Most Common Recruitment Startup Mistakes – Part One

So you’re sick of earning money for someone else? Good for you. But what’s your next step to getting your business off the ground?

The fact is – and it’s a harsh one indeed – 4 out of 5 recruitment businesses don’t last beyond 2 years. We all know the recruitment industry is one of the toughest sectors to work in, selling a product that can say no and only being as good as your last month. But with no barrier to entry to set up a recruitment company it’s even more challenging trying to survive in the world of a recruitment business owner-manager.

So with this in mind it’s quite scary some of the basic errors start up recruiters make which give their chances of survival a hammering. As Managing Director of Davidson Gray, the recruitment start up specialists, here are some of the most common mistakes I see when speaking to recruiters who want to work for themselves.

Not Understanding Cash Flow

It’s astonishing how many start-ups haven’t realised the need to understand cash flow. Placements are vanity, invoices are sanity but cash is king. Your P & L forecast may be well thought through but if your candidate doesn’t start for 30 days, and your client doesn’t pay for 60 days it’ll be 90 days before any placement turns into the hard cash you need to pay the rent. It’s fairly simple to turn a P & L forecast into a cash flow forecast, but make sure you allow for extended payment terms, plan for the worst and hope for the best. This should mean you don’t get caught out.

Spending Start up Cash on the Wrong Things

I meet so many recruiters who are that keen, or plain impulsive, that they’ve already wasted some of their start-up capital on paying over the odds for some of the start-up tools, not bought wisely, or simply wasted it on things that aren’t essential.
The most common of these capital spend mistakes is the website. I think because this is a tangible image of running your own business recruiters jump on this first. Building an effective website is a specialist skill, and I don’t mean the actual build, more the layout and the SEO behind it. Calls to action, how to submit a CV that automatically goes on to the database, and even deciding if the site is aimed at candidate or client attraction. A website is about getting your business free leads, be this candidates or clients so don’t get a “mate” to do it, or pay some random web company to build it, you could be simply throwing away precious start-up capital.

Invisible Websites

A nice looking, functional website is great for your existing clients and candidates to look at, but then again, they already know you, so what purpose does that serve? Yes it’s good for a start-up to have a website when re introducing yourself to existing contacts but surely it has to be the aim of any website to be found by the people who don’t know you, to drive new customers to your business.

SEO, or Search Engine Optimisation, is a black art that’s very much misunderstood, but in essence it’s how people find you by typing in a search term. It’s astonishing how many websites which have supposedly been professionally built are virtually invisible on the web. There is a great deal of skill involved in getting yours found by your target audience, and this can cost you thousands, but done correctly it can be relatively cheap and the best marketing spend possible.

Just imagine if you’d spent thousands on a slick glossy set of brochures for all your new clients, but you kept them locked in a cupboard. That’s how much of a waste of money an expensive but invisible website is.

I hope you’ve found this second blog in the series helpful, and as always if you have any questions feel free to contact me. You can find me on LinkedIn under my main business name of Davidson Gray.

Written by Rhys Jones Managing Director – Davidson Gray.

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