Human resources consulting company business plan

HR Consulting Firm Business Plan

Executive Summary

HR Solutions is a human resources consulting company based in Everett, WA. The company is starting this year, with the principle, Lori Morris, heading the company. The greater Seattle area has low unemployment and a booming economy, meaning that HR consulting services are in high demand, and it is believed that there is significant growth potential in this market. The basic business model for launch is to begin with recruiting services, which will serve two purposes – to generate quick cash flow, and to build a client base that can later be sold a range of consulting services. The target market will be medium-sized businesses in the area, in particular businesses that are 150-300 people in size.

The marketing strategy will focus on B2B inbound, and on networking within the local business community. Both approaches are necessary. Inbound often takes a long time to bear fruit, given the length of the traditional B2B buying cycle, and how much time it takes to build up content and reputation using this strategy. So while the business is working on that, networking will be the absolute best way to build business in the first year. For this and other reasons, the first year is expected to turn a loss, with a profit only occurring in the 10th month. However, the company is expected to have some serious positive momentum at that point, which will allow it to be profitable from thereon out.

Company Identification

HR Solutions is a human resources (HR) consulting company, located at 3216 Wetmore Avenue in Everett, Washington. We are a strategic partner working with small and medium-sized organizations both onsite and offsite to design and implement HR strategies for staffing, development, total rewards, policy and procedure, compliance and organizational culture. Our consultants include specialists that work with larger businesses and generalists who are able to provide the basics of HR structure to new businesses that are not yet large enough to employ a full-time HR professional. We ensure that our employees are highly credentialed and well recognized as leaders and contributors to our industry as a whole, lending a high-level of credibility to our services.

Mission of the Company

Our mission is to make small and medium-sized companies as successful as possible. We believe that employees are critical to success in business. Recognizing that finding and retaining great talent is not easy for small businesses who lack HR training, it is therefore our mission to provide them with the expertise that they need to grow and thrive.Our vision is to be raise the bar for human resources across Snohomish and King Counties, giving small businesses the resources that they need to excel

Business Goals

The first business goal is to generate a profit. This is a foundational goal of all business, and we propose to do this by executing a couple of key business strategies. The first strategy is to employ efficient sourcing, qualifying and monitoring to maintain an average time to fill rate of 30 days or less for all posted positions, which is 12 days faster than the national average time of 42 days (Society for Human Resources Management, 2018).

By reducing the the time to fill rate for an open position we help eliminate disruptions in productivity and fulfill our mission of keeping organizations focused on business objectives. We can manage this by defining and tracking all aspects of the hiring process to identify opportunities and mitigate delays.

The second goal is to hire and maintain a minimum of four employees at all times that meet the definition \\\\\\\"expert level\\\\\\\" in the practice of human resources. To serve our mission clients must be able to trust that our skills and abilities are among the best in our industry. We are the experts so they do not have to be. To maintain this level of trust we can set minimum criteria for a combination of knowledge, ability, and experience that our high-level employees must possess prior to working for HR Solutions. We can also institute training programs for low-level employees to acquire this knowledge, ability, and experience over time.

Keys to Success

There are several key success factors that will help us to achieve our business goals. The first is to build a set of specialties. While we want to be able to provide a full range of HR consulting services, we recognize that the market is going to be strongly oriented towards helping companies solve particular pain points. The strategic focus will be on identifying top talent (Harbour, 2018). In the Seattle area, the battle for top talent is substantial, whether it is engineering talent to work at Boeing here in Everett or tech talent in Redmond or Seattle. Small companies in this area are competing against some of the biggest and most successful companies in the world. The reality is that competing against these companies for top talent is one of the biggest challenges that they face, and this is an area where we believe our networks, and expertise at identifying talent can be of tremendous value.

Competing for top talent will mean developing a specialty in modern HR practices. Trends like digitization of HR, the shift towards employee experience (from employee engagement), analytics and leveraging the gig economy are all major shifts. The large enterprises that are competing for talent with our customers are among the most progressive in the use of modern techniques and tools, and we have to be able to match that in order to effectively equip our partners to compete (Leong, 2017).

Operations will be another critical success factor. Basically, as a small consulting firm, we need to be as efficient as possible in all of our efforts. We recognize that many of the legacy competitors in this space have been relatively slow to adopt the latest technology and techniques, and this provides us with an opportunity to be more efficient, and leaner. Using SaaS tools in particular will allow our consultants to be fully functional while working remotely, and will allow us to collaborate more effectively. We believe that this will drive greater efficiency, and in turn will put us in a position to have higher margins that our competitors, which we can either use to grow the business or compete on price. Our first choice will be to plow back profits into growing the business.

The final key success factor is marketing. As any new business can tell you, getting your brand out there into the world is a difficult challenge. We have engaged with a marketing consultant who will utilize the most modern marketing techniques to increase our attractiveness to new clients, to streamline our marketing and sales funnel, and to help us build a brand as quickly as possible. If we cannot market our services effectively, no amount of operational excellence will help us.

To make all this work will require us to excel at understanding strategic human resources management. We call our clients partners because we are their strategic partner. Starting with the position that we need to understand our partners\\\\\\\' pain points, and then playing the role like that of a doctor to take the information that they are giving us, ask key questions and make a formal diagnosis of what the partner needs, and then tailoring our offering to show them how we can be a key strategic partner in achieving the results that they hope to achieve. Strategic HRM is one of the strongest trends in HR now, as more companies realize that even in the most tech-driven companies, having great people is truly an essential component to success (LucidChart, 2017).

Excellence with data will also be critical. First, we have to price our services in a way that maximizes productivity while simultaneously maximizing value. The reality is that we must understand what are efforts are worth to the partner in order to do this. We will gather data, analyze is, and to the extent possible use it in our strategic and tactical decision-making. Communication will be the last competence to drive our business forward, as it is essential that we communicate value to our clients, jobs to prospects, and in general excel in all forms of communication. A failure to communicate effectively is probably going to be a lost opportunity.

Industry History

Human resources consulting is a long-established industry. For much of the 20th century, HR was an in-house function, and it is for many companies. If someone started a business, they would perform HR functions themselves – often poorly. With increased competition, there has been an increasing need for outside help in the HR function. For the past several decades, HR consulting has evolved. First, it was larger staffing companies like Randstad or Accenture, and has been practiced by other large enterprise consulting companies. By the 1980s it was not uncommon to see HR professionals starting small business to target other small businesses and the business has only continued to grow and evolve from there.

The current size of the human resources consulting business in the United States is $22 billion, with a growth rate of 0.6%, according to the latest IBIS World report (2017). There are 62,000+ businesses in the field, most of which are fairly small, with a total employment of 168,000 people.

Legal Form of Ownership

HR Solutions will be setup as a single member Limited Liability Company (LLC). The LLC structure provides several advantages for a small, owner operated businesses that make it a good fit for HR Solutions. Firstly, the structure is easy to establish and flexible. Next, there is no double taxation. Lastly, they provide a separation of assets between the owner and the business.

Location and Facilities

HR Solutions will occupy 1,252 SF of class B office space on the 2nd floor of The Ogden Building at 3216 Wetmore Avenue in Everett, Washington (LoopNet). It is a professional building situated in downtown Everett close to City and County offices and public transportation including the Everett Train Station. It has a Walk Score® of 81 which is defined as Very Walkable i.e. “most errands can be accomplished on foot” and a Transit Score® of 56 which defined as Good Transit i.e. “many nearby public transportation options” (Walk Score).

The space includes a reception area to easily receive guests; a conference room for meetings and trainings; and three private offices for professional employees to conduct daily work. This location also features shared kitchen and bathrooms, and both covered and on-street parking for guests and staff. The rent is $9.00 per S/F plus $2.00 per S/F triple-net (NNN). A City of Everett business is required to conduct business within city limits.

Front view of 3216 Wetmore Avenue, Everett, WA (Google).

Management Structure

HR Solutions will begin operations under the organizational structure outlined in this section. The company responsibilities have been divided into three main operational categories including administration, finance, and operations. The key positions and their specific responsibilities have been outlined below.

President/CEO | Lori Morris | The President & CEO is the highest ranking officer in the company responsible for managing the organization as a whole.

Other officer positions will be for Treasurer and Secretary. Filling these roles with high quality professionals will be one of the first things that the company will do. Fortunately, we are a human resources company and can find the right people quickly. The Treasurer will be the acting CFO and the Secretary the acting COO. Lori Morris will be responsible for administration functions including marketing, IT, office admin and facilities management. The COO will be responsible for the human resources function. Specific responsibilities are outlined below:

Treasurer | Leia Organa |

Secretary | Obi-Wan Kenobi |

Administration | Chief Administrative Officer (CAO) | Lori Morris |

Marketing

Print/Media

Sales

IT

Office Administration

Reception

Facilities

Human Resources

Finance | Chief Financial Officer (CFO) | Obi-Wan Kenobi |

Accounting

Operations | Chief Operating Officer (COO) | Leia Organa |

HR Services

The organizational chart is as follows:

Products and Services

There are a number of products and services that we will be able to offer. One of the most important is the provision of recruitment services, as finding good people is one of the biggest pain points that companies in this area have. Many quality workers are scooped up by Puget Sound\\\\\\\'s biggest companies, and this creates competition for the rest. We are experts in identifying workers who prefer to work, and thrive, in smaller company environments.

Other services that small and medium-sized enterprises need in order to thrive, but are often in short supply, are workforce planning, HR development, total rewards, employee & labor relations and risk management. These are each specialties within the HR field, and these are usually needed by medium-sized enterprises. Those customers will typically have the infrastructure in place to support hiring , payroll and other basic HR functions, but they often have very small HR teams that are challenged to provide the more refined workforce development services noted above. As such, these areas all provide opportunity for an HR consultant working in this space, and these are bigger clients and more long-term projects. We believe that it makes sense to develop products and services that allow us both short-term work (hiring) and long-term work in development, risk management and total rewards.

Market Analysis

C1. Target Market

The target market for our services is going to consist of small and medium-sized enterprises. They will range in size from around 10 to 300 employees. For the consulting services, 150-300 employee firms are more the target, where for hiring we will work with smaller firms as well. The Seattle area leads the nation in small business growth, making this an excellent place to set up an HR consulting business aimed at small and medium-sized businesses.

The geographic target region will consist of Snohomish and King Counties, which consist of our hometown of Everett, and the Seattle area. The Seattle area has the highest GDP of any city in America (McNamara,, 2017). We are open to working with clients anywhere from Bellingham to Olympia, but we are expecting that at least 80-90% of our clients will be in Snohomish and King, and we will target that geography in our marketing efforts. Even these areas are quite different. For example, King County has an average monthly wage of $1626 while Snohomish County has an average monthly wage of $1102 (BLS, 2018). Both have low unemployment rates, which is one of the reasons there is such a strong market for high-quality recruiters.

The general nature of HR, especially in the consulting functions, is that they can be applied to a number of different industries. The recruiting function is better when targeted to specific companies, and we will honestly be using it more as a loss leader to bring on clients in order to sell them on our consulting services. There are a wide variety of companies in the target market – engineering firms, financial, legal, technology, retail, and light industry. We believe that we can service each of these industries to a high standard.

Industry Analysis

The HR consulting industry is worth around $22 billion in the US (IBIS World, 2017). The local market is significantly smaller, and the consulting (not recruitment) business is smaller still. There are several firms in the region already competing but the rapid economic growth of the Seattle area means that we have reason to believe that the market is underserved at present. We believe that endogenous growth alone will provide us with the opportunity that we need in order to break into the business. Furthermore, there are many competitors that are using old technology, and old techniques, and we believe that the application of modern tech and modern HR techniques will allow us to outperform many of the legacy competitors in the space.

The companies that we are targeting are typically the businesses too small to be targeted by the largest companies, though there is some overlap with a company like Randstad, especially in recruiting. In consulting, many of the competitors are focused on enterprise clients, and would see our target partners as being too small. The other side of the industry is the potential market. The Seattle area has a robust and diverse economy. There is a lot of business growth, and many companies that fit our target market .We believe that there is ample demand for our business, especially on the consulting side, because the typical profile of a company in the 150-300 employee range is one that has a basic HR structure, but is not at an enterprise-level of professionalism yet. They want to have things like total rewards and HR development programs, but might not have had the resources to this point to build those out. They also might find that working with a consultant allows them to manage their oosts associated with these programs better, and will take some burden from their in-house HR teams.

The current trends in human resources are a move towards increased use of technology, increased sophistication of either employee engagement or employee experience programs, increased use of outside (contract) labor, even for tasks like marketing that were normally always done in-house, and increased specialization in the workforce. In the Seattle area, the dominant story is Amazon, which employees an incredible amount of people and has more or less distorted the entire technology employment market. With this strong growth has become a local issue of maintaining key employees,

C3a. SWOT Analysis Matrix

S (Strengths)

1.Strong expertise in HR

2. 2018 tech and processes are efficient

3.Extensive knowledge of the industry

W (Weaknesses)

1.New company – no brand/reputation

2.Need more specialist talent

3.Relatively small budget

O (Opportunities)

1. Strong local economy

2. Relatively underserved market for HR consulting

3.Old school competitors are vulnerable

T (Threats)

1. Other competitors

2. Economic shocks could weaken demand

3. Taxation and other government policies that can reduce profitability

C3b. This means that we are a human resources company, good at human resources, which helps when running an HR consulting business. With modern technology and processes, we believe that we have competitive advantage over some of our competitors, and our knowledge of the local economy will also help us to establish new business. To do this, we must overcome a few weaknesses. The major one is that we are a new company, without an established brand, and operating on a small budget, both of which will provide us with marketing challenges. We also need more specialist talent – a company of one can only thrive for so long, and our operating plan calls for hiring more HR pros inside the first few months.

If these weaknesses can be overcome, we have some great opportunities in the robust nature of the local economy and underserved HR consulting market, both of which give us an opportunity to win clients with limited competition. That some of the older competitors have an outdated approach also provides us with a chance to win business. The stronger competitors, however, can provide superior service levels because of their connections. Economic shocks could weaken demand by undermining the robust economy, and of course the regulatory and taxation environments pose a threat to profitability, especially during the early stages of our growth.

D1. Market Strategy

The products are HR consulting services and recruitment services. As a general rule, the recruitment services are going to be a loss leader to showcase our talents. There are two reasons for this. One is that recruitment services are relatively quick turnaround, so will provide rapid cash flow for our new company. The other reason is that we need to showcase our skills in order to build a partner base. The HR business is a lot about personal contacts, and building up relationships. Start with something that is relatively easy, prove your worth, and then sell those partners on your consulting business. So this is the basic product strategy.

The consulting business is focused on five main areas: workforce planning and employment, HR development, total rewards, employee and labor relations and risk management. These five areas are high value areas for HR consultants because they are typically complex, and in high demand from companies. There is a shortage of professionals in these specialties, which allows HR consulting firms to find a niche in the market. These are complex services rendered over a long period of time. This provides the opportunity for a monthly retainer to be charged, as well as specific consulting billable hours. For companies that we are targeting, this can be a substantial revenue stream. The reality is that these programs command fairly high prices, over long periods of time ,and are very lucrative for the HR consulting industry.

We intend to charge premium prices. We want to establish ourselves not just as skilled practitioners but as thought leaders in the industry. BY working with partners as strategic partners to improve their overlal business function, we will be able to convey a high level of value add, which will allow for premium, skim pricing strategies. There is no price list – for consulting services prices are negotiated on the basis of the length and complexity of the job.

The final \\\\\\\"P\\\\\\\" of marketing is place. Most marketing today is digital, through Google, the company website and through social networking sites. The company itself will have a strong digital presence. The physical location of the consultants means that it is possible to target most of Western Washington for our services. Typically, consultants will visit client sites to ascertain key components of the contract and what the needs of the client really are. After initial client visits, most work is then done at the company office. We will also offer some work-from-home privileges, to the extent that this enables our employees to be more productive. But as with most digital or information roles, the actual physical \\\\\\\"place\\\\\\\" is not particularly important.

D2. Price List

The consulting business is not a hardware store. There is no price list because every job is different. While there is no value to making up numbers from thin air, we\\\\\\\'ll do it anyway. Consulting services at $100/hr and recruitment services at 10% of position\\\\\\\'s salary.

D3. Promotional Strategy

The promotional strategy will focus on inbound marketing techniques, which over the past few years has become the best practice for B2B marketing (Buckley, 2015). This focuses on creating exception content, social media, master SEO techniques, and positioning yourself as a thought leader in the industry. The reason for this is that typically the first several stages of the buying process are digital in nature – long before you actually make contact with the person (Steenbrink, 2016) There are also outbound techniques, in particular Google and social media ads, which can be highly targeted, and will leverage the same content that is produced for the inbound campaigns. This highly efficient form of marketing will be combined with extensive networking, which is something that HR professionals must do within the small business community, as there is a degree to which HR consulting is a relationship-based business. Marketing is the responsibility of Lori Morris during the early stages of the business, but hiring a marketing professional is slated to be one of the hires in the 7-10 employee range, after some key consultant and operating positions are filled. A typical inbound program can take 12-18 months to bear fruit, so the buildout of this program will be concurrent with the networking and outbound strategies (Lieberman, 2017).