How To Start A Recruitment Business

If you’re a talented recruiter and want to take the next step by building your own recruitment business, chances are you’re great at the bit that makes the money i.e. billing, but have little or no understanding of how to set up and build a business. Yes this may seem obvious, but it’s important that you acknowledge this now rather than jumping in feet-first expecting to wing it. As recruiters it’s a habit some of us have, and on recruitment assignments we may often fly by the seat of our pants since there is little or no risk (and it’s often fun)!

But when your living depends on it, it’s critical to spend a little more time planning. I have met a lot of recruiters who want to prove to the world they can do it without the need to take advice from anyone. But how ridiculous is this, to jump into setting up a recruitment company without any planning and no one to ask when you get stuck – most of all when your mortgage and bills depend on you getting it right.

This blog series is written specifically to help those who want to learn more about building a recruitment business in a way that will; turn profit quickly, be built on solid foundations for growth and create minimum amounts of stress, whilst giving you a lot more of the fun bit – the buzz of building YOUR own business in YOUR style whilst making a lot more of that big driver for most recruiters, MONEY!

If you have decided, or have thought about becoming your own boss the good news is the psychometric profile of a recruiter is as close as you will find in any profession to that of an entrepreneur. Some of these similarities are:-

Enjoy working in a high risk high return career – we know as recruiters we’re only as good as our figures but get the big (if your boss has sense) commission cheque when you do hit your figures.
Have a high stress threshold – no matter how good you are, at times there is a lot of pressure which in turn creates stress (be it positive or negative), which for the majority of the population would be too much.
Feel comfortable in an environment that requires fresh personal introductions on an ongoing basis – i.e. new business calls.
Thrive in a fast paced gregarious environment.
Naturally enterprising and make things happen, be it with creativity or sheer persistence.
Like trinkets of success – nice cars, watches, shoes, etc.
Ambitious and want to be seen and regarded as successful.

The list goes on.

In addition you already have a lot of the necessary competencies in place. Think about it, for most recruiters your desk is already a mini business, in one of the most competitive markets there is, selling a product that can actually refuse to be sold! Added to that, you probably don’t realise how commercially competent you need to be in your job. Each day you have to make the commercial decision which candidate and which job on your desk will make you money or if you need to go out and hunt for better prospects.

To top things off, you must already be good at what makes the business world go round, the engine that drives all business, knowing how to sell. In my opinion the ability to sell, and sell well is hugely undervalued. I don’t advocate being a motor-mouth car salesman (apologies to the car sales profession, this may be an old stereotype but useful as a reference in this context), but knowing how to influence people as we do as recruiters is quite a skill. So, when you run your own company you can use this skill not just to bill, but also to sell to prospective employees, get suppliers to give you the deal you want, and even with the tax man when your struggling with your corporation tax (but we try and avoid this last one…never a fun conversation!) So, pat on the back, you’re in the top 2% to 3% in the country that has what it takes to be a successful entrepreneur!

So now that’s established, “ where do I start in setting up a recruitment company?“ Well I’ll use a wiser man than me to give you the answer…

“A journey of a thousand miles begins with a single step.”
Lao Tzu, Chinese philosopher 604 BC – 531 BC

Yeh maybe it’s a bit cheesy but it’s true! Just at least make a start, and don’t be overawed by the size of the job in hand. In this context, a very good place to begin is to look at a sales forecast and think realistically where and how you’ll get your clients and candidates. You should also make a list of costs and work out how much you will need to live off. These two starting points pretty much make up a rudimentary business plan. It’ll need a bit more finessing but this is actually 80% of what you need. There are many facets to setting up and building a successful business, but this will get you started. You may also find reading my two-part blog on the Most Common Recruitment Start up Mistakes useful to prevent your business becoming one of the 4 out of 5 recruitment businesses that don’t last past 2 years.

So once your past the dreaming stage and actually decide to get serious you should start to come up with dozens of questions on what you’ll need, how do I do this etc., like the below

How do I register a recruitment company? And do I go Ltd?
How does VAT work? How do I file accounts?
What do I do for a database? What happens if my IT goes down?
How do I do a cashflow and how much money do I really need?
What impact will the restrictions of my current employment contract have?

There will be a lot more, but write them down and ask around, you will find a lot of the answers if you ask the right people. It may seem daunting at first but don’t forget Lao Tzu’s quote, and just keep taking those steps.

This series of blogs will address a lot of your questions, but feel free to contact me directly with any specific questions or if you just want to talk it over in general.

I sold the first two recruitment businesses I built early in 2014 to concentrate solely on helping recruitment start-ups. Not necessarily a completely altruistic career change, but I get a lot of satisfaction from putting my 20 years of recruitment business building experience to good use – helping the type of raw talent I was 20 years ago. During my career I’ve helped set up and grow 8 recruitment companies and every single one has been a success so I’d like to put some of these winning formulas to good work in more start ups.