The top 7 recruitment start-up mistakes

For nearly a decade, I’ve been totally immersed, purely in the recruitment start up and SME world and there’s not a lot I haven’t seen or heard. I’ve maintained a 100% record of never having had, or been connected to, a recruitment business that’s failed. It is for these reasons that I feel I am informed enough to list the top 7 start-up mistakes you’d be well advised to avoid.

Not Understanding Cash Flow

It’s astonishing how many start-ups don’t realise the need to understand cash flow. Placements are vanity, invoices are sanity, but cash is king. In my blog Managing Cash In Your Recruitment Business, I explain how to turn a sales forecast into a cash flow projection. If you want to know how much money you’ll need to survive in your new business before you start taking cash out, you’ll need to turn your early sales forecast into a cash flow projection.  My blog walks you through it. I also talk about the start up and running costs you may want to consider in my blog, How Much Does A Recruitment Business Set Up Cost?

Once your recruitment agency is up and running and has navigated the early sales ‘ramp up’ stage, understanding your cash flow doesn’t stop there, and as you grow and add staff, and your breakeven running costs ramp up, you absolutely must watch your cash flow. This may sound daunting but if you want to make it simple, work out the average running costs based on the last 3 months, and then keep at least one month’s running cost in the bank, and if you’re risk averse, two months. However, this alone won’t save you, additionally you do need to plan to pay your tax bills.

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