Exec Employment Agency Business Plan

The Executive Search & Rescue Placement Firm will be targeting the emerging company market in the Portland metropolitan market. Portland will be targeted because 1) it is where Dan’s network is located 2) Portland is a prime place for emerging companies, it is part of the silicon forest and has the most VC money on the West coast behind Seattle and the Bay area.

Within the emerging market, Executive will be targeting two groups, high-technology firms and non-high-technology firms. The high tech firms make up the largest group of emerging companies, up to 80% of the market. Those not in this segment, by default will be in the other group. Although most emerging companies are high tech, not all are and Executive can still provide value-added services for these companies and will not ignore them.

By virtue of Executive’s clients being emerging companies, they typically have the highest growth rate among other companies. Growing companies need more people and this is how Executive fits in, they help find people (executives) for these companies.

4.1 Market Segmentation

Our customers can be divided into two different groups:

1. High-tech firms. The high-tech firm deals with some aspect of technology, it could be design, or manufacturing. These firms currently make up over 80% of the top 20 fastest growing companies in Oregon.
2. Non-high-tech firms. While this category of emerging companies is far smaller then high-tech companies, it should by no means be neglected. There are plenty of fast growing companies in this segment and Executive will be able to serve them.

4.2 Target Market Segment Strategy

Executive is concentrating on emerging companies for the intuitive reason that emerging companies need executives more often then more stagnant companies. As a company grows, there is an increased demand for leadership.

Within the emerging company label, there are predominantly high technology companies. While this has been tempered somewhat by the recent economic slowdown these companies are growing at astronomical rates.

An example at just how fast some companies are growing is a non-Oregon (for illustrative purposes) company called eBay. eBay’s CEO Meg Whitman used to be a executive at Hasboro Toys. After two years at eBay, Meg was worth more (from eBay stock) than the entire Hasboro family after over 30 years of business. Recently tech stocks have been hit, and eBay is no exception, however, they were hit less as they are a profitable Internet company. The point is that a lot of these companies are growing very fast and this is the perfect time and place for an executive search firm to fuel this growth. 

4.3 Service Business Analysis

There are two business models for executive search firms:

1. Retainer firms. These firms typically command 30-35% of the executives first year salary. The firm is paid regardless of finding a candidate. The benefit of using this firm is that the search firm is under extra pressure to find the right candidate and will spend extra time to get the person that “fits the bill.” This setup at the same time limits the number of positions that the search firm can look for at once, as they have an obligation to find the executive for the retainer fee. This is a more unusual set up.
2. Contingency firms. This is the more common arrangement where a fee is paid when the search firm finds an appropriate candidate. The advantage to the client is that they only pay if services are rendered. This creates an economic incentive to perform, but when the company is in a hurry to find someone, the incentive is lost to some degree regarding speed. This set up is advantageous to the search firm because it allows them to search for a wide range of clients at once. The margins for the contingency model are generally the same as the retainer firms.

4.3.1 Competition and Buying Patterns

Portland currently has about six to 10 executive search firms. There are other search firms that handle many different positions other than executives.