This article has been provided by Stewart Roberts, Commercial Director at Total Back Office Solutions Limited.
On a regular basis, we are approached by expert recruiters who have begun to ask themselves questions about why they aren’t working for themselves. For many of them, the work they do is good and they bring in a lot of value for their agencies, and so they begin to wonder why they are only taking a small cut of the profit, or why they aren’t just working for themselves rather than someone else. There are many more reasons that a recruiter might want to start their own agency, but often these reasons aren’t thought through to their logical conclusion.
It might be time to start your own agency, but before you get started down that road, make sure you’ve considered the following, often overlooked, points:
There are costs to cover that cut into profit
You may only be seeing 15-20% of the money that your agency receives from clients, but your agency may not be seeing the full 100% either. Aside from the commission each recruiter earns for the work they’ve done, there are many overheads and finances to cover that can eat into profit margins, especially when a business is still small.
There are plenty of options to help you deal with the initial financial hit of starting your own agency, and as long as you are prepared for it then you can being to earn more by yourself than you did when you worked for someone else. Make sure you’re prepared for the extra costs that can add up.
Trust in an agency is different to trust in a recruiter
It’s always worrying to hear a potential recruitment agency start-up self-assuredly tell us that they will be bringing a majority of their clients with them to their new business. Even if their clients have told them this, and this isn’t always the case, there may still be restrictive covenants that actually prevent that from happening. Some clients may also have second thoughts about working with a start-up agency compared to an agency they have a long relationship with, even if the former comes from the latter.
If you are relying on existing clients joining you in a new business, you should first make sure that it’s possible, and secondly be prepared for the worst. If being able to bring clients with you is your only reason to start a new agency, it might be better not to, or to find a better reason.
Be motivated enough to set your own targets
It’s all too easy to be upset at how hard your current employer is making you work, compared to the amount you earn, and depending on your circumstances it may be reasonable to say it’s unfair. If you feel you are being unfairly worked then it’s entirely justifiable to want to work for yourself instead.
Make sure, though, that you are going to be motivated enough to set your own targets once you do.
An outside offer needs to be fully understood before going ahead
On a rare occasion, a recruiter is offered a large opportunity by a client that isn’t on their agencies books. When this happens, it’s definitely tempting to keep the offer to oneself and profit off it as a new, start-up, recruitment agency. As long as both parties understand that this will be the case, that it doesn’t contravene any existing covenants, and that you will be able to support your new business, then this can be a good idea.
Do make sure that this is the case first though, to avoid falling at the first hurdle.
Start-ups generally require hard work and outside support
Sometimes people just want a break from working for someone else, being told what to do and perhaps even being constantly monitored or faulted. It’s good to be your own business, and be able to set your own goals, but starting a new business also requires a lot of motivation, hard work and support which means that those goals aren’t always immediately realised.
We’re always here to offer our support to help your new recruitment agency get off the ground, with advice that will help you find your feet as a new recruitment agency, should you decide to tread.
Article provided by Stewart Roberts, Commercial Director at Total Back Office Solutions Limited.
