When Should You Start Your Own Agency Instead of Working for One?

On annual basis, we hear from many recruiters who approach us to discuss how we can help them start up their own recruitment agencies and each person has their own reason for taking the plunge. These reasons vary depending from person to person and they affect what type of agency the individual wants to create and how they perform as business owners. Most look to create a lifestyle agency where they do not take on the responsibility of staff, work with a business partner and generate the sales they want without taking personal and financial risks. Here are some reasons why people want to start their own agency:-

    • “I’m making lots of profit for someone else”

Many top performing recruiters will look at their profit figures for the year, then look at their commission figures on their payslip and wonder why they are only taking home 15-20% of the money they are bringing into the agency. This can cause consultants to start wanting to have more of this themselves without realising the costs that are being covered by the agency such as guaranteed salaries and desk costs. As long as recruiters are realistic that when they start up by themselves they will have to cover these costs and that their profits will not be as high when they start then these type of recruiters are ideal for starting their own agency.

    • “I have a large number of clients and candidates who will come with me”

This is always a worrying statement to hear when recruiters say they will be setting up their own agency as this is not always a viable option due to restrictive covenants in contracts and also assuming clients will follow them to a new start business. Taking business from your previous employer is not recommended but working to the law of your covenant by approaching new clients and candidates within your industry is allowed.

    • “I’m getting disillusioned with the targets and commission I am earning”

Changes in the way that recruitment agencies police their staff by starting to monitor call times, CV’s sent and other “big brother” measures can sometimes turn off recruiters who have been used to working the same way for years. Also, if an agency changes a commission scheme or sets unrealistic targets it will have the same effect. This disillusionment can later turn into resentment and cause them to start wanting to leave and start up by themselves without these restrictions.

    • “I have been offered a large opportunity by a client not on my agencies books”

These kind of opportunities do not come up every day and when they do the consultant always wants to make as much money as possible without sharing it around. As long as the client understands that they will be operating through a new start recruitment agency then this can be done without contravening their restrictive covenants within their contracts.

    • “I want to be my own boss and have a better work life balance”

This is the main reason why recruiters want to do it alone. Recruiters want to work the hours they want to work, not have a boss hanging over their shoulder and set their own personal targets to meet their financial needs. With the right support and being self-motivated to achieve these personal targets it is possible to get the better work life balance

We have helped many different recruiters who have come to us driven by the above reasons to set up their own agency and we have helped them to plan and direct their business to fulfil their own financial and personal goals. By ensuring they remain compliant, are set up correctly, follow our advice and can get the financial support from TBOS they often grow into successful agencies.

The interesting thing is that most recruiters who set up their own agency do not want their own staff to have the same restrictions or reasons to set up their own business so will avoid making the same mistakes as their predecessors did.

Total Back Office Solutions Ltd and Fund My Contractor can help recruiters achieve their goal of setting up and running their own agency and if you would like further information please do not hesitate to ask.

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