As we approach the end of the year, many recruitment consultants will be evaluating their current position and may be deciding if 2025 is the year that they start their own start-up agency.
Over the past 20 years, I have seen many recruitment consultants consider their options for the following January in the later months of the year and they will start to investigate what is involved and what they need to do to begin that journey.
Some will even consider resigning before the end of the year so they can hopefully start their new business as early as possible instead of joining the pack who leave due to the “January blues”.
Below are some tips for any recruitment consultant looking to start their own agency in 2025:
START YOUR RESEARCH EARLY
Although setting up a recruitment company is easy to do, it is best to do your research first to ensure that you do it correctly. There are many articles and blogs on how to set up a recruitment agency, companies that help guide new directors and suppliers who specifically offer solutions to new start up agencies. Looking into setting up a recruitment agency is best to be done as early as possible to ensure that the agency has the best chance at a successful start.
HAVE SOME FUNDS PUT AWAY IN PREPARATION
With any new business, generating sales for a new company does not happen immediately and there are start-up costs that need to be paid for beforehand. The formation of the company, getting insurances and contracts, and paying expenses all cost money which will need to come from some form of start-up capital. Any new placements may also take a while to generate and once made, will take further time to realise the funds in the company bank account. Therefore, it is advisable to have at least 3-6 months of salary put aside to cover these costs plus the fact the business may not be able to distribute salaries for a few months.
CHECK OVER YOUR RESTRICTIVE COVENANTS
Before starting a recruitment agency, it is best to look at the director’s contract of employment with their previous company to see if there are any restrictive covenants which may hinder the initial growth of the business. This may be a restriction on dealing with current clients and candidates for a period, so the director needs to be able to generate new clients and candidates during that time. Any new business does not want the hassle of legal letters to contend with during the early stages as this acts as a distraction (and potential cost) to the growth of the agency.
ENSURE YOU HAVE A BANK OF CLIENTS YOU CAN APPROACH
Clients are the fundamental part of any recruitment agency as they are the person making payments to the business. Having a bank of clients that can be approached to make placements with is important from the start of any new business. This is again where checking restrictive covenants is important to ensure that this approach does not breach any contracts.
SPEAK TO INDUSTRY PROFESSIONALS WHO HAVE DONE IT BEFORE
Most agency directors were originally recruitment consultants who decided to take the plunge and start their own company. These directors will have made mistakes in the past but also made some good decisions, which can be vital advice for anyone looking to start their first agency. Speaking to any successful director within the industry will help cement the decision being made and give some valuable insights to make the first year a success.
MAYACHI Ltd has helped hundreds of recruitment consultants with their aspirations to become the next successful director of their first recruitment agency. MAYACHI offers a 2-hour free no-obligation session for any new start-up recruitment director in which we go through the formation process, HMRC responsibilities, introductions to suppliers, funding advice and business planning. This session provides invaluable information to any potential start-up and will give any new agency the best possible chance in their first year.
