Congratulations, you’ve decided to step off the boss man’s ladder and start up your own recruitment business. You’ve got a business idea and want to take it to the next level. Whether you are planning to go into partnership with others or go it alone, there are some steps to consider when starting a recruitment business.
Do your homework
You may have gained a lot of experience within the industry and ‘have a good idea’ of your market potential but it’s now time to start refining your idea. For example, what will the geographical reach of your business be? Will you be sector specific? Are there enough potential clients within your area? What about your candidate pool? Will you be concentrating on temporary/contractor work or permanent placements?
Recent data published by the Recruitment & Employment Confederation (REC) mentioned that 9 out of 10 employers who use recruitment agencies, highlighted the importance of an agency’s geographical and/or sectoral expertise when choosing an agency partner – up from 71% last year. Therefore, take your time. It’s tempting to rush straight in and ‘just get going’ but aim to establish the market feasibility of your business proposition first.
Don’t forget ‘The Dreaming Room’
Before writing your business plan, it’s important to remember why you want to start a business. Small Business specialist, Michael E. Gerber, makes a point of getting entrepreneurs to visit ‘The Dreaming Room’ first. What is your vision for the business – why do you want to build it? Only by understanding these questions can you write a plan to help you get there. Your business plan shouldn’t be viewed as a ‘fixed’ document, but something that changes and carries your passion and self-belief to make your business a success.
Write a business plan
There is a lot of specialist advice available on how to write a business plan. Whatever you do – be concise.
Know your market – which clients and candidates will you be selling to and who is your competition? What do you plan on selling? How will you get your brand out there?
Know your Finance – Where will you get your money from to finance your business? What’s your pricing structure going to be and how much margin do you plan on making? Remember cash flow is king. Do you have a survival budget to see you through the first few months as you build your business?
Any gaps in your plan will be highlighted when you do your SWOT analysis – what are the strengths, weaknesses, opportunities and threats facing your business?
Building in the ‘Risk Factor’
It is also important to build in a risk management process at this stage. Alert yourself to potential risk areas for the business. For example, if you are starting a temporary/contractor agency, do you have a guaranteed cash flow to cover the weekly wages? If a client’s late paying an invoice on a permanent placement, do you have a process to follow to chase payment? Some actions can be taken now to minimise certain risks. Remember, your business plan is a living document – it will constantly change as your business starts and grows.
Making it official
In the UK, most recruitment businesses register as limited companies because it offers more protection. The finances of the business are separate from your personal finances but there are more reporting and management responsibilities.
The UK government provides a step by step guide for setting up a Limited company. You can get help from an accountant but as a director of limited company you are still legally responsible for your company’s records, accounts and performance.
Running your business on a daily basis
If you’re starting up the business alone, do you plan on trying to do everything yourself or will you be taking staff on? Whilst business admin is essential, it can be time consuming. There are also a number of recruiting laws and employment regulations that you have to be aware of. If you are planning to run a temporary/contractor agency, do you have enough time to manage the weekly payroll? Work out what your strengths are and where you want to focus your time. Consider outsourcing those activities that are not fee generating to a recruitment specialist.
Simplicity have been helping entrepreneurs start their own recruitment businesses for the past 15 years. It’s an exciting time and there’s a lot to think about. We’ve highlighted some of the steps to consider in our ‘Getting Started’ brochure or you can contact one of our business development specialists today. Let’s help turn those dreams into reality.
