HR Consulting Firm Business Plan: HR Solutions

Executive Summary

HR Solutions is a human resources consulting company based in Everett, WA. The company is launching this year, with the principal heading operations. The greater Seattle area has low unemployment and a booming economy, meaning that HR consulting services are in high demand, and there is believed to be significant growth potential in this market. The basic business model at 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, particularly businesses with 150–300 employees.

The marketing strategy will focus on B2B inbound marketing and on networking within the local business community. Both approaches are necessary. Inbound marketing often takes a long time to bear fruit, given the length of the traditional B2B buying cycle and the time required to build up content and reputation using this strategy. While the business is developing that capability, networking will be the most effective way to build business in the first year. For this and other reasons, the first year is expected to produce a net loss, with profitability first occurring in month ten. However, the company is expected to have strong positive momentum at that point, which will allow it to remain profitable thereafter.

Company Overview and Mission

HR Solutions is a human resources (HR) consulting company located 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 covering staffing, development, total rewards, policy and procedure, compliance, and organizational culture. Our consultants include specialists who work with larger businesses and generalists who can provide the fundamentals of HR structure to newer businesses 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, lending a high level of credibility to our services.

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 that lack dedicated HR expertise, it is our mission to provide them with the knowledge and tools they need to grow and thrive. Our vision is to raise the bar for human resources across Snohomish and King Counties, giving small businesses the resources they need to excel.

The first business goal is to generate a profit. This is a foundational goal of any business, and we propose to achieve it by executing two key strategies. The first is to employ efficient sourcing, qualifying, and monitoring practices to maintain an average time-to-fill rate of 30 days or less for all posted positions — 12 days faster than the national average of 42 days (Society for Human Resource Management, 2018). By reducing the time to fill an open position, we help eliminate disruptions in productivity and fulfill our mission of keeping organizations focused on their business objectives. We will 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 who meet the definition of "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 the industry — we are the experts so they do not have to be. To maintain this level of trust, we will set minimum criteria covering a combination of knowledge, ability, and experience that all senior employees must possess before joining HR Solutions. We will also institute training programs for junior employees to acquire this expertise over time.

HR Solutions will be established as a single-member Limited Liability Company (LLC). The LLC structure provides several advantages for a small, owner-operated business that make it a strong fit. First, the structure is easy to establish and flexible. Second, it avoids double taxation. Third, it provides a separation of assets between the owner and the business.

HR Solutions will occupy 1,252 square feet of Class B office space on the second floor of The Ogden Building in Everett, Washington. 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, defined as "Very Walkable" (most errands can be accomplished on foot), and a Transit Score® of 56, defined as "Good Transit" (many nearby public transportation options).

The space includes a reception area to receive guests, a conference room for meetings and trainings, and three private offices for professional staff. The location also features a shared kitchen and bathrooms, as well as covered and on-street parking for guests and staff. The rent is $9.00 per square foot plus $2.00 per square foot triple-net (NNN).

HR Solutions will begin operations under an organizational structure divided into three main categories: administration, finance, and operations. The President/CEO is the highest-ranking officer, responsible for managing the organization as a whole. Additional officer positions include Treasurer (acting CFO) and Secretary (acting COO). The CEO will oversee administration functions including marketing, IT, office administration, and facilities management, while the COO will be responsible for human resources functions and the CFO for accounting and finance.

Keys to Success and Industry Background

Several key success factors will help us achieve our business goals. The first is to build a set of specialties. While we intend to offer a full range of HR consulting services, we recognize that the market is strongly oriented toward helping companies solve particular pain points. The strategic focus will be on identifying top talent (Harbour, 2018). In the Seattle area, the competition for top talent is substantial — whether it is engineering talent at Boeing in Everett or technology talent in Redmond and Seattle. Small companies in this area are competing against some of the biggest and most successful companies in the world, and this is an area where our networks and expertise in identifying talent can be of tremendous value.

Competing for top talent will mean developing a specialty in modern HR practices. Trends such as the digitization of HR, the shift toward employee experience (from employee engagement), people analytics, and leveraging the gig economy are all major shifts reshaping the field. The large enterprises that compete for talent with our clients are among the most progressive users of modern techniques and tools, and we must match that sophistication in order to effectively equip our partners to compete (Leong, 2017).

Operational efficiency will be another critical success factor. As a small consulting firm, we need to be as lean and efficient as possible. Many legacy competitors have been slow to adopt the latest technology, and this gives us an opportunity to operate more efficiently. Using SaaS tools in particular will allow our consultants to be fully functional while working remotely and will facilitate more effective collaboration. We believe this will drive greater efficiency and position us to achieve higher margins than competitors — margins we can reinvest in growing the business or use to compete on price. Our first preference will be to reinvest profits into growth.

Marketing is the final key success factor. Getting a new brand into the market is a significant challenge. We have engaged a marketing consultant who will employ modern techniques to increase our attractiveness to new clients, streamline our marketing and sales funnel, and help us build a brand as quickly as possible. Without effective marketing, no amount of operational excellence will carry us forward.

Underlying all of this is a commitment to strategic human resources management. We call our clients "partners" because we function as their strategic partner. Beginning with an understanding of partners' pain points, we play a role analogous to that of a physician — gathering information, asking key questions, making a formal diagnosis of what the partner needs, and then tailoring our offering to demonstrate how we can help them achieve their goals. Strategic HRM is one of the strongest trends in HR today, as more companies recognize that even in the most technology-driven organizations, having great people is a genuinely essential component of success (LucidChart, 2017).

Excellence with data will also be critical. We must price our services in a way that maximizes productivity while simultaneously delivering value. We will gather data, analyze it, and use it in our strategic and tactical decision-making to the extent possible. Communication is the final competency required to drive the business forward — communicating value to clients, communicating opportunities to candidates, and excelling in all forms of professional communication. A failure to communicate effectively is likely to mean a lost opportunity.

Human resources consulting is a long-established industry. For much of the 20th century, HR was an in-house function. When someone started a business, they would perform HR functions themselves — often poorly. With increased competition, the need for outside expertise in the HR function grew. For the past several decades, HR consulting has evolved considerably. Early on, it was dominated by larger staffing companies such as Randstad or Accenture and by large enterprise consulting firms. By the 1980s, it was not uncommon to see HR professionals starting small practices to target other small businesses, and the industry has continued to grow and evolve since then.

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