The start up centre on our website is very well utilised; starting your own business is a big dream for many. As part of the Blog Carnival series Kyra at Alliance Recruitment Agency shares her tips to start your own recruitment business.
Recruiting is a “people” business where it is important to understand the needs of both the employers and the employees; the goal is to become a good matchmaker that places people in employment positions suited to them to succeed.
The recruitment business is good for people who like to network with people, enjoy talking to them on phone and want to support the development of career professionals by placing them with organisations looking for top talent.
It helps to have previous experience working for another recruiting agency, before going out and starting your own recruitment business. Having an extensive list of business contacts gives someone an advantage in starting up a new recruiting agency.
Costs involved in opening a recruiting business
Here are the basic requirements for starting this business as a sole owner/operator
- A business license
- Business cards
- Promotional materials
- Service agreement forms
- Space to work from
- A telephone
- A computer
- An Internet connection
- A business banking account
- An accountant
Once you are ready to start your recruiting business, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. Have a clear plan in mind. Consider what will be your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity is important. It prevents you from being personally liable if your recruiting business is sued.
- Register for taxes. You will need to register for a variety of state and other taxes before you can open a business.
Open a business bank account.Have a dedicated checking account for your recruiting business. This keeps your finances organised and makes your business appear more professional to your customers.
Set up business accounting. Record your various expenses and sources of income to understand the financial performance of your business. Keeping accurate and detailed accounts also simplifies your annual tax filing.
Obtain necessary permits and licenses. To avoid hefty fines and closure of your business, acquire necessary permits and licenses.
Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be necessary.
Define your brand. Your brand defines your company, as well as how your business is perceived by the public.Creating a strong brand will help your business stand out from competitors.
Establish a web presence. Create a business website to allow customers learn more about your company and the products or services you offer. Or even use social media to attract new clients or customers.
Growing Your Business
You need to engage with the human resource managers of many companies, if you want to market your recruitment business. It also involves lots of “cold-calling” of potential employees. You could try email marketing if you have a list of contacts.
One way to meet the human resources managers of larger corporations and their staff is to attend employment trade shows or business conferences. You should concentrate on building long-term relationships because both employers and employees may not have a current need, but may call you if a need arises in the future.
How to keep customers coming back
The best way to build a steady flow of business and keep previous clients coming back to you,is to make successful placements. If both the employees and the employers are happy with the results of your work they will use your services again if need arises in future. They can also help by spreading the word to other professionals and organisations, about your successful efforts.
How and when to build a team
After you have got some success with initial placements and earned enough commissions, you may think to expand your staff to increase the placement activities. Each new recruit can concentrate on expanding the opportunities in a particular industry sector or working with a certain type of professional.
Recruiting businesses require clients to sign a services agreement before starting a new project with them. This agreement should clearly mention the client expectations and minimise risk of legal disputes by setting out payment terms and conditions and service level expectations.
An average recruitment and placement can take between 30 to 90 days. The typical commission for a placement is around 10% of the annual salary for the position or the equivalent of one month’s pay. Many recruiting agencies which do multiple placements per month have higher profit potential.
Some organisations like to outsource some or all of their recruitment activities to recruitment agencies. In this case, a contract should be made by the recruiting agency where payment by the client will happen on a monthly retainer basis, for the ongoing recruitment efforts.
The monthly expenses will be rent, telephone, Internet connection, promotional materials, conference/convention attendance fees, and other marketing expenses.
Ways to make your business more profitable
The easiest way to earn good returns is to place people in positions that pay higher salaries. Some recruiting agencies specialise in placing C-level senior management like.CEO CFO, CTO, COO, and CMO, who all command very high salaries.
Recruiters who make themselves available to talk with candidates after work hours and on weekends ,increase their chances of finding good candidates. The reason being, many candidates prefer to have confidential conversations about taking a new position from their homes, instead of taking such calls from their workplace.
Kyra is a Hiring Director at Alliance Recruitment Agency – an IT Recruitment Agency. She specialises in helping with international recruiting, staffing , HR services and Careers advice service for overseas and international businesses. Check them out on Facebook or Twitter.