It makes sense to want to build your own business in recruitment. After somewhat of a lull, the global industry is booming once again, growing year on year and currently worth around US$521 billion. In a largely digital age, it’s also easier than ever to run a successful recruitment business from home or on the go should you wish, without needing to splash out on office space.
Whether you’ve worked in recruitment for a number of years and are looking to take a natural next step in your career, or you’re a serial entrepreneur who sees an opportunity in this sector, there are undoubtedly some things you should know about how to start a recruitment agency, and more to the point, how to encourage growth once you’ve got the ball rolling.
The first thing any recruiter will tell you about their job is that their hours are not your typical 9-5. If you currently work or have previously worked in this industry, this is something you’ll be very aware of, but for an entrepreneur from outside the recruitment sector, this can come as a big shock to the system, and jeopardise the potential success of your company.
As many of your candidates will already have jobs they are looking to leave, you should expect to be working in the evenings to really make a decent go of things, whether that’s at home or in the office. For this reason, it’s a good idea to have recruitment platforms that you can take on the go with you.
Get comfortable with the laws governing the recruitment industry – of which there are many. This legislation differs between countries, so you may need to set aside considerable time to do your research and learn the ins and outs of your local employment legislation, and may even consider taking a short course in it, just to be sure.
Globally, the recruitment industry is projected to grow 17.66% by 2021, with new agencies appearing every year. The golden age of digital technology means that many of these have been able to operate across a wider network than ever, with many helping clients all over the country. If you’re going to become one of these companies, you need to figure out what you can offer clients in your area that they aren’t getting from competitors.
Building a fresh, exciting and engaging brand is absolutely vital. Working millennials are causing a massive shift in how companies operate across all industries. A major advantage for startup recruitment agencies is that your larger, long-established competition can easily get stuck with a business model and brand they’ve had for years, losing out on younger clients as a result.
One of the largest shifts is the increased focus on the customer journey, which in the world of recruitment becomes the candidate journey. Over 75% of professionals are believed to be passive candidates in the recruitment process, so finding tangible ways you can offer an improved candidate journey that picks up where your competitors are falling short could be key in your success story as a startup agency.
Before you get too ahead of yourself thinking about branding, remember that all of this needs to work with your chosen business model. Recruitment business models can take many different forms, each with their own advantages and disadvantages. The key is finding the one that appeals to your candidates while also keeping in line with the goals you’ve set for your agency. A business model that does all of this provides a strong foundation on which your recruitment company can grow.
Some common business models for recruitment agencies include:
If you’ve never set up a business before, take what you think it will cost you and multiply it a few times. With recruitment, as with any industry, it’s sensible to have enough capital to tide you over during the first few months, particularly if you opt for a success-only business model, as you may struggle to secure candidates at first, meaning you end up working for free.
Cash flow float will be your biggest expense, particularly if you’re recruiting temps or contractors. You may need to pay temporary workers weekly based on their timesheet, for example but not be able to invoice the client for your services until the end of the month, creating a need for you to have considerable money set aside to pay your candidates with. The more candidates you secure, the higher this figure is.
Calculate all your costs before you commit to your ambitions, and don’t scrimp on anything, or tell yourself you’ll be able to cut certain expenses down. Do all the maths honestly and realistically, then start thinking about registering your recruitment agency, speaking with an accountant, securing a business loan and all the rest.
It won’t just be what you can think of off the top of your head, either. What you’ll need to set up a successful recruitment agency will include:
Your website is how clients who are actively seeking a recruitment agency will find you, and the first thing clients you approach will look for when trying to learn more about you. Launching your website is instrumental to launching your business, and the two things should happen simultaneously, which is why we’ve put it last on our guide. If you launch before you’re ready and it’s a good website, you’ll wind up getting enquiries that you’re not prepared for.
The most important things to have on your recruitment agency website are:
As a lot of recruitment agency work is based on location, potential clients are likely to search for their city or town – for instance, “recruitment agency Cambridge” – to find an agency close to them who can find them candidates locally. Optimising your website with advice from an SEO agency will help enormously in terms of getting you noticed as a local company offering an exceptional service.
Of course, these are just the basics. Launching a recruitment company is a long term investment that will take months of planning to realise. But if you manage to pull it off, it’s an incredibly rewarding industry to work in as an independent agent. Proper planning could take you from a big fish in a small pond to a recruiter with limitless potential.