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How to be your own boss: Starting your own recruitment agency

If you have experience with recruitment, you might be thinking about starting your own agency. We go into why you should, and how best to do so.

Recruitment is a growing industry, and with new talent entering the job market from schools, colleges and universities, there is an ever-increasing demand for professionals to place them in the right positions. So if you’ve got some experience with this industry, should you start your own agency?

The statistics suggest that you should. According to the Recruitment and Employment Confederation (REC), the recruitment industry pulled in revenue of £32.2 billion in the 2016/2017 period. Of this, a significant amount was profit, with nearly half (47 per cent) of agencies placing people in permanent jobs pulling in profit margins of between 15 and 19 per cent.

Furthermore, this is only set to get better. REC’s figures suggest that the industry will grow by 3.8 per cent in the 2017/18 period, 3.6 per cent in 2018/19 and 2.7 per cent in 2019/20. This means it could be worth more than £3.5 billion by 2020.

So, how can you go about starting up a recruitment agency? Read on for a quick guide on the decisions you will need to make and the steps you will have to take to become your own boss and set up your own business finding professionals the best jobs, and matching companies with the right talent for their needs.

Contract or permanent?

First of all, think about whether you will focus on recruiting staff for permanent or temporary positions. The REC numbers might help here, suggesting that temp agencies averaged revenue of £380,792 per employee in 2016/2017, and contract and temp work saw an increase in value of 6%, going from £26.7 billion in 2015/16 to £28.2 billion in 2016/17. Starting out as a perm recruiter is the safer option, but the lure of contract recruitment can be very appealing for any recruiter as it offers a quick turnaround and lots of flexibility. However, jumping from perm to contract can be challenging to finance, which is where companies like Boomerang come in very useful as they can offer 100% finance and take away the risk from you completely.

Choose your niche

You don’t have to pick a niche, but you might find it is the more profitable option for you. For example, Recruitment Buzz reports that their clients are operating in the IT and technology sector generally see growth rates of between 30 and 100 per cent and are able to charge an average commission of 18 to 22 per cent. Specialising could be the route to higher revenue for you, so research your options.

Set up your tech

You would be surprised how much technology you need to set up a recruitment firm. You’ll need a website, as well as customer relationship management (CRM) software to keep track of your clients. You’ll need payroll and timesheet software if you’re planning on hiring or working in the temporary market, and accounting software could also be helpful, these will take away the burden of administration and let you concentrate on making placements and growing your business. Make sure you factor all of this into your setup costs. Speaking of which…

Finance your set-up costs

In addition to software, you’ll need insurance, potentially some office space and some marketing for your agency. If you want to take on staff, the average yearly salary for a recruiter (according to Payscale) is £25,046. You can scale all this back and run your agency from your bedroom with a phone and a laptop, but if you want to build a scalable business, then you’re going to need financing.

If you’re going down the perm route, then you might be able to fund this on your own. If you’re thinking of setting up a temp desk and you need any support, then get in touch with us. At Boomerang, we specialise in working with start-ups and established agencies, and we can provide you with a free consultation to discuss supporting your agency.

Our blogs The Importance of Communication Keeping in Touch with Your Candidate and 4 Tips to Improve Your Candidate Experience will also give you a few more tips



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