When a recruiter has been working at an agency for a large portion of their working life it is often a big change when they start their own agency and are then the employer instead of the employee. In the early days there are lots of new experiences and challenges which will test the new directors nerve, mistakes will be made (hopefully only once) but in time it will become easier to manage and run the new business.

TBOS has seen many different types of recruiters and agencies set up over the last few years and as part of our initial discussions we always try to offer our help and advice to make things easier so directors can avoid some of the previous mistakes and misconceptions made by some of the other agencies.

Below is a list of issues that we have noticed over the years, that take a while for new directors to get used to:-

1. RAISING THEIR OWN CONTRACTS
   Many recruiters have come from agencies where they have an administration team in place who manage all the contracts and compliance for the placements they make. When recruiters have to do this themselves they often don’t realise the importance of ensuring that all clauses are correct and that the contracts have been signed before making a placement. This can cause some complications should there be an issue with getting payment from the client or if there is a dispute. Buying reputable contract templates and ensuring that all clauses are understood is a good place to start but also implementing a process to get them signed before the candidate goes on site is also advisable.
2. ORGANISING THEIR OWN TIME
   Moving from working as an employee under a manager or director with KPIs and targets to working alone takes a lot of self-control and motivation to make the new agency a success. Working with a business partner or in a serviced office environment can help to ensure that there is still the social atmosphere which recruiters often crave. As a new agency owner it is important that tasks are organised to ensure that making profit as quickly as possible is prioritised as time is money.
3. MANAGING THEIR CASHFLOW
   Coming from a working environment where a regular salary and commission are paid based on placements made not when payments are received can be a big wake up call for new agency directors. Having to understand that until the cash is in the bank the money cannot be spent can take some getting used to and managing which supplier is a priority over another can make it a stressful time. Monitoring and planning the initial cash-flow is vitally important and having reserves in the bank will make things easier should the plan fall behind.
4. SACKING NON-PERFORMING STAFF
   Most new agencies who take on their first team members will learn the hard way that managing other staff is not a simple task. Coping with personal and HR issues, non-performance and missing targets will put pressure on the agency owners and making the decision to get rid of a staff member is not an easy one. Remembering that every person who sits at a desk is a cost to the business if they are not producing should be the incentive to let that person go but often directors will keep bums on seats instead of facing up to the inevitable.
5. SPENDING COMPANY TAXES SUCH AS PAYE, VAT AND CORPORATION TAX
   When a client makes payment on an invoice there are always tax implications whether it is VAT on the amount paid, PAYE on salaries or corporation tax on the company profits generated. All of these need to be realised and put aside so as to not fall behind with HMRC payments. Setting up separate accounts to withhold tax monies and having up to date management figures to know the current tax position is vital throughout the company life cycle.

All of these issues above cannot always be avoided and recruiters will always try to do things their own way but it is advisable to address them as quickly as possible should they arise and work out a process to avoid them happening again.

TBOS has helped a large number of recruiters over the years set up their own agency and we work with the new directors to avoid these kinds of issues to hopefully help them grow into successful and profitable agencies.

For more information on how TBOS can help and advise you on how to start your own recruitment agency then please give our office a call.