5 Reasons Recruiters Look To Start Their Own Agency

Every recruiter has their own reason(s) for starting their own agency and this decision will often have an impact on both the size and type of agency that they want to grow. It’s important for us to know what’s motivating the recruiter because this shapes the core of the goals for their agency. Once we have this information, we can help and guide the recruiter to build and grow the agency they are looking for. We work very closely with these types of business owners by providing the help and support needed to run their back office and finance function, leaving them with enough time and energy to channel into growing a successful agency. Taking the leap into the unknown of starting their own agency can certainly become a reality as long as the recruiter has the skill, motivation and previous knowledge/ experience of growing their own contract or permanent desk from scratch.

We’ve heard several different reasons over the years as to why recruiters have decided that “now” is the time to start their own agency, and have explored a few of the most common below:-

    A lot of new agency enquiries are a result of an employee that has become disillusioned by their current agency and are looking for a new beginning. This may be due to a loss of respect for their manager or boss, increased targets with little reward or a change in working practices such as commission structures, KPI’s or company benefits that they do not agree with.  Many of these types of enquiries are looking to build an agency that will treat their employees fairer, have a good reward scheme and have a better company culture.
    Most future directors are rife with ambition to start their own agency utilising their recruitment skills and previous experience of running their own desk. Of these, many will have the experience of running teams (or in some cases branches/ previous agencies) so can transfer these skills to starting and running their own agency where they are the ‘big boss’ and shareholder.
    The pressure of long hours and hitting KPI’s can and does take its toll on recruiters and some of the new start agencies look to build their new business to ensure that they change their lifestyle to also include more family or leisure time. When running their own company, new directors can set their own targets and working hours to include down time or their own perks, such as playing golf once a week or picking their children up from school.
    Recruitment agencies have always been a business model that can easily be manufactured to be built up and then sold for large multiples. Many new agencies are formed based on a premise of building themselves to a large size, making contract and permanent placements in a niche market, which then ensures they can sell for large amounts in 3-5 years.
    The most common reason that potential recruitment directors want to start their own recruitment agency is money. They will often look at the amount of profit they have generated for their current agency and then look at their payslip and wonder why they are only seeing 30-40% of the profit themselves and start questioning where the remainder goes (often concluding that it goes into their bosses pocket).  By running their own agency they envisage that they will receive a larger portion of this profit. However, paying for overheads and other associated business costs will often be an afterthought, meaning the financial reality of owning your own business can end up being a different story if these outgoings are not managed and controlled correctly.

TBOS has a wealth of experience in helping to set up and provide its back office and accountancy services to over 100 new start up recruitment agencies over the past 8 years, with countless success stories during that time.  Each agency has its own motivation for starting and this will prompt the direction the agency takes and TBOS will tailor its service and advice to match this.  The TBOS service for new start up recruitment agencies provides a fully comprehensive back office and accountancy service, for those making both contract and permanent placements.  As the cost is based on a per placement basis, this means that fees grow with the agencies productivity whilst still providing a full time and multi-disciplined service at a fraction of the cost of having internal staff and external accountants.

For more information on how TBOS can help you start your own recruitment agency, please contact our office.