Recruitment Blog
How to start a recruitment agency: Best practices and checklist items
Wondering how to start a recruitment agency? We know that starting your own recruitment agency can seem daunting, but there are some straightforward steps you can take to get the ball rolling.
While the following checklist is not a comprehensive how-to guide, it does contain guidance, ideas and food for thought for new recruitment agency owners.
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The 4 things you need to start a successful recruitment agency
When you’re getting into the recruitment industry, there are a few things you’ll need before hiring potential clients.
1. An accountant
As a business owner, your accountant is one of your most important advisors. Good accountants are generally best found by referral.
Finding an accountant with experience in recruitment is a nice-to-have, but more importantly, choose an accountant you like and trust. They will be helping you manage cash flow, build your business plan and be an integral part of your recruitment business.
Poor advice, or a lack of advice, can be one of the fastest ways to bring your business undone, so take your time selecting the right accountant.
2. A company or business name
Selecting a name can be very time-consuming. The most important thing is finding a name where the domain name is available. Avoid less obvious high-level TLDs like .io, .jobs, .net etc. as they are less intuitive to find. You really want to get the name in the most common domain extension for the country in which you work – e.g., .com for the USA, .com.au for Australia, .co.uk for UK .co.nz for New Zealand and so on.
3. Cloud-based recruitment software solutions
Cloud-based recruitment software solutions will minimise your setup costs and hardware requirements, allowing you to get to work more quickly. They will also significantly cut down your manual admin and streamline your processes, crucial time-saving you’ll need in those important early days (not to mention later as you scale and grow!).
4. A website
The great news is that you don’t need to spend a fortune on a website. The days of $10,000 and $20,000 websites for small businesses are long gone.
As a startup, you only need to spend a few hundred dollars to get a great website up and running using a standard website builder, like WordPress. Take your time and shop around, ask your friends or colleagues as there is a very good chance that someone in your network will know someone who can put together a beautiful site using a simple builder.
Selecting your recruitment agency business model
Recruitment agencies operate under a diverse array of business models, each shaping the nature of their hiring process. These business models may influence how recruiters are sourcing candidates, what technology integrations they select, fee structures and more. Here’s a breakdown of some key models and their descriptions:
- Contingency recruitment: Agencies operating under this model earn fees exclusively upon successfully placing candidates into positions. With multiple clients, they source candidates for specific roles, earning a percentage of the candidate’s first-year salary upon a successful match.
- Retained search: In this model, clients pay an upfront fee to exclusively secure the agency’s services for specific high-level or specialised searches. The agency works intensively to locate top-tier candidates and may earn an additional completion fee upon successful placement.
- Niche or industry-specific recruitment: Some agencies focus on specific industries or niches like technology, healthcare or finance. This specialisation enables them to better comprehend client needs and locate candidates with precise skill sets.
- Contract/temporary staffing: Agencies specialising in temporary or contract staffing provide short-term staff solutions to clients, managing HR tasks for these staff members while charging a fee based on their compensation.
- Hybrid models: Some agencies adopt hybrid approaches that blend multiple models to cater to diverse client needs. This might entail offering both contingency and retained search services to provide more flexible options.
These various models shape the recruitment landscape, influencing how recruitment companies attract potential candidates and new business. By aligning with the right model, agencies enhance their recruiting experience and play a pivotal role in gaining new business.
A few extra expert tips about starting out
Recruitment = relationships
Personal relationships are everything in recruitment. Spend time getting to know your clients personally. Take them to lunch, invite them to golf, call them and say hi each week and share information with them whenever you can. This may sound obvious, but the art of relationship building is slowly disappearing in many sectors of recruitment.
Give your time and expertise freely
There is a reason recruiters are called ‘consultants’. The best recruiters develop huge amounts of industry expertise and they share that knowledge openly with their clients. Company owners and hiring managers need experts they can call on to discuss the latest salary rates, availability of resources and so on. Be that person your clients turn to and do it for free – the benefits will follow.
Nurture your top candidates
Don’t just add a candidate to your talent pool and forget about them. Your top talent needs to be nurtured through consistent communication and engagement. A great candidate may not meet the requirements for one job but may be perfect for another job that comes up a month later. Utilising an applicant tracking system allows you to keep track of all your candidates and talent and can prompt you to reach out to people, follow up with clients and a whole range of other tasks.
Experiment with your terms and do deals that make sense
When starting out, it’s important not to get too fixated on your terms. This doesn’t necessarily mean you should discount, but you should be creative and experiment with different arrangements to find what works best for you and your clients. Talk to clients about fixed fee arrangements, retainers, exclusivity and so on. You’ll be surprised at the deals you can do if you are providing a higher level of personal service than your competitors.
Avoid working with companies you don’t know
Fee disputes can be dramatically minimised (if not eradicated) by working only with clients you have or can build relationships with. The majority of fee disputes in recruitment involve transactions with weak personal relationships between client and consultant. If a company holds you at arm’s length and you can’t get a relationship going then the chances of a successful recruiting relationship are slim especially when starting a staffing company.
We hope these 101 tips help you start your own recruitment agency! If you’d like more in-depth tips or advice around what software and tools could work best for your new agency, contact our friendly team to have a chat.
The importance of branding and setting yourself apart from other recruitment agencies
Marketing is an indispensable driver of success for recruitment agencies, catering to the dual imperative of attracting potential clients and engaging prospective candidates.
Flexibility is the linchpin of an effective strategy, accommodating the diverse needs of both employers seeking new talent and job seekers exploring opportunities.
A well-rounded approach encompassing social media, job boards and direct outreach empowers agencies to resonate with their target market on multiple fronts, thereby establishing a compelling presence within the competitive landscape.
In this multifaceted ecosystem, marketing strategies serve as potent instruments for showcasing an agency’s proficiency in the recruitment process. By showcasing a proven track record, conveying expertise and outlining a unique value proposition, agencies communicate their capacity to seamlessly connect candidates with full-time roles.
This not only engenders trust among potential clients seeking efficient hiring solutions but also solidifies the agency’s credibility among job seekers looking for a reliable partner. A strong marketing presence underscores an agency’s industry acumen and successful placements, collectively affirming its standing while cultivating a thriving ecosystem of fruitful partnerships.
Don’t waste time and money getting things you won’t use in your first year
Many recruitment services and staffing agencies will tell you that you need business cards, a printer a scanner and/or a server to get started, but we disagree!
You don’t need any of these things when starting out (and in our opinion, ever). Going paperless and wireless is easier than you might think. Connect with people via LinkedIn or Google, read resumes online and make notes before your interviews (reading resumes in interviews is lazy), and scan documents via your mobile phone. Use the money you save and take your partner out to dinner. (You might need the credit points in the months ahead!).
Frequently asked questions
Is starting a recruitment agency profitable?
Starting a recruitment agency can be profitable, but success depends on various factors including the market demand for recruitment services, your ability to attract clients and candidates, effective management of operations and many more. If you can establish a strong client base, provide quality services and manage costs effectively, you have the potential to generate significant profits.
Here are a few assets that could help you:
- How to build a resilient temp business
- How to cut agency costs and regain profitability
- What do high-performing recruitment agencies have in common?
How do agency recruiters make money?
Agency recruiters make money by charging fees to their clients for finding suitable candidates to fill job positions. These fees are often a percentage of the candidate’s first-year salary or a fixed amount. When a candidate placed by the agency is successfully hired by the client company, the agency earns its fee. It’s important for recruiters to balance pricing to remain competitive while ensuring profitability.
What is the difference between in-house recruiters and agency recruiters?
- In-house recruiters: These are recruiters who are employed directly by a specific company to handle its internal hiring needs. They focus solely on recruiting for that company and work closely with the company’s HR and hiring teams.
- Agency recruiters: These recruiters work for recruitment agencies or firms that provide hiring services to multiple client companies. They handle recruitment for various clients, often across different industries, and earn fees based on successful placements.
How much does it cost to start a recruiting agency?
Starting a profitable recruitment agency depends on factors like market demand and effective management. Agency recruiters earn money by charging client companies fees for successful candidate placements. In-house recruiters work within a single company, while agency recruiters serve multiple clients. Costs to start a recruitment agency vary but can encompass office space, technology, marketing and staff. Automation tools can enhance efficiency and provide detailed metrics showing the profitability of your agency.
Get your recruitment business off the ground with JobAdder
When launching your own recruitment agency, it can be difficult to select the right technology solutions that will empower you to start building your business.
JobAdder is the ATS and CRM that recruiters love to use. It’s made for recruitment agencies, staffing firms and talent acquisition teams who want everything in one place without the complexity. Use it as a standalone platform or plug and play with 10+ add-ons, 100+ partners and 200+ job boards to create a custom recruitment management solution. Join us today to discover why we have a customer satisfaction score of 99% from 26,000+ users worldwide.
James Caan CBE reveals his essential growth strategies for recruitment agency owners.
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