How to Start a Recruitment Agency
As they have now become used to the idea of working remotely, even if, prior to the pandemic, they never had before, an increasing number of people are looking into ways to start their own businesses, often based around the skills they are currently paid by an employer to perform. Recruitment is one of those businesses. But how do you start a recruitment agency? Should you start a recruitment agency? This is what this guide is going to take an in depth look at.
The State of the Recruitment Industry in the UK
Before you address the issues behind any new business venture, including how to start a recruitment agency, you need to ensure that there really is a market for what you plan to offer.
In the UK, the recruitment business has been steadily growing for over two decades. And while many business sectors suffered greatly during the pandemic, the recruitment business, according to a December report from the Recruitment and Employment Confederation, in 2020, the recruiting business as a whole generated £35.9 billion in Gross Value Added (GVA) for the UK economy. Given that throughout 2021 an increasing number of vacancies proved difficult to fill, the post pandemic outlook for recruiting is excellent.
Even firms that had previously done all of its recruiting in house have been turning to recruitment agencies to help them source the candidates they need. Partly this is because they are facing new challenges themselves related to post pandemic restructuring and simply don’t have the time, or they are realising that a good recruitment agency can be an asset at any time, and given the increasingly global nature of business and hiring, often has access to a wider candidate pool than they ever could.
So, when it comes to the market demand, it’s there for recruitment. However, that also means increased competition. So, a new recruitment agency could indeed do very well, but it will have to stand out, and offer something very special, to succeed.
Are You Cut Out to Run a Business?
Starting a business, especially if you can do so remotely, sounds very appealing in a lot of ways. You’ll be your own boss, making your own rules. You can choose who you work with, both in terms of a team and clients. You can work, technically, from wherever you like. You can keep more of the money earned from your recruitment efforts, and you have a chance to build a business that will leave you in a comfortable financial position. It all sounds good, and it can be, but it won’t be easy.
To be a successful recruiting firm owner or entrepreneur, you’ll need a strong set of fundamental skills that will allow you to actually accomplish the job. Despite the fact that many people possess similar abilities, not everyone is cut out to be a business owner.
Even if they fundamentally work in the same profession (think Bill Gates and Steve Jobs), successful business people are all extremely diverse, but there are some characteristics that they all appear to have in common that anyone starting a recruiting firm should have or strive to develop.
Personal Characteristics
The first step is to examine your own personal qualities to see if you have, or will be able to acquire, the characteristics of a typical successful entrepreneur’s mentality.
Optimism: The ability to think positively and optimistically is crucial for an entrepreneur. This positive attitude will help you get through the inevitable bumps in the road.
Initiative – Do you have the ability to swiftly grasp the “big picture” and solve difficulties on the spot?
A Strong Desire for Command – Do you like being in charge and taking on responsibilities?
When things go wrong or don’t go as planned, do you have the ability to pick yourself up and keep going?
Interpersonal Skills
As a small business owner, your interpersonal skills will be more important than ever when interacting with clients, customers, business contacts, and suppliers. Rather of being a faceless employee of a recruiting firm, you’ll be the face of the company, at least at first, and you’ll require a strong set of interpersonal skills:
Develop Good Listening Skills – While the ability to communicate and ‘sell oneself’ is important for a recruiting firm owner, the ability to listen is much more important.
The Ability to Appear Trustworthy – You must be seen as honest, transparent, and trustworthy in order to build any type of business, but this is especially true in recruiting because people will be entrusting you with the future growth of their business from a staffing point of view.
Creative Thinking – You might not think of recruitment as being particularly creative, but you will need to be. If you’re self-employed, you won’t have a boss or a “leader,” and you’ll have to make all of your business decisions on your own, at least at first.
Seeing the ‘Big Picture’ — A successful entrepreneur or accountant must be able to look at a problem from a variety of perspectives while still coming up with distinctive solutions.
The Ability to ‘Spot a Trend’ – An owner of a recruitment firm must be able to broaden their reach’ by detecting trends, niches, and ‘gaps in the market’ that they may exploit.
Not everyone who asks how to start a recruiting agency has all of these ‘traits,’ but the good news is that you can develop them if you work hard enough. Do you need some motivation? In this free resource for would-be entrepreneurs, learn how Deepak Shukla, the founder of the Pearl Lemon Group, launched his own businesses.
Starting a Recruitment Business: The Step By Step Process
The first step in starting a successful recruitment firm is deciding how you’ll work and what area you’ll specialize in. Traditional recruiting agencies were a brick-and-mortar operation, with high-street locations advertising job openings.
Today’s recruitment start-ups are increasingly going online first, with interactive websites that display job openings and allow individuals to build and send CVs to potential employers. Although starting a business online reduces startup costs, generating online traffic might be difficult, and you’ll still need to decide if you want to establish a physical location to interview employees and meet clients, or, if you plan to do all of that online, which is perfectly possible, a clear plan for doing so.
Choose a niche within the recruitment business, such as supply teachers, healthcare professionals, or media specialists. Setting up as a specialised recruitment agency can provide your start-up an advantage over bigger, more generalist recruitment firms that may fail to match individuals with openings due to a lack of in-depth sector knowledge.
The first step in starting a successful recruitment firm is deciding how you’ll work and what area you’ll specialize in. Traditional recruiting agencies were a brick-and-mortar operation, with high-street locations advertising job openings.
Today’s recruitment start-ups are increasingly going online first, with interactive websites that display job openings and allow individuals to build and send CVs to potential employers. Although starting a business online reduces startup costs, generating online traffic might be difficult, and you’ll still need to decide if you want to establish a physical location to interview employees and meet clients, or, if you plan to do all of that online, which is perfectly possible, a clear plan for doing so.
Choose a niche within the recruitment business, such as supply teachers, healthcare professionals, or media specialists. Setting up as a specialised recruitment agency can provide your start-up an advantage over bigger, more generalist recruitment firms that may fail to match individuals with openings due to a lack of in-depth sector knowledge.
How To Start a Recruitment Agency: Initial Costs
Setting up a recruitment firm doesn’t have to be expensive, and you can do it from the comfort of your own home. However, you will require sufficient funds to get you through the difficult first several months. The following expenses are included in the price:
Website — To market your openings, you’ll need a specialized recruitment website with database capabilities. For roughly £1,000, you can get a great off-the-shelf recruitment website with decent functionality, with costs rising dependent on how bespoke you want the site to be.
Databases of CVs – People can publish their CVs for potential employers to view on internet ‘job boards’ such as Monster and Total. These CVs can be accessed by recruitment firms for a cost ranging from £200 to £5,000 per month. You can also pay to have your job openings advertised to the vast audience on the job board. Before discussing monthly rates, request a free trial with a job board.
Computers, a broadband connection, mobile phones, and recruitment software will be among the most important pieces of equipment. Some recruitment software, such as Zoho Recruit, is available online for roughly £30 with free trials. For mobile and broadband plans, expect to pay roughly £40 per month.
Starting a recruitment business from home saves money at first, but you may need office space as you grow and hire employees, interview prospects, and meet with clients. For around £400 per month in London and around £200 per month elsewhere, a serviced office space can be a good way to get started.
Subscriptions and membership fees – Consider memberships like the REC and LinkedIn Recruiter, which can help you gain credibility, knowledge, and contacts.
Insurance – Professional indemnity insurance will protect you against claims of negligence. It’s worth considering public liability coverage for your business if applicants visit your office or go out to meet clients. Employer’s Liability insurance is required if you employ people. It protects you in the event that one of your employees is hurt while working for you.
Establishing a Fee Schedule for Your Recruitment Agency
For larger clients, recruitment firms are typically paid based on a percentage of the job’s salary or a monthly fee.
The cost of a job is determined by the level of the position and whether it is permanent or temporary. When it comes to permanent jobs, most recruiters charge a portion of the employee’s annual pay, which increases as the salary does. For more junior positions, this percentage may range from 10% to 15% of the annual compensation, increasing to 20% to 25% for most job levels. For jobs paying six or seven figures, high-end specialist and executive recruiters can charge 30% or more.
For filling client openings, some internet recruitment companies charge a flat fee. This strategy could be popular with clients, but it may reduce the margins you earn for higher-paying positions.
Consider how much you’ll need to spend on advertising, networking, time spent dealing with clients, reviewing CVs, and interviewing applicants when calculating your firm’s fees. Because you won’t be paid until you’ve placed a candidate in a position, cash flow is crucial in the beginning.
Make Sure You are Ready to Comply with Regulatory Requirements
Recruitment is a strongly regulated sector in the UK, so you’ll need to stay on top of the newest regulations and adhere to strict employment requirements.
The Employment Agencies Act of 1973 is the key piece of legislation that governs the sector. It explains how much you can charge, how to publicize a vacancy while making it clear you’re an agency, how to deal with young or international candidates, how to conduct background and legal checks on a candidate, and what information you can share with both the client and the candidate. Go to gov.uk to learn more about the Employment Agencies Act if you need a refresher.
Build the Cornerstone of Your Business: Your Website
Stop what you’re doing and make it your top priority to provide a decent user experience on your website for potential clients and applicants. Yes, you’ll want to save as much money as you can when starting a recruiting agency, but your website is NOT the place to cut corners.
Why? Because your website reflects the quality of your company, and a poorly designed site erodes your credibility and costs you money. Improving user experience, on the other hand, contributes to a better total consumer experience and a higher bottom line.
Consider:
By 2020, customer experience will have surpassed price and product as the most important brand differentiator (Walker Information)
A well-designed user interface has the potential to increase your website’s conversion rate by 200 percent (Forrester)
Don’t drive people away from your recruitment agency because of a lousy website experience. These seven web design best practices will help you clean up your act.
2. Make your site mobile-friendly
Your potential clients and candidates are on mobile, and if you don’t give them a good mobile experience, you’ll leave them with a bad taste in their mouth about your agency (at best) or drive them to a firm that does mobile well (at worst). To emphasize these points, consider the following statistics:
According to StatCounter, more people access the internet through their mobile devices than through PCs or tablets, both globally and in the United States.
On mobile, Google found that 53% of consumers will abandon a site that takes more than three seconds to load.
If they can’t find what they’re looking for on a mobile site, 79% of users will go to another site to find it (Google)
Here’s a link to a free tool from Google that will test your site’s mobile speed and performance. It’s a straightforward pass/fail test (if you fail, find yourself a web developer asap and fix it).
1. Make navigating your site simple
People are impatient with a disorganized, perplexing layout or inconsistent navigation. In fact, according to Adobe, 38% of customers will leave a website in under a minute if it is unappealing or incomprehensible.
Make sure your navigation is clear, straightforward, and easy to use. The best design technique is to place your navigation bar vertically down the left side or horizontally across the top. Users expect it, and it makes your site more user-friendly.
4. Include a conspicuous "contact us" button on your website.
Make it simple for folks to contact you. You’ll frustrate them if you don’t, and they might leave if you don’t. In this Web Usability Report, 51 percent of website users stated the most crucial element missing from many companies’ websites is “thorough contact information,” and 44 percent said they will abandon a site if there is no easy-to-find contact information.
The goal here is to keep things as basic as possible. You should have a “Contact us” button in your main navigation that takes visitors to a separate page. There should be the following information on the page:
- A simple form that can be submitted.
- The main email address for your company
- Phone number and street address
- Your social networking accounts’ links
3. Cut down on page load times
There are two compelling reasons to ensure that your website loads quickly:
Google uses page load times as a ranking factor. Since 2010, page speed has been a ranking factor for desktop searches, and starting in July 2018, page speed has been a ranking factor for mobile searches as well.
But it’s not just about SEO. Users hate slow-loading websites, and the majority of them will abandon your site if it takes too long to load. The relationship between page load times and bounce rates has been studied extensively.
The most prevalent cause of slow-loading pages is large images. Check to see if the images on your site have been compressed for the web. This maintains quality while reducing file size.
6. Use text links (not graphical buttons)
You might overlook this one if you’re not familiar with the fundamentals of SEO. Instead of using graphical, button-based navigation, use text-based links. Because search engines can’t crawl or index the text inside a button graphic, but they can crawl and index text-based links, they can index your pages and figure out how your site is structured faster.
5. Break up the copy into bite-sized chunks that are easy to skim
Your website should look like a research paper. Consumers are accustomed to skimming and have little desire to “skim” a vast wall of gray text. Short paragraphs (one to three phrases), subheadings (H2s), bulleted lists, and graphics help to break up the material.
Also, choose a font that is easy to read and has sufficient text contrast. Georgia, Helvetica, and Arial are three excellent options that look great on all devices.
7. Include a call to action on each page
There should be no dead ends on your website; each page should direct the user to do something else. A call to action, or CTA, is the name for this “ask.” What do you want them to do after that? Which page would you like them to go to next?
However, don’t overwhelm the user with too many CTAs. Concentrate on the option that makes the most sense for your user’s position in the sales funnel. The goal is to guide them through your site until they take the actions you want them to.
SEO, Marketing and Your Recruitment Agency
You are hoping to start a recruitment agency, not a marketing business, but you will certainly need to market your business.
Good SEO starts with your website, so you will need to ensure that the copy is both engaging and contains relevant keywords. Great site speed and navigation, which we just discussed, has great SEO benefits, so getting that right from the start will boost your SEO too.
You should also consider adding a blog of some kind to your site. Jobseekers are usually looking for helpful information, and if you are the recruitment agency that provides it you will not only have a better chance of them choosing to work with you over another agency, but you’ll also better establish yourself as an authority in your field, which will impress employers who are your potential clients as well.
Then there is social media. A strong LinkedIn presence is CRUCIAL for any recruitment agency, both in terms of lead generation and making useful professional connections and establishing your expertise. But it is not the only place you should maintain a social presence. Facebook is expanding as a recruitment platform, and a niche site like Redditt can also be a great source of leads.
Getting Help When Starting a Recruitment Agency
Many of the aspects of starting a recruitment agency you can bootstrap alone, but if you are going to invest in outside help, initial marketing and SEO may be the best investment you can make. Digital marketing is a field that gets more complex every day, and it’s also hugely time consuming, something you are likely to be short on.
To help you understand more of the marketing challenges you’ll face when starting a recruitment agency, or any other business, and get specific strategies for overcoming them, download this free report by Deepak Shukla, founder of our parent company, the Pearl Lemon Group.