Access to capital is the single most important item to a staffing company that place assignment employees. Most staffing companies need at least six weeks worth of accounts receivable financing just to pay its assignment employees and direct payroll costs. They also need 2 – 3 months worth of working capital to pay office salaries and fixed expenses. Since most entrepreneurs want to grow their businesses, the will need even more capital to fill additional open orders.

Figuring out where to get the cash to fill open orders is a good problem to have. Figuring out where to cash to pay for stagnant payrolls and expenses isn’t so good. Either way - finding the right solution to the cash-flow problem takes some common sense and an open mind.

In this economy, plenty of staffing companies – as well as other businesses - are being forced to choose who gets paid when there isn’t enough cash to meet all obligations. Obviously, you must pay your assignment workers because they are the ones that will generate profits. And you definitely want to use available cash for additional profit-generating employees. So who will get the short the stick?

When short on cash, can you make your lenders wait for the next payment? How about your suppliers? These are tough choices, but if you’re the one calling the shots, there’s one item you definitely want to put at the top of the list to be paid: payroll taxes.

Uncle Sam is the Owner

Employers are required to withhold income tax and social security tax from paychecks and pay that money over to the IRS. The employer is considered to hold that money in trust for the government. This rule doesn’t apply to other payments, such as income tax. Payroll taxes are special, because they’re required to be withheld. As a result, this tax debt is in a different category from others. The employer may owe money to many other creditors, but it doesn’t hold money in trust for them. When it comes to payroll taxes, the government is considered the owner of the money even before it has been paid over. If you don’t pay it over, you’re doing a bad thing, and you can expect something bad to happen.

Granda Hills Community Hospital Case

That’s what happened to James Doulgeris in a recent case. He was appointed interim president and CEO of a hospital that was in bankruptcy. According to a district court opinion, the hospital was already delinquent in its payroll taxes when he took over. Yet he had authority to sign checks, and in fact signed checks totaling millions of dollars to other payees while the payroll taxes remained unpaid. Despite his argument that the CFO was the person in charge of deciding whom to pay, the court found that Doulgeris was a “responsible person” and entered judgment against him in the amount of nearly $2 million.

It may be tempting to suppose that a different rule would apply if the business never had the cash to pay the taxes in the first place. For example, a business might have a $100,000 payroll obligation that includes $15,000 of withholding. If it has only $85,000 on hand, it might pay $85,000 to the employees and plan to come up with the $15,000 required for the payroll tax later. The pay stubs will indicate it withheld $15,000, but in reality that additional money never existed. If the additional $15,000 never appears, the responsible person penalty can apply even though the business never had the money. The reason: if it had only $85,000 on hand, it was not in a position to pay that amount to employees, because any amount paid to employees has to be matched with the appropriate amount of withholding.

Trust Fund Recovery Penalty

The IRS can hit you with this penalty even if you aren’t an owner or someone who otherwise might benefit financially from the failure to pay these taxes. If you could have caused the employer to pay the taxes and you failed to do so, you can end up on the hook for the entire amount.

How can the government collect the tax from you, when you weren’t the person who owed it in the first place? The answer: they don’t collect the tax from you. They collect a penalty, and the penalty happens to be equal to the amount of the tax that wasn’t paid by the employer. It’s a harsh result, but that’s the law as written by Congress. The lesson: when your business is in trouble, make sure the payroll tax is paid, even if other creditors are screaming for their money.

Solution: An Outside Payroll Processor and Funder

An outside payroll processor like an ADP or Paychex will take away the temptation of diverting money due the IRS to other expenses. Payroll processing companies accrue for all payroll taxes the week they are incurred. While these type of companies “keep things straight” with the IRS and other government taxing agencies, they will not help grow your business.

For a complete solution, turn to a full service payroll funding company. They will not only process payroll and deposit tax money, they will fully finance payroll growth due to an increase in business. Increased business equals larger profits for your company without having to rely on Peter’s money.

Simply put: a payroll funder will supply an infusion of cash that gives a staffing company the ability to pay Paul while staying on Peter’s good side! And when Peter is the IRS that is the only side you want to be on.

Staffing companies are currently faced with the cost and administration of workers compensation and employee benefits. Some have considered moving their employees to a Professional Employer Organization (PEO) in order to reduce their costs and headache’s. But in the end, did those who chose to go that route really solve anything? Were they fully informed be making the decision?

There may be a perceived savings – but at what cost. A reduction in workers comp. cost is the main motivator and the item most owners consider the most in making their decision. There may also be benefits that staffing companies can offer their temps.
Before moving your employees to a PEO consider the following:

• Cost
• Control
• Brand

Cost
Yes cost. Before counting the dollars you’ll be saving on workers compensation (w/c), calculate all the other costs you’ll be incurring.
• Administrative – Most PEO’s bundle this in total percent charged on payrolls – remember they have to make a profit too.

• Float – How soon in advance do they debit your account for payroll? Does that inhibit you from growing your company?

• SUTA - Is their State Unemployment Tax % greater than yours?

FUTA & SUTA Cap - Do they cap FUTA & SUTA once your employees reach the limits? In other words do they reduce the amount they charge you once your employees reach the limits? For example an employee earns $28,000 during the year. Your FUTA & SUTA costs are 4.0% of payroll. Assume the taxing limit is $8,000 in wages. If your PEO doesn’t reduce their percentage this alone just cost you an extra $800. And that’s just on one employee.

• If at some point you choose to return the employees to your company you will be treated essentially as a star-up since you have no experience rating. This may limit your w/c option to the state pool – thus raising your cost.

• Are you paying for services you don’t want or need?

• Any other charges besides the percentage of payroll

Control
This is another big issue you need to consider. Since the PEO is now the employer of record they may:

• Limit the types of jobs your company can place. This may really hinder your ability to grow your business.

• Have very little ability to control w/c modifier. A PEO does business with many staffing companies and have little control over injuries & w/c claims. One company that does not have a good workplace safety program in place can cost you a pretty penny the following year in higher w/c premiums.

• Employee benefits. Most PEO’s require minimum number hours worked before temps can take advantage of the benefits. You may not have the ability to adjust the number in order for you to really offer these benefits to your employees.

• How is their payroll processing procedure? What hoops does the PEO make you jump through when a w/c or unemployment claim is filed? Is it more work to explain to them what happened than it is to deal directly with the insurance or government agency?

• A PEO is a potential competitor of yours. Are you comfortable giving them your client list.

• Like an adjustable rate mortgage that you can’t control, how much will your percentage rise and savings decrease next year?

Brand
As an independent staffing company you need to have your name in the marketplace as much as possible. Most (ok…all) independents do not have the dollars to advertise and build there brand names as the nationals do. Part of the branding process is word of mouth. A lot of that is done by your employees.

Ask yourself the following questions:
• When your employees see the PEO’s name on the checks they will view them as their employer – not you.

• When they speak with their supervisor or other prospective employers, will they name the PEO company as their employer or your company?

• Will the decision makers at the work site view your company or the PEO as the company they do business with?

When all is said and done, an independent staffing company cannot afford to give this valuable (and free) piece of market exposure?

At first blush, switching employees to a PEO maybe an option for an independent staffing company to consider. But don’t make a hasty decision – it can cost your company plenty in the end.

The Employment Situation - October 2011

Nonfarm payroll employment continued to trend up in October (+80,000), and the unemployment rate was little changed at 9.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment in the private sector rose, with modest job growth continuing in professional and businesses services, leisure and hospitality, health care, and mining. Government employment continued to trend down.

Household Survey Data

Both the number of unemployed persons (13.9 million) and the unemployment rate (9.0 percent) changed little over the month. The unemployment rate has remained in a narrow range from 9.0 to 9.2 percent since April.

Among the major worker groups, the unemployment rate declined for blacks (15.1 percent) in October, while the rates for adult men (8.8 percent), adult women (8.0 percent), teenagers (24.1 percent), whites (8.0 percent), and Hispanics (11.4 percent) showed little or no change. The jobless rate for Asians was 7.3 percent, not seasonally adjusted. In October, the number of long-term unemployed (those jobless for 27 weeks and over) declined by 366,000 to 5.9 million, or 42.4 percent of total unemployment. The civilian labor force participation rate remained at 64.2 percent in October, and the employment-population ratio was little changed at
58.4 percent.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) decreased by 374,000 to 8.9 million in October. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

In October, 2.6 million persons were marginally attached to the labor force, about the same as a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 967,000 discouraged workers in October, a decrease of 252,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.6 million persons marginally attached to the labor force in October had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

Establishment Survey Data

Total nonfarm payroll employment continued to trend up in October (+80,000). Over the past 12 months, payroll employment has increased by an average of 125,000 per month. In October, private-sector employment increased by 104,000, with continued job growth in professional and business services, leisure and hospitality, health care, and mining. Government employment continued to contract in October.

Employment in professional and business services continued to trend up in October (+32,000) and has grown by 562,000 over the past 12 months. Within the industry, there have been modest job gains in recent months
in temporary help services and in management and technical consulting services.

Employment in leisure and hospitality edged up over the month (+22,000). Since a recent low point in January 2010, the industry has added 344,000 jobs.

Health care employment continued to expand in October 2011 (+12,000), following a gain of 45,000 in September. Offices of physicians added 8,000 jobs in October. Over the past 12 months, health care has added 313,000 jobs.

In October, mining employment continued to increase (+6,000); oil and gas extraction accounted for half of the increase. Since a recent low point in October 2009, mining employment has risen by 152,000.

Manufacturing employment changed little in October 2011 (+5,000) and has remained flat for 3 months. In October, a job gain in transportation equipment (+10,000) was partly offset by small losses in other manufacturing industries.

Within retail trade, employment increased in general merchandise stores (+10,000) and in motor vehicle and parts dealers (+6,000) in October. Retail trade has added 156,000 jobs over the past 12 months.

Construction employment declined by 20,000 in October, largely offsetting an increase of 27,000 in September; both over-the-month changes largely occurred in nonresidential construction. Employment in both residential and nonresidential construction has shown little net change in 2011.

Employment in other major private-sector industries, including wholesale trade, transportation and warehousing, information, and financial activities, changed little in October.

Government employment continued to trend down over the month (-24,000), with most of the October decline in the non-educational component of state government. Employment in both state government and local government has been trending down since the second half of 2008.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.3 hours in October. The manufacturing workweek rose by 0.2 hour to 40.5 hours, and factory overtime remained at 3.2 hours.
The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.7 hours in October.

In October, average hourly earnings for all employees on private nonfarm payrolls increased by 5 cents, or 0.2 percent, to $23.19. This increase followed a gain of 6 cents in September. Over the past 12 months, average hourly earnings have increased by 1.8 percent. In October, average hourly earnings of private-sector production and nonsupervisory employees increased by 3 cents, or 0.2 percent, to $19.53.

The change in total nonfarm payroll employment for August was revised from +57,000 to +104,000, and the change for September was revised from +103,000 to +158,000.

______________
The Employment Situation for November is scheduled to be released on
Friday, December 2, 2011, at 8:30 a.m. (EST).

The conventional wisdom of end-users of staffing is that they think all agencies are the same so they tend to focus on price. They basically think that contract labor and the services a staffing agency provides are pure commodities. In some ways, our industry has been guilty in helping create that image. But realistically, how can humans be considered a commodity? By extension, how can all staffing services offer the same service?

Humans by nature are complex and work place habits vary greatly from employee to employee. The ultimate goal for a staffing firm is to place these humans (candidates) in jobs that they are qualified to do, in cultures that they can thrive in and at a price that can produce a decent profit. This will take some skill and strategy, but it can be done.

When approaching end-users of staffing are you differentiating yourself from the marketplace? A typical sales call usually consists of “Are you hiring?” or something along those lines. The usual response is “no” then click – end of conversation. A better way to approach potential accounts is to ask questions that uncover problems and then offer solutions to those specific problems. Once we convince ourselves that human capital has value and the solution offering is different from what the marketplace currently offers then you are ready to end the practice of commodity selling and begin the consultative sales cycle.
The first phase in a consultative-type sale is information gathering. Collect some basic information on the industry and company before making the initial contact. You want to come across as knowledgeable on key issues that affect their business.
The second phase should consist of information gathering specific to the company. Build upon what you know and start uncovering challenges that your prospect faces. Price should not be in play at this point in the process. A useful rule to follow is - Ask questions, listen and whatever you do – don’t start selling! Sales people love to talk and tend to confuse the prospect.
Only tell the prospect what they need to know to make a decision.

The third phase is to begin developing a solution to resolve their challenges. Keep asking relevant questions to make sure you fully understand what the prospect needs. Involve your prospect in the process! People are more apt to implement a plan if they feel they helped design it. Price is still not in play at this point in the process and the rule is still in effect - Ask questions, listen and whatever you do – don’t start selling yet!

The fourth phase is to complete the solution to their unique challenge. The key here is not to go overboard and offer services that they don’t want or need. The perception that the prospect will process is that they will pay for things that they don’t need. Price is still not in play at this point and the rule is still in effect - Ask questions, listen and whatever you do – don’t start selling! Tired of reading that yet?

Once you and the prospect have all your questions answered, you can move on to phase five which is to formally propose a solution and pricing. This is gut-check time for most salespeople. But at this point, you have a prospect that has been fully involved in designing the solution and they are confident in your ability to deliver. Ok, you can start selling now.
Phase six is negotiation and close. In the 1980’s one of President Ronald Reagan’s strategies before engaging the former Soviet Union was to be in a position to “negotiate from strength”. He didn’t start arms reduction talks until he felt confident that the US was in a position of strength to extract the concessions we wanted from the Soviets. In other words, don’t start negotiating until you’re in the strongest position to close the sale. If you’ve done your job right, you should have some leverage in terms of the time your prospect has invested with you, the specific solutions that they helped design and an acknowledgment of the benefits of using your company.

Present your proposal with confidence and stay firm on your price. Conceding on price right away shows the weakness of the sales person as well as commoditizing the offering. Once you drop the price your prospect will continue to demand price and other concessions. The dynamics of the relationship change as well. Your prospect will now view you as simply another staffing agency instead of a trusted business partner. This is not a strong position to be in.

A couple of good strategies to use while negotiating are to:
1. Add value
2. Trade concessions instead of just conceding

Again hold on price but offer carrots that are of value to the prospect i.e. internet time approval, on-line usage reports, additional on-site visits, electronic invoicing and payment etc. If you still need that little extra to close the deal, consider trading better terms (more volume, guaranteed usage, better payment terms etc.) for a small break on price. Last but not least, don’t walk out of the meeting before asking for the business.

The consultative sale is a lot more involved than just filling open positions. However, by positioning your staffing company as trusted partner instead of a commodity vendor you will build profitable long-term relationships with your clients.

Sign-up for Damian’s unlimited funding and/or productivity solutions and earn up to $1000. Hey start-ups - we want your business too! We will match the first $500 profit payment, Dollar for Dollar.

Already a client? No problem. Directly refer a staffing company to us and we will pay a referral bonus equal to the sign-up bonus immediately after the first week of funding.

Call 1-800-232-6426 to find out more details. We appreciate your business.

The Federal Reserve Beige Book Survey
October 19, 2011

Prepared at the Federal Reserve Bank of Chicago and based on information collected on or before October 7, 2011. This document summarizes comments received from business and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.

Reports from the twelve Federal Reserve Districts indicate that overall economic activity continued to expand in September, although many Districts described the pace of growth as “modest” or “slight” and contacts generally noted weaker or less certain outlooks for business conditions. The reports suggest that consumer spending was up slightly in most Districts, with auto sales and tourism leading the way in several of them. Business spending increased somewhat, particularly for construction and mining equipment and auto dealer inventories, but many Districts noted restraint in hiring and capital spending plans. By sector, manufacturing and transportation activity was reported to have increased on balance. A few Districts also reported slight improvements in construction and real estate activity; nonetheless, overall conditions for both residential and commercial real estate remained weak. Districts reporting on nonfinancial services cited mixed results with activity varying widely by industry. Loan demand by and large moved lower, with the exception of an increase in mortgage refinancing in many Districts. Crop conditions at harvest were generally less favorable than a year ago. In contrast, energy and mining activity continued to strengthen in several Districts, with the exception of some storm-related slowdowns in the Gulf of Mexico. Cost pressures eased in the majority of Districts, though there was some further pass-through of earlier increases to downstream prices. Wage pressures remained subdued outside of a few exceptions in which firms noted having difficulty finding appropriately skilled workers.

Consumer Spending and Tourism

Consumer spending was up slightly in September. The majority of Districts reported increases in auto sales, with the largest improvements in San Francisco and New York. Several Districts noted a greater availability of new vehicles as the supply disruptions that had plagued auto dealerships in the aftermath of the Japanese disaster subsided. Contacts in the Cleveland, New York, Philadelphia, and Dallas Districts indicated that demand for used cars remained high and that some models were still scarce. A large number of Districts reported that non-auto retail sales were flat to down in September; but a few, such as Philadelphia, Richmond, and Dallas noted an increase in customer traffic late in the month and into early October. Back-to-school sales were described as being fairly strong in New York and satisfactory in Richmond. In addition, Boston, Chicago, Kansas City, and Dallas cited some strength in the sales of big-ticket or luxury items, while Minneapolis and Chicago noted that more consumers were trading down to value products at grocery stores.

Tourism was generally higher in those Districts reporting on the sector. Contacts in New York noted that, despite the negative impact of Hurricane Irene, Broadway and hotel revenues continued to rise. Richmond reported substantial damage from Hurricane Irene to some tourist destinations that were subsequently forced to close for repairs, but tourism remained vibrant in other areas. Boston, Atlanta, and Minneapolis also cited increases in tourism, with hospitality contacts in Atlanta expecting a robust holiday season. Tourism results were mixed across various destinations in the San Francisco district.

Business Spending

Business spending increased somewhat from the previous report. However, contacts in a number of Districts reported that a weaker and more uncertain economic outlook had increased caution and was weighing on future spending plans. Philadelphia, Richmond, and Chicago indicated that many retailers were reluctant to build inventories ahead of the holiday season, pointing to recent declines in consumer confidence. Auto dealers were an exception, as they continued to replenish inventories that ran low in the aftermath of the production disruptions caused by the Japanese disaster. Capital spending continued as planned in most Districts. Respondents in Cleveland, Atlanta, and Chicago noted increased purchases of equipment in the manufacturing, mining, and transportation industries. Boston and Minneapolis indicated that some manufacturers planned to expand capacity either through mergers and acquisitions or the building of additional facilities. Atlanta cited a pick-up in corporate expansion and relocation interest, and Chicago noted an increase in mergers and acquisitions activity among middle-market firms.

Nonfinancial Services

Reports regarding nonfinancial services were mixed in September. Richmond noted slower overall activity, and St. Louis cited reduced demand for telecommunications, media, and education services. Demand for accounting and legal services was reported to have been unchanged in both Dallas and San Francisco. On the positive side, contacts in St. Louis reported that demand for business support services increased, and Boston reported strong business conditions for economic consulting firms involved with litigation work and advertising firms helping to market financial services. In addition, San Francisco noted continued growth in demand for technology services, Minneapolis noted an increase in activity in software and engineering, and Philadelphia cited some growth in logistics. Staffing at nonfinancial service-sector firms was reported to have been up slightly in Richmond, but growth slowed in Chicago and Philadelphia reported flat activity.

Manufacturing and Transportation

Contacts indicated that manufacturing and transportation activity increased since the last report in most Districts. A large number of Districts reported higher production of autos and other transportation-related equipment. Cleveland, Atlanta, and Chicago noted increases in auto production, and Boston, Richmond, Chicago, and St. Louis all cited robust activity for auto suppliers. Dallas reported healthy demand for nondefense transportation goods. Boston, Richmond, Kansas City, and San Francisco indicated continued growth in commercial aviation and aerospace manufacturing. Steel production rose in Cleveland and Chicago, and in a number of Districts metal manufacturers’ new orders also rose. Other areas of manufacturing were more mixed. The Dallas report noted a decline in refining activity. However, both Dallas and Atlanta continued to note robust oil and gas drilling activity, and this activity was said to be propelling demand for related equipment from suppliers in Chicago. Manufacturing of construction materials or equipment was reported to have increased some in Philadelphia, Chicago, and Dallas but remained weak in most other Districts. Growth in high-tech manufacturing continued to be robust in Boston, but moderated in Dallas and San Francisco. Respondents reported that food production was up in Chicago, Minneapolis, and San Francisco, steady in Dallas, and lower in Boston. Manufacturers of consumer products reported a softening in orders in Richmond, Chicago, and Dallas, while new orders for apparel increased in San Francisco. Freight traffic increased in Cleveland and Atlanta, driven in large part by shipments of commodities, and Richmond also noted that port activity for commodities continued to be robust. However, Richmond also indicated that imports and exports, in particular of consumer goods, were both somewhat soft during what is typically the peak season for trade.

Real Estate and Construction

All twelve Districts reported that real estate and construction activity was little changed on balance from the prior report. Residential construction remained at low levels, particularly for single-family homes. That said, Philadelphia, Cleveland, and Minneapolis noted small increases in single-family construction, and construction of multifamily dwellings continued to increase at a moderate pace in Boston, Philadelphia, Cleveland, Kansas City, Dallas, and San Francisco. Home sales remained weak overall, and home prices were reported to be either flat or declining across all of the Districts. In contrast, rental demand continued to rise in a number of Districts. Commercial real estate conditions remained weak overall, although commercial construction increased at a slow pace in most Districts. Boston, Philadelphia, St. Louis and Cleveland cited some gains in demand for construction of education, healthcare, and institutional-related buildings, and New York reported an increase in hotel development. Furthermore, Philadelphia, Cleveland, and Chicago noted an increase in demand for manufacturing and distribution facilities. Vacancy rates remained elevated, but Boston, Atlanta, Chicago, Minneapolis and Dallas reported an increase in leasing activity and Philadelphia and San Francisco indicated rising investor interest in well-leased office space.

Banking and Finance

Financial activity was reported to have weakened some since the last report. Dallas noted that the improvement in financial conditions had stalled, and Chicago indicated a further tightening of credit conditions, particularly for financial firms. In addition, New York reported noticeably weaker activity in the securities industry. Loan volumes were either flat or down slightly in most Districts. Consumer loan demand moved lower according to respondents in Cleveland, Chicago, and Kansas City, and it held steady in New York and San Francisco. However, New York, Philadelphia, Cleveland, Richmond, Chicago, and Kansas City all noted an increase in mortgage refinancing activity given lower mortgage rates and Cleveland also noted continued strength in auto lending and increased demand for business loans. Meanwhile, business loan demand was described as down somewhat in Philadelphia, Chicago, St. Louis, and Kansas City and was little changed in most other Districts. Loan standards were described as still tight for many classes of borrowers. That said, several Districts indicated that strong competition among banks for high quality borrowers was leading to lower rates and fees for these customers.

Agriculture and Natural Resources

Contacts generally reported that crop conditions at harvest were less favorable than a year ago, although results varied by and within Districts. Lower yields than a year ago were reported for major crops in the Chicago, Minneapolis, and Dallas Districts and in most of the Kansas City District. Even so, yields were large enough to alleviate worries about shortages. Corn, soybean, and wheat prices moved down, while some contacts noted higher prices for cotton. Drought conditions persisted in the Atlanta, Kansas City, and Dallas Districts, and pastures were in worse shape than a year ago in many areas. Although there were declines in feed costs, poultry and livestock producers remained pressured by drought and the cost increases of the past year. Hog, poultry, and dairy prices decreased, while cattle prices increased. Still, agricultural prices tended to be higher than a year ago, boosting farm incomes outside of drought-stricken areas. Chicago and Kansas City reported higher agricultural land values.

Activity in energy-producing sectors strengthened in the Cleveland, Minneapolis, Kansas City, Dallas, and San Francisco Districts. Atlanta reported a decrease in off-shore operations in the Gulf of Mexico due to Tropical Storm Lee. Cleveland and Atlanta also anticipated increased capital investments in oil and gas production, since new technology has lowered costs and boosted output. Contacts in Minneapolis reported plans for expanded wind generation of electricity. Mining activity in the Minneapolis, Kansas City, and San Francisco Districts was strong.

Employment, Wages, and Prices

Respondents indicated that labor market conditions were little changed, on balance, in September. Several Districts cited only limited and selective demand for new hires. Cleveland, Richmond, Atlanta, Chicago, and Kansas City all noted that firms in some sectors that were hiring more broadly (such as manufacturing, transportation, and energy) were also experiencing difficulties in finding appropriately skilled or qualified labor. Respondents in the Boston, Richmond, Atlanta, and Chicago Districts indicated that hiring was being restrained by elevated uncertainty or lower expectations for their future growth. New York reported that deteriorating business conditions in the finance industry had led to a pull back in hiring with some layoffs anticipated in the months ahead. Richmond and Chicago reported reduced seasonal hiring in retail trade given apprehension about the strength of holiday sales, while New York indicated that seasonal hiring was likely to increase.

Most Districts reported that wage pressures remained subdued. Exceptions were generally for workers with specialized skills or in areas where firms were having difficulty finding workers. For instance, Atlanta and San Francisco cited wage gains for workers with specialized skills, such as in information technology, Minneapolis reported wage increases in the energy industry, and Cleveland noted higher wages for truck drivers. In addition, contacts in Minneapolis and Cleveland noted increases in non-wage costs such as healthcare. Most other cost pressures moderated in September. Although Kansas City and San Francisco reported increases in raw material costs, most Districts reported a general decline in commodity prices, including prices of oil and industrial metals. Many Districts indicated that there continued to be some further pass-through of past increases to wholesale prices. Though retail contacts noted a hesitation to increase prices with demand still weak, many Districts reported increased pass-through of costs in the retail sector, particularly for food and cotton-based goods.

For more information about individual districts, please click the following link http://www.federalreserve.gov/fomc/beigebook/2011/20111019/default.htm.

Simple Steps to Reboot Your Brand

Written By Walter Dailey

Published October 19, 2011

FOX Business

A good friend of mine is a very successful financial advisor and I often find myself engaged in spirited debates with him over the state of the economy and our national debt. He usually runs circles around me with his extensive knowledge of the financial system. Despite my inability to hang with him on the minutia of our country’s fiscal policies, he usually gives me credit for my typical comeback – well, we didn’t get here overnight (profound, I know). For some of you, your small business may also be suffering through economic issues – revenue is down, foot traffic is waning and inventory is hanging around way too long. If you’ve found this to be true, my sage insight will come to the fore – you didn’t get here overnight. If you’ve found yourself in this tough spot and things aren’t changing, it may be that your brand has been in the decline for a while and it’s time to seriously consider rebooting your brand – a complete reinvention of your company’s persona.

The Old Spice product line is a classic example of a successful brand reboot. The brilliant minds behind this comeback story took an outdated, uninspiring brand and made it into fresh, new and engaging. They challenged the status quo with nonlinear, out-of-the-box thinking. Despite the inherent risk, they managed to pull off a successful reboot.

If you think you’re due for a reboot, consider the following as you seek to rise from the ashes:

Are You Listening, Really?

Criticism is tough to take, especially if it’s about your baby (your small business). Be bold enough to read reviews about your company online or hear directly from customers and employees. Don’t dismiss them merely because they are incredibly harsh and/or anonymous. Don’t assume that all negative feedback can be chalked up to those who only have an axe to grind. Pay attention to these stinging remarks; look for a common theme. They very well may be pointing you to a better path.

Wipe The Slate

Nothing says brand reboot like a new name, revamped packaging, a remodel, redesigned logo and slogan. Sure, these things are “surfacy”; however, I’m a firm believer in shaping reality via perception.

Reassess Your Line

How compatible is your service/product with the times? Be sure that your offering is in lockstep with what consumers want. Don’t be the guy that runs the 8-Track & Cassette Tape Outlet and are clueless as to why customers are not beating down your door.

Defy Norms

When it gets foggy, most small businesses simply follow the taillights of the vehicle located just one step ahead. What happens when the company you’re eyeing rides into a ditch? You’re most likely to meet the same fate. Have the vision to blaze your own path. If you must, defy the norms of your industry to get things done.

As the Old Spice story has demonstrated, a reboot may be the best way to survive and thrive.

Walter Dailey is the lead consultant and producer at Dailey Sound Vector

We all know the old saying: “there is nothing more certain than death and taxes”. The last thing any staffing entrepreneur wants to see is the death of their own business. Its one thing if a business dies by “natural causes” (i.e. a nice way of saying that the owner(s) did not have the right skill-set or financial where-with-all to run a business). But it’s appalling when a business dies via too much government interference.

Taxation
Let’s face it; the government does need to tax in order to provide some basic services. And a small business can survive if the tax rates are reasonable and easy to comply. Inequities arise when the tax code is too complex and tends to favor certain sized businesses or industries over others.

Many times, the tax code tends to favor big business (that have many deductions, tax shelters and accountants) over smaller companies that do not have time, talent or resources to take advantage of any tax savings constructed in the code. Larger companies have leverage over legislatures to have the tax code written in their favor or they are able to negotiate waivers or exemptions from local governments to keep a business from relocating to another state. For example: Sears, Motorola and Navistar received millions in tax concessions to remain in my home state of Illinois.

An interesting proposal is to reform the tax code to make it flatter and fairer. This would level the playing field between small and large business, as well as between industries. That being said, taxes are a relatively small hurdle for staffing businesses to overcome. The high hurdles come with regulation.

Over-Regulation

Over-regulation kills job growth period. The time and money it takes to comply with every law is much more of a burden than the tax rate. Complex regulations put independent staffing companies at such a disadvantage that it hurts their ability to survive and put people to work. And contrary to some beliefs, those end-users of staffing that rely on a flexible workforce will not hire the same employees full time – they just won’t hire them at all!

The following examples will highlight some of the job-killing regulations that have either been proposed or passed recently.
The Temporary Workers’ Bill of Rights

Backed by labor unions, this legislation would have required staffing companies to fully disclose the terms of their business relationship with their clients, such as pay rates and bill rates. The legislation proposes that staffing companies be required to pay the same amount that the current full-time workers at a particular company are being compensated, which in some cases may be less than what the staffing company may otherwise pay.

The Temporary Workers’ Bill of Rights has been introduced in Tennessee and Massachusetts but never passed. If it did, it would have had a devastating effect on the temporary staffing industry. What privately held business is forced to disclose its proprietary pricing, cost and profitability?

Employee Free Choice Act
This bill would have allowed unions to be certified without a secret ballot election if a majority of workers signed authorization cards. It has been dubbed “card check”. It also would impose mandatory arbitration on employers and employees if an agreement is not reached in 120 days.

The proposed legislation would make it much easier to organize your clients’ work force and your temporary employees.
The business community maintained that the measure is undemocratic and would hit employers with added costs at the worst possible time. Luckily, this bill did not pass.

California Reporting Time Pay
To guarantee at least partial compensation for employees who report to their job expecting to work a specified number of hours but who are deprived of that amount of work because of inadequate scheduling or lack of proper notice by the employer, the Industrial Welfare Commission Orders require that employers pay nonexempt employees, in addition to the hours the employee actually works, for certain unworked but regularly scheduled time.

This is unfortunately the law in California. Most staffing companies cannot pass this cost on to its customers.

San Francisco Paid Sick Leave Ordinance

Under this ordinance, employees working within the San Francisco city limits accrue an hour of sick leave for every 30 hours worked – including temporary help.

Extension of Unemployment Insurance Benefits
In our current era of high employment state UI funds are depleted nationwide and more money is needed to pay the current beneficiaries. The federal government keeps adding to the problem by increasing the amount of time one is able to collect benefits (currently at 99 weeks) thus increasing the rate that employers have to pay into the system. The staffing industry tends to shoulder a larger burden of the increase since they are in the employment business. They also have the added burden (and cost) of disputing bogus unemployment claims.
Dodd – Frank Act

While this regulation does not specifically deal with staffing, it causes much uncertainty within the banking industry. Banks have historically perceived the assets (accounts receivable) of staffing companies as weaker than other industries, thus they are less likely to extend credit – particularly to smaller staffing firms. Many banks have either tightened credit terms or to a lesser extent exited the staffing industry entirely.

Todd J. Zywicki, a senior scholar at the Mercatus Center at George Mason University, says that credit is the lifeblood of the economy, and that Dodd-Frank was designed to decrease access to credit. “Dodd-Frank is the thing that is most harming the economy right now,” he said. “Big business can deal with regulatory uncertainty, but it makes small businesses reluctant to take on risk and expand their operations.”

Staffing firms that use independent funding companies have largely been spared the adverse effects of the Dodd-Frank Act.

Become Part of the Solution
While new anti-staffing regulations are surely on the horizon, your voice needs to be heard. Every state has a local American Staffing Association chapter that you can join. Associations such as the California Staffing Professionals http://www.cspnet.org/ or the Massachusetts Staffing Association http://msastaffing.com/ have done a fantastic job of defeating most anti-staffing legislation.

For three days, hundreds of the BEST staffing, recruiting, and search professionals will gather for the top recruiting conference in the industry. You don’t want to miss this.
We will be exhibiting at the conference to show support for CSP. Be one of the first 25 people to visit us at Booth 310 and receive a $10 Starbucks gift card.
For more information, please visit http://www.cspnet.org/news/conference.cfm.

Celebrate National Small Business Week
This week marks the 48th annual National Small Business Week, a recognized time to celebrate the contributions of small businesses to the economic well-being of America. It is the owners of small business that will ultimately get this economy moving again. At Damian Services we recognize that our clients risk most of their personal wealth to start their staffing firm. And luckily, the vast majority better their lives and the lives of the employees they hire. Thank you for help making this country run.

The next couple of articles focus on seed capital and expansion.

These days, it’s tougher to pry start-up cash from relatives’ pocketbooks

Childhood friends Scott Kenny and Jon Polcyn planned for years to open their own chiropractic practice, but they never figured on launching that dream in the midst of a recession. After a couple of bank rejections and a loan offer at 16% interest, the friends considered their last resort: family.

“The last thing I ever wanted to do was ask family members for money,” says Mr. Kenny, 31. “I felt like, hey, I’m an adult, and I didn’t want to ask mommy and daddy for help.”

Yet the business partners felt family was the only option. After presenting their business plans to Mr. Kenny’s father, Mr. Polcyn’s father-in-law and the grandfather of Mr. Polcyn’s wife, they were offered the roughly $200,000 they needed. Integrated Physical Medicine opened in New Lenox last September.

Friends and family have long been a go-to resource for start-up funding. But for many, the recent downturn has cut off this traditional financing path, says John Paglia, an associate professor of finance at Pepperdine University in Malibu, Calif. Thirty-five percent of 388 privately held companies surveyed by Mr. Paglia in a nationwide web-based poll last fall reported friends and family as a source of funding, down from 56% of 559 entrepreneurs polled six months earlier.

Mr. Paglia argues that entrepreneurs may be less likely to approach family now, fearing they won’t be able to pay back the loan quickly enough. Another sore point: Family and friends either don’t have the excess capital or may be reluctant to lend it out in a rocky economy.

He says those factors are concerning as the country looks to dig out of a deep recession. “To the extent that family and friends’ finances aren’t available to stir some of this entrepreneurial action and, at the same time, we’ve got a contracting angel community, I don’t think that bodes well for economic recovery,” he says.

Family businesses have always been a key economic driver. The Family Firm Institute, a Boston-based group of international family business leaders, estimates that family firms account for 80% to 90% of all business enterprises in North America.

“Historically, the reason family businesses exist is because the first people to go to for money to start a new business or new idea is family members. That has not changed,” says Andrew Keyt, executive director of Loyola University Chicago’s Family Business Institute. “The advent of venture capital and private-equity money is still a relatively new phenomenon and it’s relatively uncommon in terms of businesses overall.”

Still, family business owners face tough choices in today’s economy as they try to expand. Many advisers are cautioning clients to slow down, even if there’s plenty of money to invest.

“If you were borrowing from mom and dad 10 years ago, say with an Internet start-up, there was a lot of momentum tied to it. People were naive. You could sell them on the energy of the thing,” says Michael O’Malley Jr., president of Chicago-based business consulting firm O’Malley Group. “But now the market has matured. . . .If it’s the typical family, whether it be the parents or a wealthy brother or uncle, everybody got churned in the last five years.”

SOLID TRACK RECORD

Tom Walter, owner of Tasty Catering in Elk Grove Village, believes in supporting solid start-up ideas from family members and employees. He’s looking more closely at proposals these days, but he’s not shying away from them. A serial entrepreneur with a few business failures of his own, Mr. Walter goes into investments knowing he might lose some of his funds.

So far, his children have launched businesses that are doing well. Among them is iMotorsports, a Roselle-based motorcycle resale business started by his son, Tim, with two high-school friends in 2010. With his brothers, the elder Mr. Walter invested $100,000 in that business, which began turning a profit within months.

‘ I felt like, hey, I’m an adult, and I didn’t want to ask mommy and daddy for help.’ — Scott Kenny, Integrated Physical Medicine

Mr. Walter also invested roughly $20,000 this year in a marketing business launched by his daughter, Erin. Despite their father’s history of support for new ventures, the Walter children were reluctant to approach him.
“I wanted to avoid asking him for funding. I didn’t want to get going just because of me being his daughter,” says Erin Walter, 27. “The other part of being hesitant was I didn’t want it to fall through. Now, it’s not just on me, but it’s on him.”

In the end, though, the Walters decided a family deal was far better than a high-interest bank loan, and they were optimistic about their prospects for success. Like the Walters, chiropractors Mr. Kenny and Mr. Polcyn are emboldened by family support. Their funders include Anton Gfesser, the grandfather of Mr. Polcyn’s wife and the founder of Trendler Inc., a Chicago-based furniture parts manufacturer.

Mr. Gfesser, now 80 and a self-taught engineer, came to the United States from Austria and worked his way up from laborer to owner of his own company in 1962. Trendler estimates its annual revenue at nearly $10 million. Mr. Gfesser believes in family investments, no matter the shape of the economy.

“They’re nice young men and they’re hungry to do well,” he says. “I was sure they’re going to make it.”

© 2011 by Crain Communications Inc.

Expansion is necessary – but risky – for family-owned businesses

The five siblings who own Prisco’s Fine Foods, a neighborhood grocery store in Aurora, took a risk in 2008 to open a cafe down the street. It was the first expansion outside the grocery store since its opening in 1926, when Italian immigrants Tony and Mary Prisco launched the business from the first floor of their home on Aurora’s south side. The cafe, opened in the midst of the recession, never took off. The siblings were forced to shut it down two years later.

“At first, we felt like we couldn’t miss,” says Robert Prisco, president of Prisco’s Fine Foods, which generates about $6 million in annual revenue. “We had quality items, an oversized kitchen in back. But when the economy went to heck and business started to fall off, we got caught in that.”

It was a mistake plenty of family business owners made during the recession, as many old rules about investing in new ventures fell apart. Still, the effort was a classic move for such owners, says Judy Hogel, director of the Family Business Council at the University of Illinois at Chicago. If there’s a chance to expand on a family enterprise, many will take the risk, even in a down economy, she says.

“For family business owners, it’s about the legacy,” Ms. Hogel says. “They have that mentality of building the family and building the family well.” ‘ At first, we felt like we couldn’t miss.’ — Robert Prisco

Mr. Prisco, 63, is stung by the loss but doesn’t regret the decision. The family later moved the cafe inside the grocery store itself, and it’s a popular spot now, bringing in new customers and helping the store remain profitable.

While it’s smart to be cautious in an uncertain economy, some family business advisers tell clients that reasonable gambles on new ideas can help the overall family system thrive.

“There’s a very high failure rate from one generation to the next in family-owned businesses,” says Kay Vogt, a family business adviser based in Chicago and San Diego. “The family is going to grow faster than the business, so they have to do something rather than employing all of them in the family business. That may mean making other investments or diversifying into other investments not related to the core family business.”
That was a motivation for one of Ms. Vogt’s clients, Kathy Sgro, a single mother and nurse who has built a home health care business.

Ms. Sgro, 60, co-founded her agency in 1990 with four other nurses. As some of her partners retired, Ms. Sgro, then divorced, decided to buy the business outright and make her four children co-owners. Her initial investment of $20,000 has become a thriving business with roughly $5.5 million in annual revenue. The company, Springfield-based Alterna-Care Home Health Systems, has 100 employees and more than 250 clients. In December, despite the rocky economy, Ms. Sgro decided to double down: She bought a 12-bed assisted-living home in Downstate Buffalo. The home is full and nearly profitable already.
Ms. Sgro, who is working with Ms. Vogt to determine which child will take over as president when she retires, believes the recent acquisition puts the company on a stronger footing.

“It was such a struggle in the beginning . . . and I did have a lot of doubts then,” Ms. Sgro recalls. “But I remember on Christmas that first year, the kids got me a desk plate and underneath my name they put, ‘President.’ I thought to myself, ‘I can’t let these four kids down. I’ve got to see this through now.’ “

© 2011 by Crain Communications Inc.

Looking for a little extra cash?

Great News. As part of our 30th year in business celebration, we are offering a special “sign-up bonus” for a limited time.

Sign-up for Damian’s unlimited funding and/or productivity solutions and earn up to $1000. Hey start-ups - we want your business too! We will match the first $500 profit payment, Dollar for Dollar.
Already a client? No problem. Directly refer a staffing company to us and we will pay a referral bonus equal to the sign-up bonus immediately after the first week of funding.
Call 1-800-232-6426 to find out more details. We appreciate your business.

Bill Would Reduce Federal Unemployment Tax Rate

Last week, the U.S. House of Representatives Committee on Ways and Means approved legislation aimed at making several significant reforms to the unemployment insurance system. Proponents say the bill will stimulate job creation and growth.

The Jobs, Opportunity, Benefits, and Services Act of 2011 (HR 1745) includes four provisions relevant to employers. It would

• Distribute $31 billion to state unemployment benefit accounts to pay unemployment compensation, repay the principal and interest on loans states took to pay unemployment compensation, or provide assistance to unemployed workers searching for work

• Permit the Federal Unemployment Tax Act 0.2% surtax to end June 30, reducing the FUTA tax rate from 6.2% to 6.0%

• Codify the basic requirement of the UI program that individuals must be able to work, available for work, and actively seeking work as a condition of being paid unemployment compensation

• Provide flexibility to states to improve the unemployment insurance program in a way that matches the unique needs of unemployed workers and employers on a state-by-state basis
•
After the bill was introduced, ASA joined dozens of business groups to send a letter to Speaker of the House John Boehner (R-OH) and House Minority Leader Nancy Pelosi (D-CA) signifying strong support for the JOBS Act of 2011.

The bill must go to the House floor for a vote. If passed by the House, it could face opposition from Senate Democrats who say it would end unemployment compensation for workers who are going to lose their benefits. ASA will continue to report on developments relating to this legislation.

Anne Duffy- American Staffing Association

Revolutionary Alliance Now Available Exclusively For Staffing Companies

Chicago, IL (February 25, 2011) –Damian Services Corporation (Funding/Back Office Solutions), Bond eEmpact (software/Consulting) and Employee Staff (Insurance/Professional Employer Organization) three leaders of staffing industry are proud to announce the 5Star Human Capital Alliance.

This revolutionary offering is designed to reduce the time consuming process involved with obtaining software, funding, payroll services, workers compensation and much more.

Staffing company’s nurture and supply human capital for almost every type of labor position in the United States. They need to have the best possible tools available to provide their customers with the best possible candidates. This need gave birth to the 5Star Human Capital Alliance.

“In the past, staffing companies needed to do time intensive research, fill out multiple forms and pay application fees to multiple vendors that may not have specific knowledge of the staffing industry. The 5Star Human Capital Alliance will be made available exclusively to staffing companies from experienced specialized partners that have in-depth knowledge of the staffing industry. Staffing companies that become alliance members will be amazed at the quantity and quality of the products and services and how easy it is to get them. Most importantly we tailor our services to the specific needs of your business.” - Mark Himel, CEO Damian Services Corporation

To learn more, please visit our website: www.5starhca.com.

About Damian Services

Damian is the first and best provider of funding and productivity solutions exclusively for the temporary staffing industry. Since 1981, our sole focus has been the efficient and expert delivery of essential services that help our clients grow and prosper.

Damian solely supports independent staffing firms ranging from start-up to multi-office enterprises with revenues in excess of $20 million per year. Clients can select services with or without funding. Over 600 staffing companies have used Damian’s services, and each week we help our clients employ upwards of 10,000 temporary workers in a wide variety of professional, medical, technical, and other white and blue-collar jobs. By outsourcing all back-office functions to Damian, our clients can focus 100% of their attention on what they do best-sell, recruit and make money.

Looking for a little extra cash?

Great News. As part of our 30th year in business celebration, we are offering a special “sign-up bonus” for a limited time. Sign-up for Damian’s unlimited funding and/or productivity solutions and earn up to $1000. Hey start-ups - we want your business too! We will match the first $500 profit payment, Dollar for Dollar. Already a client? No problem. Directly refer a staffing company to us and we will pay a referral bonus equal to the sign-up bonus immediately after the first week of funding.

Call 1-800-232-6426 to find out more details. We appreciate your business.

April Employment Summary – By The Numbers - Unadjusted

APRIL 2011
Unemployment Rate 9.0%
Non Farm Employment 224,000
Temporary Help -2,300

Manufacturing 29,000
Construction 5,000
Professional 51,000
Computers and Design 7,900
Financial Activities 4,000
Retail Trade 57,000
Transportation and Ware. 4,100
Health Care 37,000
Mining Employment 11,000
Leisure & Hospitality 46,000
Government -24,000

There are many other industries and sub-industries not included in this table. For a more detailed break down, use this link: http://www.bls.gov/news.release/empsit.t14.htm.

THE EMPLOYMENT SITUATION — APRIL 2011

Nonfarm payroll employment rose by 244,000 in April, and the unemployment rate edged up to 9.0 percent, the U.S. Bureau of Labor Statistics reported today.
Job gains occurred in several service-providing industries, manufacturing,
and mining.

Household Survey Data

The number of unemployed persons, at 13.7 million, changed little in April. The unemployment rate edged up from 8.8 to 9.0 percent over the month but was 0.8 percentage point lower than in November. The labor force also was little changed in April.
Among the major worker groups, the unemployment rates for adult men (8.8 percent), adult women (7.9 percent), teenagers (24.9 percent), whites (8.0 percent), blacks (16.1 percent), and Hispanics (11.8 percent) showed little change in April. The jobless rate for Asians was 6.4 percent, not seasonally adjusted.

The number of persons unemployed for less than 5 weeks increased by 242,000 in April. The number of long-term unemployed (those jobless for 27 weeks and over) declined by 283,000 to 5.8 million; their share of unemployment declined to 43.4 percent.

The civilian labor force participation rate was 64.2 percent for the fourth consecutive month. The employment-population ratio, at 58.4 percent, changed little in April. The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed over the month, at 8.6 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

In April, 2.5 million persons were marginally attached to the labor force, about the same as a year earlier. (These data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 989,000 discouraged workers in April, a decline of 208,000 from a year earlier. (These data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.5 million persons marginally attached to the labor force in April had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

Establishment Survey Data

Total nonfarm payroll employment increased by 244,000 in April, and the private sector added 268,000 jobs. Employment rose in a number of service-providing industries, manufacturing, and mining. Since a recent low in February 2010, total payroll employment has grown by 1.8 million. Private sector employment has increased by 2.1 million over the same period.

In April, employment in retail trade rose by 57,000. Within the industry, employment in general merchandise stores increased by 27,000, offsetting a decline of similar magnitude in the prior month. Elsewhere in retail trade, April job gains occurred in electronics and appliance stores (+6,000), building material and garden supply stores (+6,000), and automobile dealers (+5,000).

Employment in professional and business services continued to expand in April, with an increase of 51,000. Job gains occurred in management and technical consulting services (+11,000) and in computer systems design and related services (+8,000).

Employment in temporary help services was little changed over the month, following an increase of 34,000 in March. Health care continued to add jobs in April (+37,000). Within health care, job gains continued in ambulatory health care (+22,000) and hospitals (+10,000). Employment in leisure and hospitality continued to increase in April (+46,000). Over the past 3 months, this industry added 151,000 jobs, with nearly two-thirds of the growth in food services and drinking places.

Employment in both state government and local government continued to trend down, with April losses concentrated in the non-educational components. Elsewhere in the service-providing sector, employment in information, financial activities, and transportation and warehousing changed little in April.

In the goods-producing sector of the economy, manufacturing employment rose by 29,000 in April. Since reaching an employment low in December 2009, manufacturing has added 250,000 jobs, including 141,000 in 2011. Over the month, employment growth continued in machinery (+5,000), primary metals (+4,000), and computer and electronic products (+4,000).

Mining added 11,000 jobs in April. More than half of the gain occurred in support activities for mining. Since a recent low point in October 2009, employment in mining has increased by 107,000. Construction employment was about unchanged in April. This industry has shown little net movement since early 2010, after having fallen sharply during the prior 3 years. The average workweek for all employees on private nonfarm payrolls remained at 34.3 hours in April. The manufacturing workweek for all employees, at 40.4 hours, also was unchanged over the month, while factory overtime increased by 0.1 hour to 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged in April at 33.6 hours.

In April, average hourly earnings for all employees on private nonfarm payrolls increased by 3 cents, or 0.1 percent, to $22.95. Over the past 12 months, average hourly earnings increased by 1.9 percent. In April, average hourly earnings of private-sector production and nonsupervisory employees rose by 5 cents, or 0.3 percent, to $19.37. The change in total nonfarm payroll employment for February was revised from +194,000 to +235,000, and the change for March was revised from +216,000 to +221,000.

_____________
The Employment Situation for May is scheduled to be released on Friday,
June 3, 2011, at 8:30 a.m. (EDT).

Discover Your Hidden Treasure – California Staffing Professionals 2011 Conference
Thursday May 19 • Friday May 20 • Saturday May 21

Hilton Spa & Resort, San Diego, CA

For three days, hundreds of the BEST staffing, recruiting, and search professionals will gather for the top recruiting conference in the industry. You don’t want to miss this. We will be exhibiting at the conference to show support for CSP. Please feel free to stop by and say hello.
For more information, please visit http://www.cspnet.org/news/conference.cfm.

This revolutionary offering is designed to reduce the time consuming process involved with obtaining software, funding, payroll services, workers compensation and much more.

Staffing company’s nurture and supply human capital for almost every type of labor position in the United States. They need to have the best possible tools available to provide their customers with the best possible candidates. This need gave birth to the 5Star Human Capital Alliance.

“In the past, staffing companies needed to do time intensive research, fill out multiple forms and pay application fees to multiple vendors that may not have specific knowledge of the staffing industry. The 5Star Human Capital Alliance will be made available exclusively to staffing companies from experienced specialized partners that have in-depth knowledge of the staffing industry. Staffing companies that become alliance members will be amazed at the quantity and quality of the products and services and how easy it is to get them. Most importantly we tailor our services to the specific needs of your business.” - Mark Himel, CEO Damian Services Corporation

To learn more, please visit our website: www.5starhca.com.

About Damian Services
Damian is the first and best provider of funding and productivity solutions exclusively for the temporary staffing industry. Since 1981, our sole focus has been the efficient and expert delivery of essential services that help our clients grow and prosper.

Damian solely supports independent staffing firms ranging from start-up to multi-office enterprises with revenues in excess of $20 million per year. Clients can select services with or without funding. Over 600 staffing companies have used Damian’s services, and each week we help our clients employ upwards of 10,000 temporary workers in a wide variety of professional, medical, technical, and other white and blue-collar jobs. By outsourcing all back-office functions to Damian, our clients can focus 100% of their attention on what they do best-sell, recruit and make money.

The decision to expand your business should be a result of untapping opportunities that can benefit your business. For example, there may be another complimentary staffing niche that your business can easily expand into. If you’re a direct placement firm, you may want to add a contract placement offering. Or you may want to add an additional office in an underserved market.

These are all very viable options. But before embarking on the type expansion, staffing owners should first think through the following issues.

Can you expand your business without exponentially expanding fixed costs?
The fixed cost of running your business should not double as you expand. If you’re adding another staffing niche, the rent stays the same as long as you stay in the same office space. If you are adding an additional location, fixed costs should not double. Efficiently using your existing resources (administrative staff, technology etc.) will help keep costs down in the satellite office. Your administrative costs-per-unit should also come down, as the costs like advertising; purchasing and other functions are spread among all your locations.

Tracking the cost of expansion is paramount in determining whether that expansion is profitable or not. Expansion, via new product line or location, needs to have its own cost center in order to make clear whether or not it’s profitable. The last thing a business owner needs is to have is the new venture bleed cash from an otherwise profitable business.

Is the staffing market growing?
Timing is crucial in making the decision to expand a business. A downturn in the economy can drastically reduce customer demand for staffing. Staffing is considered a lagging indicator of the economy which makes the timing of expansion even trickier. For example, staffing companies that expanded in 2002 prospered. Conversely, staffing companies that expanded in 2007 suffered. Unless you have unlimited cash flow that can support expansion even with reduced demand, make sure that the current business environment can support your expansion.

What are the National’s doing?
Market intelligence should play a key part in your decision to expand your business. Manpower, Kelly and all the other national staffing chains spend millions researching the staffing market. You may be able to get important clues about the future of the market by observing what they do. Getting clues from your competitors can give you an edge, as it may show you ways in which your company can uniquely benefit the customer.

If the national’s are venturing into new areas (niches or locations), it may mean that they have found opportunities in those specific markets. They may have stumbled upon an untapped market. If this is the case, you can do two things: wait and see how they do, or follow their lead.

By waiting for the results of a national’s venture into a new area, you can verify for yourself whether demand really exists and the benefits outweigh the risks. Following the national’s lead does not necessitate that you duplicate exactly what they are doing. Instead, you can incorporate their ideas into your marketing strategy. After all, if their expansion proved to be a bust, then you can be thankful that it was not your company.

Can you finance the expansion internally?
Before making a financing decision, you need to carefully study the benefits of such an expansion and whether your current cash flow can support the additional investment. The ideal situation would be to expand only when you have already proven that demand exists for your products or services, as proven by the profitability of your company.

If you need additional capital, make sure that the new venture will be profitable enough to allow you to earn money and repay the loans. Many small businesses met untimely deaths with their aggressive growth strategy. They wound up deeply buried in debt with no other recourse than to file for Chapter 11 bankruptcy or liquidate assets. Like any other business decisions, expand only when you think you have financial benefits to gain.

The largest barrier to expansion for a staffing company is funding the increase in temporary payrolls. Simply put - a staffing business cannot take full advantage of an additional offering or office without sufficient funds to grow it.

Let’s expand upon the previous concept of accounting for the expansion as a separate cost center. Over time, the expansion should start producing its own profit – instead of relying on the existing business to financially support it. In order to achieve that profitability quickly, a staffing company must have access to a reliable funding source that is knowledgeable about the industry with preferably no limits on the amount of funding made available.

Are you willing to change roles?
Whether you are opening an additional store or adding a new offering you should expect a change in the role that you play. From a one-person business, you will begin to hire new personnel in order to achieve growth. If you are opening a second location, you may need someone to manage that office, as it will be impossible for you to be in two places at the same time.

When you expand your business you should be prepared to delegate responsibilities to others and concentrate on strategic planning, mentoring your staff and managing the overall business. Remember that you are now the visionary, not the recruiter. So enjoy your new role!