STARTING A RECRUITMENT AGENCY, IS IT WORTH IT?
Whatever the reasons for starting a recruitment agency, be it non-recruiters or seasoned consultants, they will have to weigh up whether it is worthwhile to take the plunge. With that said, the likelihood of succeeding in the recruitment business comes with experience in the field…
RECRUITMENT CONSULTANTS GOING IT ALONE
Many recruitment consultants will be conflicted on whether it is the right time or whether the grass is greener doing it themselves instead of remaining as an employee. Nonetheless, there are many positives of starting your own recruitment agency which make it worthwhile in the end.
Below is a list of the advantages to recruitment consultants on starting their own recruitment agency:-
GENERATE PROFIT FOR YOURSELF
One of the main reasons that recruiters decide to start their own agency is that they have often for years been generating large amounts of profit but only seeing a portion on their pay packet as salary, commissions and bonuses. Depending on the commission structure this can often mean that a recruiter may only see 30-35% of their profits on their payslip with the remainder going into paying for the agency costs and filling the pockets of the directors and shareholders. By running your own agency, the profits of the company can be distributed as the directors and shareholders wish, meaning all the hard work they have put in, can be rewarded directly back to them.
BUILD THE AGENCY YOUR WAY
Recruitment agencies nowadays vary in the type of culture and experience they give to their consultants. Some are heavily driven by KPI’s, call times and targets, some are about hiring lots of consultants in and seeing who lasts and some let long standing consultants get away with whatever they like as long as they are billing. All of these factors can have a detrimental effect on the consultants’ experience and cause new recruitment directors to avoid making those kinds of mistakes within their own agency. Rewarding consultants with bonuses and commission schemes, flexible working hours and funky offices are some of the ways new directors are giving a better quality experience for themselves and their staff.
TAKE ADVANTAGE OF BEING A DIRECTOR AND SHAREHOLDER
One of the main differences between a recruitment consultant and a recruitment director is often the way that directors and shareholders are compensated via dividends. Shareholders of recruitment agencies can pay themselves a salary and dividends (profits after corporation tax) which can have a better take home compared to an employee on a full salary. These kind of tax breaks are to incentivise people to start their own business in the hope that they will employ further staff. This ultimately improves unemployment figures and delivers further PAYE and corporation tax payments to the treasury.
GROW A COMPANY OF VALUE
The biggest advantage of starting your own recruitment company is that there is the potential of one day selling the company for a multiple value of the company profits. This means that all of the hard work in setting up and creating a company which is growing and profitable can often give a life changing wind fall, should it be attractive to potential buyers. The recruitment owner can influence the multiple of their own business by deciding if and when they should expand into contract recruitment, international placements or create a management structure.
HOW TBOS CAN HELP
TBOS have helped many recruitment consultants to make the leap from being an employee to a director of their own recruitment agency by offering help and advice on how this can be done. We can help with the company formation and initial set up to allow the new owner to start making placements. Once they start making profits, TBOS advises on how they can meet their overhead requirements whilst still taking funds from their own business.
TBOS do this by providing comprehensive management accounts to the director which outline the monthly figures of the company. This enables the new agency director to make decisions on the company’s future. And with the support of TBOS by their side, they receive recommendations on how they can maximise their return should they decide to grow their agency for future sale.