Starting a Recruitment Business Needs Experience – and Funding

By Recruit Ventures

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When you’re as involved in the recruitment sector as I am it goes with the territory to keep up to date with current thinking, research and opinions.

Looking online this week I discovered more than one forum agreeing on three key points.

Firstly what they said was that if you’re thinking of starting up your own recruitment business, you were probably frustrated with your current role as a recruitment consultant.

What they went on to say was that if you do ‘go it alone’ two main considerations were experience and funding.

Taking them one at a time, yes as someone considering a start-up you probably are a recruitment consultant who feels you can do better yourself. That’s good. Firstly, it means you have the drive to run your own business. Secondly, it addresses that issue of experience. You have to know the business to run a recruitment business. It would be naïve to launch yourself into any sector without market knowledge, but it’s madness to do it in recruitment. Apart from anything else you’ll need your contacts and local knowledge to be credible. So tick that box. Experience is essential – and you’ve got it.

Funding is also key to any start-up in any sector. But consider how important it is in recruitment. Chances are that a new agency you’ll want to run a service for temps. It’s a valuable service for most employment sectors. The problem comes when you have to pay temps before the client pays you. It’s a cash flow trap that’s snared many a new recruitment business, and it goes like this. Temps (understandably) want to be paid weekly, and most client companies want 30 day terms with you.

Having funding in place to smooth out the cash flow, and enhance your fledging reputation is essential. Fail to pay the temps and you’ll lose jobseekers as customers. Lose the jobseekers (who will probably damage your reputation further by complaining to the employers as well) and you have nothing to offer, so you lose the employer clients.

If you get it right, in the business plan, it will work. So, use your experience to run the business, but use your business acumen to establish robust, mid to long term funding from a proven source.

Tick that box too and you’ve got a business that will work.


David Simons has extensive recruitment knowledge and experience having worked in the industry for over 20 years. He is currently Managing Director of Recruit Ventures where he works closely with joint venture partners, assisting and advising them on their start-up businesses.

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