How To Start Your Own Recruitment Business

Due to the entrepreneurial nature of recruitment, a lot of Recruiters decide to ‘startup’ their on their own. Whether you’re looking to blow your own trumpet as a ‘one man/woman band’ or build the next award winning multi-national, there are steps you can take which will help you in your planning.

Here’s everything you need to know about starting on your own. 

It won’t be easy!

According to Sonovate over 5,000 recruitment companies were started in 2015. The chances of these companies all becoming industry heavyweights are stacked against them. Sadly, many of the companies that are started won’t be successful in their aim or last long.

If you do ‘make it’, it’ll be the best decision you ever made. Successful recruitment entrepreneurs enjoy massively increased earning potential and complete control over business decisions. Along with the freedom to work whenever and wherever you want.

However, when you’re working for someone else, if you blank a month, your mortgage is still paid. You focus on next month, and go again. When you work for yourself, ‘blanking’ may make a big difference to how you live that month.

Time-management is obviously a crucial skill for all recruiters, but never more so than for the recruitment entrepreneur. You’ll need to wear a lot more hats than you did before. Marketing, sales, business development, administration, technical operations and finance now all falls under your remit.

If you have the personal qualities to succeed (and if you’re a successful Recruiter, you do) the next question is: which type of recruitment entrepreneur do you want to be?

There are two quite distinct paths you could choose. For the sake of description we’ll call these ‘the Lifestyle Boutique’ or ‘the Recruitment Business.

Single Desk startup

Option A: The Lifestyle Boutique

Of the estimated 18,000 recruitment companies in the UK, around 90% are boutiques with less than ten people.

What’s the appeal?

If you love recruiting and are starting to get sick of giving your agency a hefty cut of your earnings, lifestyle recruitment could suit you. By going it alone you’ll keep a much higher proportion of your billings.

Equally, the work-life balance associated with a smaller firm (or one person band) will mean you’re not chained to your desk. You become the master of your own destiny. Which means you’ll be setting your own KPIs and be the one who makes sure you hit them.

But also be deciding when’s an acceptable time for golf on a Wednesday.

So who’s suited to this life? Often, Principal Consultants. It’s a hugely attractive proposition if you’ve got the pure ‘biller instinct’, a lone ranger with a laser-focus on making money.

The real key to successful lifestyle recruitment is having an extensive network. You probably want to be sure you’ll have exclusive business as soon as you metaphorically open the doors. Without this, it’s advisable to have some money in the bank. So if you don’t place anyone for 12 months you can still survive.

It’s often Principals Consultants that have had the time to forge great relationships so have a thriving network of go-to clients to capitalise on. Equally, if you’ve been sitting at the top for a while, your bank balance likely makes pretty pleasant reading.

Spencer Ogden bike

Option B: The Recruitment Business

Starting and growing a successful recruitment businesses can be relatively straight-forward if you follow the path of others, and a huge amount just relies on hard work. There’s massive money in growing too – a large number of The Times FastTrack 100 are recruitment businesses are only a few years old.

Equally, they can easy to sell. If a larger business has the cash and wants to expand their markets and offering in terms of functions and geography it makes a lot of sense than doing the graft themselves.

Who’s suited?

Building a business requires a more well-rounded skill set than lifestyle recruitment. While billing might be an important part of setting up your business, especially in the early days, you need to have a holistic view of the business as a whole. You need to be commercially minded and a strategic long-term thinker.

Often it’s experience as a Recruitment Manager that gives you these skills. You’ll have exposure to P&L management, budgeting, training and development to general HR, building a team and people management.

Where lifestyle recruiters can focus nearly 100% on billings, you’ll need to invest as much as you can back into the business. You won’t get rich on day one, and you certainly won’t be working four hours a day. Starting a recruitment business is hard work, long hours, and high stress but the payoff in the long-term can be huge.

Regardless of which route you take, plenty of people begin with one in mind and then develop into the other.

Here are some practical things you need to consider before taking the plunge…

Rope Swing Water

Things to think about

Before you hand in your notice, you should’ve written a comprehensive and well thought out business plan. Doing so will highlight any potential pitfalls and assist in your decision making.

There are countless online guides to show you how to write one, and as you’re continuing in a line of business you know, it shouldn’t take you long to draft.

1. Structure

– Would you consider a co-founder?

– How about becoming a franchisee instead of starting completely from scratch?

– Will you need an investor?

2. Research

– Is there space for you to make money in your chosen market?

– Who’s your competition and how are you planning to compete?

3. Business Planning

– What are your priorities?

– How are you going to generate new business?

– Are you going to outsource non-revenue-generating activities such as Accounts?

If you’re aiming to build a recruitment business you want to get robust business processes in place from day one. You may struggle do this later on when scaling up.

4. Money

– How are you starting out?

– Do you have savings, or are you planning on capital investment?

You’ll be pulling together P&L reports, budgets and forecasts. Inaccurate financial forecasting is a major contributor to startup recruitment failure.

Don’t forget you’ll be doing all of your own tax, invoicing, business expenses etc. and you’ll need to ensure cash flow stays healthy. You’ll need to get a business banking account and an accountant too.

– Are you running temps or contractors?

– How are you going to payroll them?

– How are you going to payroll any staff you hire?

5. Pricing

The temptation with a new recruitment business might be to undercut your competitors on price in order to drum up business.

If you do this you’ll likely end up in the trap of diminishing returns and won’t make enough profit to keep your business running. Work out what you need to charge and balance it against what’s competitive.

6. Insurance

Look into Public Liability, Professional Indemnity, and Employers Liability Insurance.

7. Marketing & Branding

Think about your company brand.

– What is your marketing strategy?

– How will people view your business?

– What are your core values?

This is an absolutely crucial step if you can afford to get a professional involved, do.

8. Infrastructure

You need to think about office space; telephony; computers; databases, online presence etc. so you can physically get started.

9. Technology

There are plenty of software packages out there to choose from depending on your needs and budget.

– CRM: Off the shelf? Online/cloud? Bespoke?

– Do you need a LinkedIn Recruiter account?

– Which job boards are you subscribing to?

– Are you going to build a website?

10. Legalities

You need to think about how you’re going to set up a professional and legally compliant business. And have a good idea of which legal practices you must adhere to, once you’re started. This means knowing the local laws wherever your business is based.

Setting up a recruitment business in the UK will have different implications to other countries.

If you’ve been working in recruitment long enough to be looking at setting up on your own, you’ll already have the work ethic and drive to succeed. Making sure you’re set up well could be the difference between failure and success.