The start of the new year is always filled with optimism and a resolve among many people. While the debate between economic forecasters continues to rumble as to whether this will be a year of further growth or a levelling off, optimism among aspiring entrepreneurs remains consistently high.
According to an article published by Business Matters magazine, a staggering 3.5 million UK workers plan to ditch the 9 to 5 and start their own businesses in 2018 – a rise from 3.2 million in 2017. Given the level of start-up activity we have seen over the last three years or more, we can expect to see much of these new businesses coming from the recruitment sector.
Indeed, according to a recent survey by CV-Library, 73% of employers state a lack of ‘relevant’ candidates as the key barrier to their recruitment success in the year ahead, while 67% say their focus this year needs to be on building talent pools. Against this backdrop, demand for the services of recruitment agencies will rise, with the Recruitment and Employment Confederation estimating that 56% of all vacancies will be filled by recruitment agencies in 2018.
As this demand increases so do the number of ambitious recruiters’ eager to capitalise on the opportunities available and make the decision to form their own agencies. But with tighter financial controls still in place – a lasting legacy of the recession – limiting the ability to obtain finance form traditional high street lenders, how will these new business owners get the support they need to launch and grow?
John Timpson, of Timpson’s fame, once said that the primary objective of any business is to ‘always ensure there is enough cash in the till’. Getting access to that cash when you need it is essential to the smooth running of your new agency. For example, from the moment you make a successful placement and invoice your client, to the time when that payment credits your account, 60 or more days may have elapsed. Yet, you still have bills and salaries to pay.
It’s a similar situation for temp roles; if you’ve landed a great opportunity to place a dozen or more workers, for instance, they will need paying each week but your client may not settle their invoices for several weeks. This is why it is not only important but essential to ensure you have the right finance support in place. It bridges that critical gap and enables you to gain access to the funds you need, when you need them.
However, a word of caution when choosing your alternative finance provider: some will enforce restrictive credit limits. When starting your new agency, you might look at those limits and think you’re some way off from getting to that level. But experience has shown us that recruitment business owners often exceed their own expectations.
The trouble they find is that once they reach those restrictive credit limits imposed by their existing finance provider, the brakes are quickly applied and suddenly their growth slows down. To us, this makes no sense – why should a fast-growing recruitment agency be penalised and prevented from taking on new business that will enable them to realise their ambitions?
This was the problem facing Darcy Associates, who replaced their previous finance provider in favour of Simplicity – a move that enabled founder Nathan Ferris to have the confidence to push the business forward again (read more here).
We have been helping recruiters to grow their business for over 14 years now. If you need any advice or support on how to start and grow your recruitment business in 2018, get in touch. We’re here to help. Contact us today.