We all know the statistics show that lots of start ups fail. Even the relatively optimistic Small Business Association puts the figure at 30% in the first year. Consider these fatal flaws for recruitment start ups. They’re the ‘ins’ to leave out of your planning.
Inadequate funding. It’s not just about not having enough money, it’s about having the right amount, and the right plan to administer it. Even a massive investment can lead to disaster. Suppose it comes from a backer who knows nothing about recruitment. They’ll impose conditions that may sit uneasily with the way your business operates. Or perhaps the cash came from ‘friends and family’. Be very aware of the emotional issues that come with that.
Inadequate funding is often inadequate because it comes without proper guidance and support for the long term.
Insufficient cash flow management. Because it is about the long term, the cash flow is crucial. There will be high outgoings at the outset and 30 day waits for payment as the days go by. Initial investment will prime the pump but not keep it running. New clients will probably want to give you a probationary period, temps will want paying before you get paid – there are a lot of pressures on cash flow and failing to plan for it can be disastrous.
Incomplete planning. When it comes to planning, come to it early. And do it completely. That means deciding on location, sector, branding and brand values. It means working out how you can maintain your lifestyle – which is very much to do with paying your domestic bills – while you get up and running. The plan has to be all embracing. If it misses out on vital aspects a business will miss out on success.
Inappropriate systems. Whichever way you cut it a recruitment business runs on its admin systems. Second rate software delivers second rate performance. Systems have to be in place from day one; they have to be fully operational and designed to meet the needs of a recruitment business. Cutting corners here usually cuts short the business.
Inexperience. Most recruitment start ups are launched by experienced recruitment professionals. They have the entrepreneurial spirit, born of running their own desks. But, get the right amount of experience under your belt before starting up on your own. It’s a big step. And if you don’t have a recruitment background, don’t do it. Simple as that.
Paul Mizen is Managing Director of the Recruit Venture Group, the largest venture partner of their kind in the UK. For more information visit www.recruitventures.com.