Each year, more than 8,000 recruitment companies are formed at Companies House with many of them being set up by first time Directors. These Directors are often top-billing recruitment consultants who are fantastic at making placements but have very little experience of running their own company.
If you are considering setting up your own recruitment agency, here are some tips for the first-time potential recruitment company Directors:
- KNOW WHEN THE TIME IS RIGHT
Anyone can set up a recruitment agency, but for it to be successful the Director must ensure that they have enough experience, contacts, and success within their industry. Also, a new agency can take 3-6 months to start making money, as such it is important that any aspiring Director has enough funds behind them to support themselves financially until they are self-sustaining. - DO YOUR RESEARCH AND PLANNING BEFOREHAND
Whilst the process of setting up an agency can be quick; it is important to do research on the cost and services provided by suppliers and have conversations with other recruitment owners on how they did it themselves. There may also be a requirement to write a business plan and/or create some financial projections to understand what is being undertaken financially. - REGISTER YOUR COMPANY NAME
When choosing a company name, it is advisable for it to be catchy, potentially include words like “Recruitment” and/or something related to the industry the placements are being made into. The name should also be checked with Companies House to ensure that it hasn’t already been registered and if the domain name is available. Registering a company at Companies House and buying the domain name are quick processes. - CHOOSE A BANK YOU TRUST
Recruitment agencies often have a very low requirement from banks regarding the services they provide outside of banking. As the bank accounts are often used for money in and out, the only stipulation would be to go with a bank that provides good service and a good online platform. If the agency is making international payments, then a requirement to accept and pay in currency needs to be addressed with the chosen bank. - SPEAK TO AN INSURANCE BROKER
Business insurance is required for all registered businesses but knowing what insurances are needed and the levels of cover to buy can only be advised by someone who provides them. It is advisable to speak to an insurance broker who can explore the market for the best prices and advise on the correct levels of cover based on the new business’s needs. - USE THE POWER OF THE INTERNET FOR MARKETING
Every new agency wants their business to be seen by their clients and candidates and this can be done very cheaply at the early stages of their company formation. Putting a holding webpage on the internet can be done quickly and cheaper than doing a full website initially to give contact details and information on the company. Also, adding the company to the social media outlets such as LinkedIn, Facebook, X and Instagram will help to improve the rankings on Google. - OBTAIN CREDIBLE CONTRACT TEMPLATES
Whilst it can be tempting initially to use previous contract templates for a new agency, these contracts may be out of date, have missing clauses or not be relevant to the placements being made. This could leave the new agency open to abuse by a client and loss of revenue at an early stage. Buying templates from a reputable lawyer or joining an association to use their legal library are advised options. - FIND A GOOD ACCOUNTANT WITH RECRUITMENT EXPERIENCE
Oftentimes, recruiters are fantastic at sales but have no clue when it comes to accounts and finance. Engaging with a good accountant and/or back-office provider is the best option to ensure that these functions are properly looked after. The accountant should help with registering the business for VAT and PAYE and have experience within the recruitment sector to give the best possible advice. - SOURCE THE RIGHT CONTRACTOR FUNDING (IF REQUIRED)
When making temporary and contract placements, there is a requirement from the agency to fund the payments to the candidates before the clients make payments. Even for new start up recruitment agencies, there are a range of providers and funding options available. Providers of Pay-And-Bill solutions and invoice finance will have different options that have different benefits and costs which can facilitate the funding of these placements. - START MAKING PLACEMENTS AS SOON AS POSSIBLE
One of the worst things to do as a new recruitment agency is to wait to make that first placement while the company is being fully set up. Avoiding picking up the phone until the website or database is live or the logo has been designed can cost an agency valuable sales time and revenue. Getting on the phone immediately with potential clients and candidates is vital to ensure that a new agency has the best start possible.
Mayachi Ltd provides help, advice and support to recruiters looking to start their own recruitment agencies or for Directors who have just registered their new business. Mayachi Ltd has many years’ experience of helping to set up over 250+ contract and/or permanent recruitment businesses in various industries and sectors providing placements in the UK and internationally.
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