While it may sound counter intuitive, successful business owners understand that working with competitors in the long run will make your business more profitable. Reasons why include:

  • Benchmarking & Knowledge Sharing

Markets change and the slow footed can get left behind. By having regular conversations with competitors one can benchmark performance to determine if a change is affecting others in the same way as it is internally. For business owners that get that validation they are then able to operate quicker to any major market change. For example, take retention ratios. Keeping key talent is a major concern in all recruitment companies regardless of size. Benchmarking on retention ratios discreetly can help business owners assess if they are doing enough in this regard, also done smartly, can lead to new ideas on programs that can be introduced to improve the business performance.

  • Lobbying

Professional Bodies usually take the lead on this, but they can only exist if competing companies choose to work together. However, a Professional Body can act on behalf of members to highlight issues with proposed legislative changes, to help all businesses in the sector. For example, when the new IR 35 legislation was proposed, APSco took a leading role in both educating members on what the proposed changes would be and feeding back to the Government on issues that could emerge out of the legislation. Similarly with any other legislative change, by working together, businesses stand a better chance of influencing government to ensure an optimal environment.

  • A deal shared is a deal won

There may be times when you have a good client for whom you are unable to source the candidate they need. For example, perhaps it is a special role you don’t usually work in. Building a network amongst peers where you work together to fill roles could mean that instead of having to turn down roles, you end up making fees you would otherwise have missed out on.

  • Exit strategy

For anyone with a long term perspective, exit strategy is a core component. The UK has a unique tax break for entrepreneurs, in that capital gains tax is reduced to 10% for business owners (subject to conditions.) what this means is that actually, the most tax efficient way to earn money in the UK is to build and sell businesses. For example, say in business A, the director over five years paid himself all profit and ended up earning over £1m over the period. Especially now with changes to taxes on dividends, the amount after tax may be as low as £500k. Compare that to business B, where the director over five years paid himself no more than £235k (before tax allowance, 180k after) keeping the rest on balance sheet. Assuming the business was then worth the balance sheet, he would then receive a further £680k after tax, so £860k overall, so over £300k more in hand. Then think through how that amplifies over time. With that in mind, if only because of the tax system, any business owner should always be thinking about how to exit. Building relationships with competitors is a key component of that. Your personal reputation will play a big part in not only hearing about opportunities but also any due diligence that then happens. Also, it may even be a competitor that acquires you!

There are many other benefits to working with competitors, including the simple fact that the chances are, not all your competitors will want to work together. So those that do, will automatically have an advantage. Food for thought. In terms of how to go about building relationships? Look for your professional bodies, organisations such as APSCo work to create peer groups to tackle issues businesses struggle to do on their own.

Over the last ten years Vacancysoft has worked with recruitment firms of all sizes to help them map out market activity in order to identify changes in demand. For more information about how we can help, please contact us.


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