With confidence in the economy at an all-time high and a rapid increase in permanent and contract placements in the recruitment industry, we are noticing at TBOS a large number of enquiries from recruiters looking to start up their own recruitment agencies. With the holiday season approaching we have realised from previous years that recruiters will sit on the beach reflecting on their current situation and their future business plans and come back with a new goal to set up their own agency. Each person has their own reasons and plans for why they want to set up their own business and we want to pass on some of the questions we ask them when they come to us to ensure they have considered everything before they take the plunge:-
1. Why do I want to start my own agency?
Before you start setting up your own agency you need to ensure you are doing it for the right reasons and really look at yourself to see if you have the right mentality to be not only a recruiter but also a director of your own business. Running an agency is not just about doing the sales, it also involves managing suppliers, cash-flow and ensuring you’re meeting statutory deadlines with HMRC and Companies House so you need to be organised and be able to multi task. Also, starting an agency because you are annoyed with your existing employer is not a good reason to start a business as it needs to be carefully planned and thought out as it is a big commitment.
2. Where will I get new business from?
As a new start up you cannot always rely on your existing clients to migrate over to your new agency so you need to be confident in your ability to get new clients and candidates. You may also be under a restrictive covenant from your old employer for a period of time which means when you do come around to speaking to those clients and candidates again they may not be willing to do business with you, especially if you are a new start up business. Having a good network within your industry and the ability to win new business is a must for any new agency.
3. Do I want to do this alone or with a business partner?
Starting up your own business can be lonely if you are only working by yourself and can affect your motivation as you don’t have someone to bounce ideas and sales banter off but sharing your business with a partner will mean a split on the profits. Working with a like-minded individual towards the same goal can be extremely rewarding and make the distribution of costs easier to swallow but you have to ensure you are both on the same page from day one. Alternatively, working alone in a shared/serviced office can eliminate the loneliness and as long as you are driven to hit your own personal targets then you can achieve this by yourself.
4. What kind of agency do I want to create?
Deciding on what type of agency you are planning on shaping and creating is important before you start. Which industry are you going to recruit into? Will you be doing permanent placements, contract placements, temp placements or a mixture of them? Will you be growing the agency with new staff? Are you building a lifestyle business or an agency to sell in the future? All of the answers to these questions will shape the agency formation and how the business will run in the first year so they are important to consider beforehand.
5. Can I afford to set up my own agency?
When planning on starting your own agency you need to ensure you have at least 3-6 months’ worth of living allowance behind you before you begin as it is unlikely the company would be able to support you with a salary from day one. It may take time for your agency to start billing and once it has been billed you have to wait until the funds are paid before you can potentially take some of those funds. The whole process could take 3 months and in that time there will be other costs that need to be paid before you can take your full salary.
6. What do I need to set up my own agency?
If you have answered all the questions above then setting up your own agency is the easier bit. Forming the company, getting the bank account, buying an email domain and registering with HMRC is the first step along with looking into contracts and insurance. Once all these elements are in place it is down to you to start making those important sales calls and generating business. Getting business cards, websites and association membership fees can be done at a later date once you start generating business.
TBOS offers comprehensive start up facility for new recruitment agencies including company formation, HMRC registrations, bank account assistance and a full list of preferred partners for additional services you may require. TBOS also offers a full back office and accounts outsourcing service to recruitment agencies which is charged on your placement numbers not your turnover and eliminates the need for back office staff and hiring an accountant. If you would like to discuss our services please do not hesitate to contact our office.