Here we are in 2008, and many of you smaller operators are loudly wondering how and, more quietly, if you can become a major player in the staffing industry. The industry has changed in many ways, with technology being the major driver of change. Unfortunately, smaller companies have suffered more than they prospered from it. Why? Because most small and start-up staffing companies lack the necessary resources to utilize the sophisticated technology-based tools which allow them to play with the big boys. While new entrepreneurs are figuring out how to address (and pay for) workers' comp, the bigger companies are dazzling their clients with job boards, online time entry and web portals. Let's face it- you will struggle to be successful without the bells and whistles that a great technology platform affords. You are not a major player (yet), but there are solutions that will allow you to provide the same level of experience to your customers.

Through the years of writing this column, we have pulled apart and analyzed the critical components of starting, building and operating a successful staffing business. We have studied and evaluated the importance of seed and operating capital, workers' compensation and personnel decisions. At each turn, we have seen new regulations that seem to achieve one thing: taking more bites from your bottom line. Entrepreneurs are spending more and more of their time battling the evil forces and enemies of free enterprise. The current economic climate dictates that those who build the better mousetrap will be successful, and all others will be eliminated by the assassins cloaked in disguises of bureaucracy- insurance companies and lenders looking to eat your cheese. Here's a tip: that mousetrap, at the heart of its efficacy, will have technology. And more specifically, software.

The evolution of staffing software technology has been slower than in other industries. There are a number of theories- chief among them is that with staffing, the product is people, and therefore it is less conducive to full-on automation. Another theory is that, save for the large national and international staffing firms, it has been out of reach financially and logistically for the Mom and Pops until very recently.

"When we started in the 60's and 70's, staffing software happened on the mainframe for the benefit of the back office. In the 80's, it began moving to the front-office with the PC, and in the 90's to the internet with client portals and job boards. Today, staffing software entails outsourcing the entire HR and recruitment process for a staffing company's end-clients. This includes the delivery of vendor management, recruitment, performance management, and paperless processes," says Gregg Dourgarian, President and CEO of TempWorks Software.

Technology has been responsible for many "tail wagging the dog" scenarios, and the current trend is no different. Today, staffing entrepreneurs (for basic survival) must free up their time in order to focus on what has made them successful in the past, and very seldom is that back-office and borrowing. The full service model has been flawed from the beginning. In each case and with every provider, some vital portion of the service has been farmed out to a 3rd party provider who only has an indirect relationship with the staffing company. The funding has been the driver, yet lenders have rarely been attuned to the most important needs of staffing companies. The result has been largely underwhelming. Why has it been mostly impossible to have a relationship with a full service, front and back-office solutions provider who at the same time can handle the cash flow needs that almost every staffing company has? In a nutshell, it comes down to core competencies and an unwillingness to work outside of a respective box. Purchasing a franchise may address some of this. However, that is not a viable option for most.

For better or for worse, factoring of accounts receivable has become a depressing and uncomfortable topic for the owners we hear from, a close second to workers' comp. Factoring is not sexy. And, in spite of its commoditization, it is one of your top expenses. Every entrepreneur asks themselves (or should): What is the value proposition of the company that charges me too much for money and is light on service? What is the justification of the top line expense to the bottom line of my business? Like insurance and taxes, borrowing is not an option for most companies. Is my lender helping me achieve growth in ways other than providing cash flow? Probably not, because it is not what they know. What about "full service" lenders who process my payroll, billing and taxes? Tough to execute when the software that they give you is provided by a 3rd party.

So, what if a technology company could have the sizable cash resources necessary to support and, more importantly, accelerate the growth of small and medium-sized temporary staffing businesses? It's a match made in heaven, and the good news for you is that these sort of companies are around, and not a moment too soon. Thanks to technology, the receivables lending industry has become a simpler proposition in many ways. Everyone's money is the same color, so doesn't it make sense to "borrow" from an industry-leading, fully-integrated information system provider who also provides email and web-based applications that can cut your costs and increase your margins to provide an incomparable competitive advantage?

If you are looking for more than a simple financial relationship in hopes of eliminating time consuming processing woes, then be sure to shop carefully. Just because a lender claims to be staffing specific doesn't make it so. Ask the tough questions. Do you own the technology or use someone else's platform? How will training and technical issues and problems be handled? If and when the relationship ends, can you still retain the system?

We welcome our readers' input and would like to hear from you. Please call or email us anytime.

By Jack Terrana and David Dourgarian