We get enquiries on a daily basis from ambitious recruiters or from non-recruiters with industry experience looking to start their own recruitment agency. In 2016, there were over 5,000 new recruitment agencies incorporated at Companies House and 2017 looks like it will be another mammoth year for the new start-up market.
Most enquiries we receive are based on the fact that an individual has seen a need within their chosen market to provide permanent and/or contract/temporary staff either because they have a strong relationship with the clients or a large pool of candidates to call on – or both! It is also common for someone to look at starting their own agency where they can see a specific area within their industry starting to grow.
The top 5 industries that we receive enquiries from recruiters looking to start their own recruitment agency are:-
Medical and Healthcare is the top industry that we receive enquiries about for new start up recruitment agencies. The enquiries are a mixture of providing contract/temporary staff into both the public and private sector, and in various different parts of the industry such as nursing, medical locums, GP’s, social care and mental health. Interestingly, these enquiries are coming from both existing medical recruiters and non-recruiters, who are either in the sector themselves and/ or who have been contracting for a number of years with agencies. A large portion of the agencies that TBOS has set up in the past 12 months have been within the medical sector and setting up invoice finance is a breeze due to the fact that the industry is supported by the government.
For us, the education sector has proven to be the second most popular industry for enquires for new start up recruitment agencies. These agencies are mainly looking to provide supply teachers and teaching assistants, often on a temporary/contract basis. The enquiries are mostly from existing recruiters working for larger size agencies that are noticing the increase in placements and want a portion of the profits for themselves. TBOS has been successful in setting up a number of teaching agencies and as with the government support for the Medical industry, setting up invoice finance for Education agencies is quick and easy due to the ‘safe’ nature of the industry.
IT has always been a strong sector for TBOS agencies, but the past 12 months has seen an increase due to more UK markets wanting permanent and contractors, whereas previously placements were predominantly overseas. The IT agency enquiries are often looking to provide a number of contractors on project work for an individual client, which can make it tricky if funding is required due to concentration issues. TBOS has still helped start a number of these agencies, mainly using the TBOS Freedom model to provide the admin and funding on the contract placements without the threat of concentration.
CONSTRUCTION AND ENGINEERING
Even though construction recruitment in the past has been hampered by previous recessions and has always had an issue whenever the economy has a down turn, construction and engineering projects are still popular choices for new start recruitment agencies. Often these enquiries come from supervisors within the sector or construction company directors who are using multiple recruitment agencies and believe that with TBOS’s help they can set up an agency and provide the manpower, with us providing the back office and accounts service. Funding can be very challenging due to the credit worthiness of the billing clients (or lack thereof!) and the convoluted sub-contract/application methodology of invoicing.
With the decline in the oil and gas industry over the last few years due to the drop in oil prices, there appears to be a gap in the market where the same kind of engineers can be used on renewable energy projects such as onshore and offshore wind farms. TBOS has had many enquiries from new start agencies looking to provide large scale contractors to build and maintain renewable energy projects. These projects can be tough to arrange funding for as often a large portion of the sales ledger will be overseas and the contracts can be 4 weeks on/4 weeks off, so double the amount of contractors is required.
The list above is surprising, especially as the government sectors (Medical, Teaching, etc..) are currently under the spotlight due to the changes in IR35 legislation. However, most of the agencies we speak to are saying that at there are massive shortages in these areas for qualified staff and due to their strong relationships with clients and candidates, they can fill the necessary roles. Also, the increase in construction and UK IT projects shows the economy is currently in a good state and the effect of Brexit at the moment doesn’t seem to be stopping this appetite for growth. Overall, new start-up recruitment agencies still makes up over 75% of the enquiries we get at TBOS and we are pleased to be helping the next generation of agency directors with their journey into running their first recruitment business.