3 per cent average sales growth and 5.5 per cent average margins.

2003 Success strategy for maintaining high performance: : Perhaps the most challenging strategy of them all is to try to stay in a winning position. Try going on the acquisition trail while you have the cash to spend. It is essential these companies do not get complacent and allow the industry to catch up.