By the nature of what Davidson Gray does (setting up and supporting new recruitment businesses), we get loads of enquiries from people wanting to set up their own recruitment business. We often get asked the question, “do you supply recruitment agencies with back office solutions?” My answer to this is always the same: “What do you mean by back office support?” And, “What support is it you really want?”
The answers to these questions vary wildly from doing invoices, accounts and factoring to admin support, and even a few, “I don’t actually know”.
We differ massively in what we do from a traditional back office solution business. Our offering is more of a ‘total back office solution plus’. Also, I am personally invested in the businesses we set up, so you will get way, way more than the typical back office model.
Given the range of answers we get to this question, I thought a blog on the subject may be helpful. If you are looking for support in your recruitment start up or want to know what back office support is on offer in the market for your existing SME, read on.
When you make the decision to go from an employed recruiter to set up on your own it can seem daunting, particularly thinking about how you’ll cope without your current office support team. What will you do if your IT goes down? What will you do for job boards? How do you do invoices and who’ll sort accounts? There is a lot to think about and I cover some of these things in my eBook on How to Set Up a Recruitment Business. This is a great place to start if you are in the very early stages of planning your new recruitment business.
What support you are looking for can be tough to understand if you’ve never worked on your own before or run a business. This is one of the reasons for this blog, to try and help you make that decision on what support will suit you and your business best. It falls into 4 rough areas:-
The last 3 (and certainly the last 2) could be marketing. Often this won’t have crossed your mind because the vast majority of recruitment companies don’t have any real marketing strategy. I cover it in this podcast; ‘Why Marketing Can Be Of More Value Than Adding Staff’.
So, before you start calling back office solution companies, I’d suggest it’s wise to really think about what it is you actually want.
I’ve used the word “traditional” to try and describe what you are likely to get if you go looking, especially on Google, for simple recruitment back office support. Although it does vary from company to company (some offer slightly different levels of support), in general, this is my experience of the support this will give you:
A lot will register the company for you at Companies House. Not a big job, but new to you if you’ve never done it before.
After this, support tends to be limited to invoicing, chasing the debt, and some will also do your accounts. If you are a contract recruiter, they can often offer factoring and payroll for your contractors.
This is where I feel the need to give you my opinion on the value of this service. As a rule, I say never criticise your competition, but I won’t be, as these companies don’t compete with Davidson Gray. As I mentioned, our support is more of a recruitment total back office solution on steroids. Plus, you get my time thrown in as a business partner personally invested in you and your company, so we’re not in this market.
If you look at what you get, registering a company at companies house is easy and it only costs £12 to register directly with Companies House. Or, this company will do it for you for £13.99 and it’s done in 3 hours.
For the accounts, with the advent of easy to use accountancy software that links directly to your online banking (like Quickbooks, for example), issuing an invoice is easy. Chasing debt, well that’s as easy as just calling your client chasing money. It may feel odd the first few times, but after that, it’s no worse than a sales call. As for the accounts, you’ll get an accountant a lot cheaper than a back office solution company charge.
As for factoring, I’m not going to comment on the cost or quality of service you will get from a traditional back office solution company. Simply because, I’ve never experienced it personally and don’t know enough people who have. We wouldn’t use this type of company for factoring because we do all our factoring in-house to ensure it’s done well and at a very good rate.
This is where it gets even more complicated. Once you start looking outside the traditional back office outsourcers, generic terms are all over the place! That’s partly down to the fact that what is on offer out there varies massively. Some companies in this space will offer elements of back office support as part of a wider support package, some will specialise in certain aspects of back office support, and others may offer something more comprehensive than the traditional model.
I will back away from offering my opinion on the value of the companies in this space because it is far too varied – it would be a whole new blog in itself. Also, some companies in this space could even loosely call us competition.
What I would repeat is, before talking to anyone in this space, try and decide what you really want and need first. As recruiters sell for a living, we also love being sold to. This means we can be prone to buying into someone quickly and making impulsive decisions. As some of the companies in this space are looking for long term commitments and (if they badge themselves as recruitment investors) may even want a percentage ownership of your company, rushing into a decision based on a good sales call is never a good idea.
So, before making any decisions, you need to slow down on your decision making, take a step back and find the company that is absolutely right for you.
We can see then that here is plenty of scope for confusion when looking at back office support, even just the myriad of potential options can leave you floundering. At this stage, you may be thinking, “come on Rhys, at least tell us what is on offer in the market in more detail”. As you can appreciate, I will stop short of making any company recommendations but what I can do is make some suggestions of things you may want to add to your wish list before you speak to any back office support or recruitment investment businesses.
Having a list of needs and wants before opening up any discussions with potential back office support providers will allow you to make more informed decisions. It might be that there are things you definitively need that are not offered by some, so you can discount them immediately. Or, they may meet all the items on your ‘needs’ list but can’t match your ‘wants.’
The difference between what you need and what you want will depend on your individual business, but sometimes things you may see as ‘nice to have’s’ could make all the difference when building the foundations of a long-term successful business. For help in deciding what should be on your ‘needs’ list, read our blogs on The Essential Checklist For Your New Recruitment Business and How Much Does It Cost To Start A Recruitment Business.
We offer all the above, which is why I described what we do as recruitment total back office solutions on steroids. Plus, you get me as a right-hand person to bounce ideas off, help you build your strategy. Also as I restrict the number of businesses we’ll support, I can then afford the time to actually undertake some of the board functions for you, e.g. Finance and Marketing.
The answer to the blog title ‘what is recruitment back office support?’ varies a lot and the definition can be subjective. The best answer for you is for you to decide on what support you feel you need. 4 out of 5 recruitment start ups don’t last past the 2-year mark, so it’s critical you put some thought into what support you feel is going to get you past the tough first 2 years.
The businesses that really succeed are those who have the vision to see past those first 2 years and the foundations you set in these early years are critical for your growth from years 3 onward. So, try and look at things like value and return on investment and not purely at cost. A false economy now can put the brakes on realising you and your business’s long term success.