People with disposable cash and good contacts can set up a recruitment agency but should be wary of pitfalls.

There are few barriers to setting up a recruitment company for people who have disposable cash and good contacts, according to one industry insider.

However, there are many downfalls that can often catch people by surprise, stated Michelle Rees, who was contributing on a LinkedIn thread about the issues that stop recruiters from starting their own companies.

She explained that many recruitment sector high-fliers take the plunge in the hope of generating as much income as they did while in employment and often end up being "very disappointed".

"When you start up a new business you are not privileged to the benefit from the same discounts that some of the larger agencies receive from job sites and print media," she said, highlighting one of the pitfalls.

However, she advised those going into self employment to focus on building their brand, which is "critical as is ensuring that you have your client's trust".

The number of self employed people increased over the last two years despite the difficult economic conditions, statistics from Kensington Mortgages show.