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Hire Power

No experience, no money and lots of competition. So why take the chance?
March 1, 2000
URL: http://www.entrepreneur.com/article/19298

When 32-year-old Harold Leffall Jr. was about seven, he'd set up "a little desk with notepads" and play business in his mother's small Oakland, California, abode. Family and friends thought it endearing but certainly had no idea young Harold would actually grow up to head a staffing business with sales exceeding the million-dollar mark--especially since no one in the family had ever gone to college and welfare was the primary source of income. "A lot of people say they didn't know they were poor when they were growing up," says Leffall, owner of Leffall Employment Agency in Oakland. "But I knew I was on welfare, and I didn't like it. I decided very early on that when I got older, [being poor] wouldn't be part of my life." With the idea that individuals living above the poverty line possessed a higher level of education, Leffall enrolled himself in California State University at Hayward, despite the fact he had to simultaneously work as a shoe salesman to put food on the table. Academic life initially caught the wide-eyed freshman off guard. Luckily, Leffall, whose father "really wasn't around" growing up, gained valuable mentors through the federally funded Upward Bound program, designed to provide motivational support to first-generation college students from low-income families. "I was fortunate because that exposed me to individuals from similar backgrounds who not only successfully went on to college, but also completed it." And complete it he did. It took five years, but Leffall, a business administration major on first declaration, finally graduated with a degree in political science. "Like most college students, I was overly optimistic," recalls Leffall, who once aspired to be a city manager. "I thought `As soon as I get a degree, I'll have job offers coming from everywhere.' But it took a whole year to find a job."

The Quest For Independence

Ditching his shoehorn, Leffall spent the following six years working in community-service positions. For the first five, he created youth and family programs in urban communities for the Oakland Housing Authority. And for the next year, he aided a nonprofit organization in getting the community more involved with the educational upbringing of children. Unfortunately, the good vibes created by the goodwill work became increasingly strained by bureaucratic frustration. Whether it was being passed over for many a promotion by his first employer or nearly being laid off when the proposed five-year community education project came to a halt after less than a year, it became starkly apparent to Leffall that it was time to get started working for his own cause.

"What I wanted was more control over my life," he says. Drawing from his childhood dreams, Leffall began exploring business opportunities, even though he'd just started graduate school to get his master's in management. "It just so happened that we had to do a project on growth business areas in one of my classes," he says. "In doing it, I came across the staffing industry and realized the projections for growth were just astronomical because more and more companies were moving away from a permanent work force to a more contingent, contractual work force."

It sounded promising enough. The only catch was that Leffall needed a minimum of $25,000 in start-up capital and a set of instructions on how to start a staffing business (or any business, for that matter). Luckily, a friend in the industry shed some light on the unknown. But the money hunt wasn't so easy. He sought assistance from small-business-friendly financial institutions like the SBA, his local bank and a nearby Small Business Development Center. With an insufficient business plan and a lack of collateral, however, Leffall's request was almost immediately denied by all three. "They knew staffing was a growing industry and thought there was so much competition from major agencies that a small agency like ours would be eaten alive, and that we didn't really have an opportunity," he says. "And I just didn't really want to hear that."

Maybe it was to retaliate against what poor kids are too often told growing up: Don't dream too big. Be practical--go get yourself a job at the post office. Whatever it was, Leffall wasn't about to settle for less than his highest hope. He dismissed warnings from friends that he could lose everything and accepted one of many mail offers to take out a second mortgage on the Stockton, California, home he'd purchased two years prior and was, at the time, renting out. When he finally secured the $25,000 loan in July 1996, he happily resigned from his job at the nonprofit organization.

Hard-Won Success

By October, Leffall found himself behind his own desk in his own office, with a receptionist ready to hand out freshly printed brochures to clients. Unfortunately, there were none. "Like most entrepreneurs, I thought this would explode immediately," he says. "But for about two months, the phone didn't ring. We were making all these cold calls and no one wanted to talk to me. I was so discouraged because I really thought I had a good idea and business would pick up."

Flabbergasted by the curt responses from companies unwilling to deal with an unknown, and with only half his start-up loan to spare, Leffall decided to give his agency an infusion of credibility by joining the Oakland Chamber of Commerce and the National Association of Temporary Staffing Services. He sent mass mailings to Chamber members offering special rates and attended Chamber meetings and industry mixers. Slowly but surely, he won much-needed contracts. "That gave me more confidence to approach companies," says Leffall. "It wasn't much, but at least it was something I could talk to a prospective client about."

Those first clients, including Leffall's former employer, the Oakland Housing Authority, led to much more than small talk. Leffall Employment earned sales of $272,000 in 1997--up 100 percent from 1996. But Leffall admits those numbers seem more impressive than they actually were. Profit margins in the industry are so low that after paying expenses and employees, he only got 10 percent of sales for himself. "I got used to fixing Top Ramen in very creative ways because I couldn't go out," he recalls. "I couldn't buy new clothes, but I had a lot of my old clothes. So when people saw me, they'd think I was okay." It didn't help that for most of 1997, Leffall unknowingly charged half of what his competition was charging for services. Not getting paid by "the most unlikely sources," like doctors and lawyers, also became problematic. He found himself in court--a few times--just to be reimbursed for his work.

After sales and marketing became less tumultuous and many hard lessons had been learned, business looked brighter. By 1998, Leffall had the budget to hire a qualified full-timer to help with recruiting and placement. (He'd already gone through two not-so-qualified friends who agreed to work for low wages.) And word-of-mouth landed Leffall Employment Agency its first two large accounts: a three-year contract with the County of Alameda, California, which reaped $700,000 for the company last year; and one with Shell Oil Co. to payroll participants in its youth training program. Leffall still gets excited reminiscing about the day the president of Diversified Personnel, also in Oakland, called to ask if Leffall Employment was interested in partnering for the County of Alameda contract. "He wanted to meet with me that same day, but I was like, `Can we meet tomorrow?'" recalls Leffall. "I was just so elated. I knew I wouldn't be fully there at that meeting."

Since coming of age in the staffing world, Leffall Employment has forged ahead amid the sea of nearly 20 competing agencies in the Oakland area and has nearly doubled sales every year. From sales of $596,000 in 1998 to $1.3 million last year, Leffall expects that, after winning the City of Oakland bid last September, sales will double again this year. A mentor to high school boys and a volunteer instructor of youth entrepreneurship for Junior Achievement, Leffall will expound on his experiences in print with a self-published book titled Brother CEO this summer.

Risk-taking afforded him a chance to live the life he always wanted--even to buy his mother a new car. But would Leffall advise anyone to start a business without sufficient knowledge? "No way," he laughs. "Get practical experience by volunteering for a company in the industry you want to get into. It'll save you a lot of heartache, and probably a lot of money as well."

Contact Sources

Leffall Employment Agency, 7700 Edgewater Dr., #647, Oakland, CA 94621, (510) 613-8080.