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Thinking of setting up a recruitment agency? If you’re not sure how to get started and what to do to make sure it’s successful, don’t worry – here are a few top tips!
With a new decade now well under way, this a good time to think about the future and your ambitions…such as setting up your own business. And if that business is recruitment, you’re in good company – statistics show that there are currently around 40,000 recruitment agencies in the UK!
At Back Office we’ve a great deal of experience with start-ups – we’ve been working with them for over 20 years – so we’ve pooled all our experience and knowledge to come up with our top 10 things to help you get off to the best possible start and stand out in such a competitive market.
Start by developing a business plan that’s simple, with easy, clear and timely targets. You might have lofty long-term aims, but it’s essential to be realistic at the start – just as it’s vital to be agile and flexible to change if necessary. A clear plan will not only enable you to formulate your strategies but also give you a benchmark for your performance.
Agency models go all the way from traditional high street shop fronts to online start-ups working from home and everything in between – so you need to decide what sort of agency you want to be, which may depend on the market sector(s) you’re aiming to work with. If it’s digitally-based, such as media or creative industries, you might well not even need a physical presence.
Again, this may depend on the market sectors you go for; contracting is more common in some (such as IT or fintech) than it is in others (sales and marketing, for example). There are advantages to placing both temporary/contractors and permanent staff, but having a strong temporary/contracting arm provides ongoing revenue, builds confidence with clients and adds value to your business – as we outlined in a recent article.
If you have a particular passion for or wealth of experience in a particular sector, play to it. As well as keeping you motivated, it’ll give you a head start on knowing what’s what, keeping up with the latest trends and finding the best people to work with. You may even have a ready-made list of contacts to get you started.
Linked with the previous point, decide which sector you’re going to target, and how you’ll offer something unique to clients, either by skill, experience levels, type of employment you cater for, region or sector. Try to avoid heavily saturated niches where lots of other recruitment agencies are clamouring to fill vacancies, and look for the right balance. If your focus is too broad you’ll struggle to meet client expectations, but if it’s too narrow you’ll have a small client pool that makes it impossible to place candidates.
In choosing your niche, it might be worth looking at which sectors are on the up. For 2020, manufacturing, marketing and renewable energy are all predicted to grow, together with the more obvious tech and digital transformation sectors. Target any of these, and chances are your business will get off to a good start.
Of course, any recruitment business revolves around the candidates on its books and the clients it works for. So you need to be pretty savvy in knowing where to find the right people on both sides of the equation. These days much of recruitment revolves around social media, including LinkedIn, Facebook and others – here’s a useful article on how to get the best from it.
While you’re setting up your own business to make your fortune, never forget there’s no such thing as a free lunch! Recruiters tend to keep long hours (mainly because they’re working round other people who are at work), and you’ll need to really impress clients and candidates with the service you offer to start building your reputation quickly. Do your homework on candidates and clients, make sure you’re always up-front and respect the importance of what you’re doing to both parties, and you won’t go far wrong.
Like any new business, your recruitment agency will need a certain amount of capital to get you up and running. It’s prudent to have enough cash at your disposal to cover six months of overheads (whether it’s a loan, grant or from your personal coffers!); one of the biggest problems for start-ups though is cash flow, as Contractors and Temps will expect payment immediately while clients might have up to 60 days to pay invoices. Factoring with Back Office can solve this problem – we’ll provide 100% recruitment funding (unlike some, who only let you draw down as little as 70% until your invoice is paid), we’ll pay your Temps and Contractors and your profit margin is paid ‘up front’ into your bank account every Friday (minus our fees). With Back Office you’re protected against bad debt, too.
You’re starting a recruitment agency because you love recruitment – not because you want to spend all your time running a business. So you want to do what you’re good at, rather than dealing with compliance, payroll, tax, invoicing, credit control, bad debts and so on. That’s why so many start-ups benefit from working with Back Office. Our experts issue invoices in your name, chase payment, manage your payroll, make sure your business is legally compliant and keep your cash flow running – giving you the time to focus on building up your fledgling business when it most needs you.
The Back Office team is also here to give you advice any time, especially if you’re setting up a new agency. If you’d like to talk to any of our experts, contact us on 01260 280 290 – or just drop us an email.