How To Start A Recruitment Agency: 3 Mistakes Most People Make

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Starting a recruitment agency might seem like a good idea. Let’s face it how hard can it be? Companies need employees so logic says it would be sensible to outsource the grunt work to someone else and then just pay them for the service they deliver as a recruitment agency.

As a recruiter then, all you need to do is match up the client and the candidate and then hey presto you send out a large invoice. In fact over the month you send out many and everyone is happy, especially your significant other, and your bank manager. The reality though is a little different.

Yes the rewards for those ambitious entrepreneur’s that do start a recruitment agency can be potentially huge, as long as you don’t make these classic new start up mistakes.

1. Not Doing Your Market Research

This is one of the biggest reasons that most businesses fail. They simply do not adhere to the ancient premise of wants and needs and supply and demand. Let me explain, if you do not have something that people want and there is a market for, you will struggle to even achieve a decent cash flow let alone make any profit.

You must research your market well. In the recruitment market some sectors are better than others to enter. This can depend on anything from the area of the country you are based to the growth of an individual market. Have a look on Google. Who is advertising and who is appearing on page one? Buy an industry trade magazine, and read it from cover to cover. Read what is being said. What are the issues and upsides? Take the bull by the horns and offer to buy a recruiter a beer or glass of wine and pick their brains. This will give you a lot of the information you need.

If you have never worked in recruitment before I would respectfully suggest you get a job as a recruiter. Now you may have stacks of cash and just want to manage a team. That might be OK and yet my experience is that the really successful recruitment business owners have all worked at one time or another as a recruiter. So what next?

2. Not planning your first Six Months Cash Flow

When you are considering how to start a recruitment agency, your initial cash flow will be vital. You don’t need a swanky office when you first start hitting the phones though you do need ‘enough’ to cover your expenses. Remember many organisations particularly the larger ones only pay on invoice which can be anywhere between 30 and 180 days. Yes some companies can make their suppliers wait up to six months before they pay them. So even if you are well trained as a recruiter it is going to take you at least 3-6 months to get regular cash flow coming in so make sure you plan for that.

3. Being Disorganised Without A Marketing Plan

When you are thinking about starting your recruitment agency, you will need a marketing plan. This does not have to be a long drawn out document with everything covered. It does need to have the key elements. This would include who you market is, what your offer will be, how you will approach them, how you will generate sales leads etc.

Your business plan is something a little different and would be a useful document to show your bank manager. Here you would highlight your cash flow, how fast you will grow, when you will bring on board other recruiters, and how you will put in place recruitment consultant training for them.

And now to learn more about how to start a recruitment agency you can get FREE access to our tips by visiting Centred Excellence at


Nicky Coffin has over 15 years’ experience running her own recruitment agency and helping other recruitment business owners to grow theirs. If you want to know how to start a recruitment agency visit our Centred Excellence website.

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