Thinking About “What’s in the Cards” for Staffing Agencies in 2021?

Business finance success concept-Bridgeware Systems, Inc.

No, I do not read Tarot cards, nor crystal balls, nor Zodiac signs. Shakespeare was a smart guy who made some literary history about this kind of “star gazing” when he had his character Cassius say, “The fault dear Brutus, is not in our stars but in ourselves”.

But that great line is only partially true. Consider the current pandemic. That is not some “fault” of “ourselves”. Call it an “act of nature”, or fate, but as a given reality it is more like the stars, fixed in our world where we are powerless to erase it.

Ultimately this terrible pandemic will be under our power, and even today we do have some real power to contain it. But, according to all the experts, we will need to deal with it as a reality which we will ignore only to our peril.

So, “Reality 101”, We deal with it. We do everything we can, within the limits set by this terrible reality and, at the same time, plan for the rapidly approaching future when we have this demon under control.

Recovery Projections: Thinking about 2021 involves considering some professional projections which have figured in the pandemic realities and their survey of actual data from surveys of more than 100 staffing companies of various sizes and serving different markets.

One of the two major staffing associations, Staffing Industry Analysts (SIA), recently revised their projections upward on how 2020 would end in terms of total revenue.

They projected 2020 revenue to end up at $114 billion earlier in July but had revised that estimate upwards to $126.9 billion this past September. That is still a big drop of 17% or $25 billion from 2019. The final figure for 2019 was $152.3 billion.

SIA was also projecting 2021 revenue to end up at $141.5 billion, but there were three key assumptions to SIA’s September 2020 projections cited above (projections link). One of these assumptions was the continuing downward trend as of September in the number of Covid-19 cases. This could be a serious problem because cases, as we all know, have dramatically increased since September.

But their SIA’s two other assumptions of “GDP growth” and the widespread availability of Covid-19 vaccines by mid-2021, seem to be on track as late as this past month.

In November, 2020 “Business Insider” reported that although Goldman Sachs was projecting only a 3.5% growth in GDP in the first quarter of 2021, they were also projecting that GDP would return to pre-pandemic levels in the second quarter of 2021.

And, unlike SIA’s September projections, Goldman was taking into account the rising Covid-19 cases between September and November, and they also, considered that the vaccine’s increasing availability “would aid in the containment of Covid-19 throughout 2021.

Goldman Sachs also believed that the new Biden administration could be counted on to “push for continued fiscal stimulus”.

Unemployment: This will be a factor in the first quarter of 2021 especially. Until the vaccine(s) reaches millions of people and the virus gets more and more under control unemployment looks to be a constant. The $300 unemployment supplement that is expected by both political parties will help us through this period. But that amount is half of the $600 weekly supplement that began last spring and ended July 25.

Many believe with this lower amount and the time limit given there will be less of a tendency for unemployed people not to be “eager” to return to work. This was a major complaint about the $600 supplement. The lower amount was important to the staffing industry (and many other industries) to ensure that there is a sufficiently large pool of workers to draw from as the recovery proceeds deeper into 2021.

As this supplement goes away completely, probably at the end of the critical first quarter, more will be looking for work and, just as importantly, more work will be available even in the hard-hit areas of leisure and hospitality. The “opening up” will be more secure because cases of Covid-19 will be in a very real and sustainable decline that can be depended upon.

Psychological Environment Improve: I would rank this improvement one of the major factors to consider in 2021. Granted it will take time, especially from where we stand today, as the virus continues to peak, and more lives are lost.

For many of the presently employed, who are unable to work from home, the stress and real fear of infection makes the work environment much more difficult.

But imagine the uplifting spirits in the 2nd 3rd and 4th quarters as the virus is increasingly subdued, community life is restored, extended families are rejoined, bars, restaurants, churches, sports facilities are fully reopened, hospitals and nursing homes can be open to visitors, and more!

As all of this happens the business community will see an injection of hope and energy spurring all kinds of business growth and development.
Many of the businesses thought to be closed for good will find a way to reopen and those that have survived will see a huge surge perhaps akin to the end of a major war. Exaggeration? Let us see what happens.

The most Dangerous Time: I do not intend to get maudlin here but as we think about the end of this month (December) and the 1st quarter of 2021, not just as persons of business, buu simply as “persons”, some things need to be said even in an online business blog.

The American people are not used to hardship, so they tell us, but this pandemic has put an enormous burden on all of us. Like many tragedies, the burden has not been evenly distributed.

All those who have been directly working with the extremely sick, the dying and their families, have probably been affected the most, with high burn-out rates, stress, anxiety, deep sadness, depression, and even suicide. Many have been infected themselves and some have died. To call them “heroes” is not a cliché.

The families who have lost loved ones, many of whom have died alone, the teachers and parents trying to manage a changing schedule at home and in school, keeping everyone safe, keeping spirits up, while trying to hold a job. These are not far behind on the hero’s list…

I could go on, and so could we all, but the point is, that the most dangerous time for all of them, for all of us, is still in front of us.

The prospect of the next 3-4 months, with winter, colds, flu, and Covid -19 do not look good. If ever there was a time for true grittiness, for the strength to endure, and even heroism, it is now.

Managing for Survival and Success: Business is not comfortable managing for simply survival. The principle has always been “whatever is not growing, dies”. The cycle in most new businesses is, first to struggle to break-even, then struggle for profitability, then growth, and more growth. But seldom do we manage for simply survival.

But the strategy and tactics of survival will still be necessary for the next few months.

Any assistance, like the Federal PPP (Paycheck Protection Program) which is expected to be renewed even this month should be utilized. These “loans” are actually “grants) i.e. “Free” when you report that the funds were spent for payroll, payroll benefits like health insurance, utilities like electricity, water, internet and even business mortgage payments. It is a great deal and a great assistance.

You can download an application here and have it ready to submit. You can also review the application with your lender right now to make sure your bank is participating and if not, get advice on which banks are.

Other help may be available from special Coronavirus programs of the SBA in addition to PPP. Check them out here. Note the blue boxed are at the top left of their PPP page. There is also good information here on all aspects of the PPP program.

Many of you have already sought out assistance and made the necessary reductions in overhead and expenses while taking good care of active accounts as well as maintaining contact with clients who had stopped all contract work.. These inactive clients will, as they recover in 2021, will be a real asset again.

A final thought about these next few months of 2021 would be that, as we survive, we also make plans. Good, detailed plans, not simply for survival but for recovery and growth, for profitability and good health for us all.

We are coming out of this. Stay safe!

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