Starting up a new recruitment agency is always going to have a number of challenges to face which is why TBOS have listed the top 10 mistakes new recruitment agencies make:

1. Believe a client belongs to them

Recruiters will often believe that a client is loyal to them and that they will follow them to which ever agency they move to but this is not always the case as clients like stability and often do not like change.

2. Over project and under deliver

Recruiters will believe that they can make the same number of placements they made at their previous agencies and produce projections that they often under deliver on causing strains on cash-flow.

3. Undercut other agencies fees

New start up agencies will believe that they can undercut other agencies but this often leads to a trend of the client always getting a discount and the agency not making enough profits.

4. Spending money in the account which isn’t theirs

Recruiters will see a large invoice payment received and believe that they can spend this immediately without realising that there are taxes like VAT, PAYE and Corporation taxes payable or other creditors due.

5. Signing up to long term agreements early on

Signing up to office leases, company car contracts and invoice finance/loan arrangements can tie you in immediately and if the business fails you might be facing large financial penalties to get out of the contracts. Using a short term funding solution like Fund My Contractor is ideal instead of signing up for a long term factoring arrangement.

6. Spending money that hasn’t yet arrived

When working for a large agency, recruiters are used to being paid commission within a month of a placement being made but when it is your own business you have to wait until this arrives before it can be spent.

7. Using “old” contracts

Using old contract templates can leave you exposed should they not comply to current regulations or if they do not cover you in a dispute.

8. Concentrating on cutting costs instead of building the top line

Too many recruiters over analyse their costs each month instead of spending this time building up new business and making placements

9. Take on too many staff early on

Staff are one of the largest costs on a business as they include salaries, commission, employers NI and desk costs (computer, furniture, office space, stationary, database licences, etc.) so ensure you can afford paying them before taking them on and also manage their performance to ensure they are profitable as quickly as possible.

10. Believing they can wear all the company hats

Any new business owner should play to their strengths and outsource anything that takes them away from making money. Outsourcing your back office and accounts (to a company like TBOS) is one example of ensuring you spend your time selling instead of dealing with invoicing, credit control and accounts.

You can find out some more common mistakes here.

How TBOS can help your new recruitment business

Over 60% of TBOS clients originated as new start up recruitment businesses, these clients received full accountancy and back-office support right up until their first placement and thereafter. There are many benefits to having a support system like TBOS,  our service allows Recruiters to focus on sales and growing their business, which is extremely important when securing those first placements and new clients.

Our solutions have been specifically designed to cover all aspects of back-office administration for any type or recruitment business, be it Contract, Permanent or International placements. Our plans are also competitively priced, with our fees only charged when the Recruiter makes their first placement. In addition to this we provide fixed pricing with the added benefit of only paying for our fees when your Contractors actually work. This provides a significant saving for new start-ups and allows them flexibility on various placements options for their business.

TBOS have helped to transform many Recruiters into successful Recruitment Directors, is it your turn?

Call a TBOS advisor today for more information 0345 504 6333, we'd love to hear from you.

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