Jeffrey Weinstock is the founder of the R&W Group, a staffing and placement company based in Washington, D.C. With clients ranging from startups to Fortune 500 companies, the R&W Group specializes in placing professionals in temporary and permanent legal, administrative, accounting and finance, and IT positions across the country.
Weinstock was laid off from another staffing company during the recession in 2009. He now views the difficult situation as the best thing that’s happened to his career, as it gave him a chance to start his own company and to do business on his own terms. Here’s his story, as told to Nav.
From Lawyer to Law Recruiter
I practiced law in D.C. for about 10 years. After that, I was ready for a change. A former colleague of mine was, at the time, working for a legal staffing agency. We were having lunch one day and started talking about what she did. Before I went to law school, I was the director of admissions for a small college in New York. Having worked as a college recruiter, I really liked what she was saying about legal recruiting. I started looking and ended up taking an offer at a large staffing agency in D.C. I was quickly promoted to run their D.C. office.
Over the next 10 years or so, I worked for a number of large and small staffing companies. I really liked each position for what it offered, but there was always something I didn’t think was handled correctly: Either the company was becoming complacent about clients, or they treated internal employees poorly, or they just didn’t seem to care about candidates.
From Layoff to Starting a Company
Fast-forward to 2009, I was the VP of a regional staffing company in D.C. It was the middle of the recession and they eliminated my position. Being laid off was really tough initially because I didn’t see it coming and I had two young sons at home. It turned out to be the best thing that ever happened to me professionally. I knew I wasn’t done with the industry yet. I felt like I could set up a company that allowed recruiters to work from home most of the time, keep overhead manageable, and pass the cost-savings on to clients. I did a lot of research and learned that one of the benefits of starting a company during a recession is that startup costs are significantly less. They ended up being about two-thirds of what I expected them to be. And that’s how R&W Group was born.
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Funding the Business
We were self-funded. At the time, I had a business partner. We used savings and we borrowed some money from family, but not much. To our surprise, pleasantly, we were profitable within three months.
In terms of credit, since we didn’t have any track record initially, we weren’t able to get a line of credit, which we expected. We used our savings and we started banking with Cardinal Bank, and as soon as possible, they did extend a line of credit to us, which we do use when necessary. We also have a business credit card, which we try to put as many expenses on as possible, including our rent. The first person we hired was an outside accountant, and he has access to the credit card records, which makes accounting that much easier.
The Biggest Challenge
Initially, we had to take a leap of faith. We didn’t know if any clients would follow us, but many did. They were excited and really supportive of what we wanted to do. Now, the challenge is growing the business. For the first several years, we doubled our revenue, year over year, and increased profits every year. It’s been very difficult to keep up that kind of pace.
Managing Cash Flow and Growth
We reinvest profits in the business. What we try to do is watch DSO (days sales outstanding) very closely. We try to keep accounts receivable to a minimum. We do use a line of credit, but only when necessary. We try to put all of the profits back into the company and towards our employees.
The Biggest Mistake in the Early Years
Our biggest mistake was taking on a client we knew very little about. That client had been referred to us by a current very good client. After several weeks, we started to realize the new client was unethical. As a startup business, there’s a lot of pressure to take on any client you can to help to pay bills and grow the business. They were the first client we told we could no longer work with. It was really tough to do, especially in the first year, but it was the right decision.
The Smartest Decision in the Early Years
There are two things we did that were really smart. We wanted to manage our overhead. We did not know how quickly we were going to grow. We signed a lease with Carr Workspaces that would allow us to grow, use locations, and network. We ended up meeting several clients that are also tenants in our suite. Carr has just been amazing. We really consider their employees to be part of our team. They’ve helped us grow. They even introduced us to a new tenant in one of their locations that was going to need some staffing help, which has become our largest perm. client. It’s been mutually beneficial, because, as we’ve grown, we’ve needed more office space, so we now lease a lot more office space from them.
The second thing is that, in all of the other companies I’ve been a part of, I learned that work-life balance is so important to employees. In order to improve that, we decided to encourage all of our workers to work from home four days a week. One day a week we all meet in our office for a staff meeting. During the week, we talk to each other on the phone or Skype or text or email. Carr is actually set up to forward all of the recruiters’ calls to wherever they are working. Our team gets along very well and actually looks forward to staff meetings, which is not something I could say about other companies!
The Future of the Business
We are incredibly lucky to get to help change people’s lives every day. We feel like we’re doing the right thing for our clients, our candidates, and our internal employees.
The future looks really bright. We’ve got a payroll partner that allows us to place contractors anywhere in the U.S. We’re exploring opening offices in other cities. We’re not sure if we need to, because we can recruit candidates from anywhere from D.C., but all of those options are on the table.
Advice for Someone Starting a Business
Believe in yourself. Don’t be afraid to take that leap of faith. Don’t be afraid to make a mistake. There will be unexpected twists and turns and challenges, but don’t give up: That’s all part of the fun.
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