How To Start A Recruitment Agency

On Friday 29th June 2012, two days before my 30th birthday I quit my job as a Senior Recruitment Consultant working for a small media recruitment agency. By 5:30pm I was celebrating the start of Media Square Recruitment - my own recruitment consultancy. It was the best feeling ever and a day I’ll never forget as it was just the beginning to an amazing journey, which spanned 6 years and changed my life forever. 

It’s challenging but can be a very rewarding endeavour. There are a few things you’ll need to consider before handing your notice in so here's a few tips from us on how to start a recruitment agency… 

Why Start a Recruitment Agency in the UK?

The UK recruitment market is looking like it’s about to pick up again. We’ve had our 12-18 month lull and businesses are starting to look for top talent again in larger volumes, and with that brings a rise in the demand for more specialised recruiters. By starting your own agency, you can:

1) Be your own boss: Set your own hours, choose your clients, and build a business that reflects your values.

2) Tap into a lucrative market: The recruitment industry offers significant earning potential for those who can deliver results.

3) Make a real difference: Help people find their dream jobs and connect businesses with the talent they need to succeed.

Make Sure You're Ready

It can look very sexy watching your director swan around the office, telling people what to do, going out on fancy director & client lunches, living in a nice house with a luxurious car but it takes a huge amount of work and a certain type of personality to get there and most people don't even reach that level. Make sure you have the necessary knowledge and skills for it - I'd expect someone to be in the industry for a good few years before considering going on their own.

Managing an agency is a challenging task and preparation is key. It's not just about recruitment but also managing a business and the boring parts that go with that.

And to anyone who is considering starting up your own recruitment agency without any experience - don't! I've never seen it work. You need to learn the market & industry first by working for someone else.

Check Your Current Employment Contract

You don't want any nasty surprises when it comes to handing in your notice and telling your boss that you're starting your own agency. Personally I had a bad experience in this situation when I started my own recruitment agency back in 2012. Chances are they may ask you to leave the office immediately and put you on gardening leave for that month, you may also have restrictive covenants and they will probably tell you not to contact any current clients. This whole area is very murky so I'd recommend speaking with a professional & qualified solicitor such as Barry Cullen.

Finances & Investment

You’re going to need some money! You probably won’t physically see any money for the first 3 months of the business so you’ll need enough money to get you through the first few months at least. For example, say you make your first placement within a month, the candidate has a month notice period so you invoice at the start of month 2, then your invoice is paid (if you’re lucky) 30 days after the candidate starts - at the 3 month point. Consider how much you will need for business costs, as well as food, rent, entertainment, etc. 

As a sidenote there are several recruitment investment firms who take a share of your profits or company equity in exchange for monetary support in the first 6 months, along with back office support too.

Back-up Credit Card

Plays into the above point but I’d recommend getting a credit card while still working in your current role. You can use this as a last resort for living expenses if your finances run dry while waiting on invoices to come in. 

Choose Your Niche

To be frank this should be the niche that you’ve spent the last few years recruiting in. I wouldn’t recommend starting your own agency AND moving into a brand new niche at the same time. It’s possible but you’re making it a whole lot harder than it needs to be. 

Recruitment Agency Type

Once again I'd stick to what you know at first. For example if you've been a temp consultant for the past 5 years don't just switch into the perm market. It's not the time to be doing silly things like that.

1) Temporary recruitment: temp recruitment is all about finding the right people, very quickly for contract roles, which could be a week to several months and even longer in some cases. It's about building up your book of agency workers and maintaining it. The hard part is building it up.

2) Permanent recruitment: this was my area. It's a lot slower when compared to temp recruitment and I think it's more consultative. Every month you're starting from £0 on the board, which can be tough but it suited me well.

3) Executive search: real search in my eyes is very different to standard recruitment. I've worked on a couple of C-suite roles in my time. It's a very different ball game. The market you're speaking with is a lot smaller, most people are open to a conversation at least, your reputation is everything, confidentiality is a must, the fees are bigger and you need to do a lot of background research on your candidates.

4) Volume recruitment: normally reserved for areas such as construction or warehouse recruitment. Maybe a construction firm wins several new contracts and needs a hundred staff for a site within the next month or so. Or maybe warehouses are gearing up for the Christmas rush so need more staff to deal with the extra work. It's a lot of advertising and sifting through applications quickly.

Build Client & Candidate Relationships

Before you leave your current role you’re going to need to invest real time building & cultivating relationships with current & potential clients by networking and attending industry events, commenting on their LinkedIn posts, etc. This will put you in a better position when you do finally reach out for the first time as a director of your own agency. 

Conduct Market Research

Before starting your own recruitment agency, you need to conduct market research to determine the viability of your business idea. To be honest you should be launching in the same niche you’re recruiting for but ensure you identify & map out the current demand in your market, the general economy over the next 6 months, your target clients & candidates, your competitors, industry events & awards, membership organisations, etc.

Another Founder?

It’s certainly possible to start your own recruitment agency by yourself but it’s so much easier with a partner. It’s great to have someone to bounce off in the early stages, someone who keeps you going and someone who can support the business financially if you have a bad couple of months. 

Create A Business Plan

This is your roadmap to success. Your business plan should outline your company’s goals, values, marketing, overall strategy, how your company is unique, SWOT analysis, financial projections, and staffing requirements. Don't forget to factor in legal requirements and insurance. Set clear objectives along the timeline of the business. It should also include a plan for obtaining funding if necessary or looking for an exit 5-10 years down the line but remember this is rare in recruitment.

Legal Documents

I would always advise speaking with a qualified solicitor when it comes to writing legal documents for your recruitment business. You'll definitely need a set of terms of business, a website privacy policy and potentially an employment contract after 6-12 months. There are companies out there who offer of the shelf solutions and of course Chat-GPT & Gemini can help with drafting them but they'll likely be full of loopholes and potentially reference American employment law.

Branding, Logo & Name

What’s the name of your new venture? Put together some ideas that reflect you as a person and how you want your agency to be perceived. Run these ideas past family & friends to get their take on them. You’ll also need a logo for your business. When money is tight, a good place to start would be a site such as Fiverr, where you can normally get a logo for around £30. A high-quality recruitment website is essential for attracting clients and candidates and you'll see a 10x return on investment if you choose a great recruitment web developer who knows what they're doing.

Domain Checker

Once you’ve chosen a name check that the web domain for that name is available and if it is, purchase it. There are dozens of free tools to check that it’s available. Most companies will offer a huge discount for the first year then charge you around £10-£20 for the domain per year. If you’re solely operating in the UK I’d recommend a co.uk domain but there’s not a huge difference these days. A .com will be a lot more expensive and are normally reserved for international businesses. 

If you're struggling with this then we offer start-up recruitment websites, which include domain registration, email set up, hosting, security & storage all for just £109/month.

Register Your Business

You’ll need to register your recruitment agency with Companies House (https://www.gov.uk/limited-company-formation/register-your-company). It will probably be registered as a private limited business. The process will take an hour or two in total. There will be a registration fee of £12. It will take a week or so to receive all the paperwork through the post. Your domain name can be different to your registered company name. 

Start A Business Bank Account

You’ll need a specific business account for your business. All the major high street banks and online banks should offer a business account. You will need the paperwork from incorporating your business before starting this process, along with passport, proof of address, etc. Once again this will take an hour or two to complete. 

What Are Your Costs?

Companies House registration, accounting software, an accountant, LinkedIn, domain hosting & storage, website build, Office 365, Google Workspace, CRM, digital advertising, VOIP system, hardware such as a laptop, mouse, keyboard, etc. I’d recommend not purchasing office space at the beginning and just working from home for the first few months. These are all costs you’ll need to consider as ongoing costs from the outset of the business. 

Investing In Recruitment Technology

You will need to put time aside to research the more appropriate and cost effective software in the above areas, as well as learning how to use that tech. Ensure you have your business account already set up as you’ll need to purchase these items through your business account, not your personal account. You'll probably need tools such as a recruitment CRM, maybe a VOIP system or virtual telephone number (looks more professional than a mobile number), LinkedIn, Apollo, Mailchimp / SendGrid, video interviewing software, etc.

Client & Candidate Database & CRM

You’ll need to migrate all of your contacts from LinkedIn into your new recruitment CRM system. This is going to be a very time consuming activity but a lot of systems offer an integration to make this easier. 

Networking

Attend industry events (both within recruitment and specifically your niche), connect with potential clients on LinkedIn, comment on their posts, and build relationships with recruitment partners, candidates and hiring managers. There are also lots of recruitment communities out there that can give you so much in the way of peer support and business advice. Your network is your most valuable asset!

Marketing Your Recruitment Agency

You’re going to need to create a website, social media accounts, pitch deck, and other marketing materials to promote your agency and services.

Abstraction Labs can certainly help out with building your new recruitment website or you can consider cheaper and lower quality services such as template website builders or a WordPress website. 

There's also lot of free recruitment marketing tools out there that can help you get up and running quickly. Stay active on social media but don't let it distract from bringing in the revenue.

And what about job advertising? Which job boards are you planning on using? How much do they cost? Are there contracts? How does it all work?

Maintain Professionalism

There’s a big step up from senior/managing consultant to recruitment agency owner. All telephone, marketing & email communication will need to be a lot more professional and take into the consideration the legal implications of all communication with clients & candidates. You’re responsible now for yourself, your agency and all of your employees. Might also be worth looking into insurance for the business. 

Offices

I’d recommend working from home for the first few months of the business for several reasons, including saving on costs, making sure the business is viable before tying yourself to any long term contracts. Also you just don’t really need it so much these days with the rise of video calls, etc. If you do choose to rent an office then there are several shared office spaces these days, which can be a great start before getting your own office space. 

Monitoring Business Performance & Growth

Keep and analyse the data on all areas of the business, which industries are seeing the most growth, which level of seniority do you have the most success with, where are your biggest profit margins, which clients bring in the most revenue, which are the most profitable areas to expand into or build upon, ratio of work to profits generated, etc. 

Build Your Team

Around the 6-12 month point you should feel as though you’re in a position to hire recruiters who have experience in your niche. I’d recommend focusing on hiring consultants with recruitment experience for the first few hires, it’s a massive time saver trust me. 

Your Recruitment Website: The Key to Success

Your website is your virtual storefront, so make it count. A well-designed recruitment website should:

1) Showcase your expertise: Highlight your niche, industry knowledge, and track record.

2) Be user-friendly: Easy navigation and a clear call to action for both clients and candidates.

3) Be mobile-responsive: Ensure a seamless experience on all devices.

4) Be SEO optimised: Rank higher in search results for relevant keywords.

5) Integrate with your ATS/CRM: Streamline your recruitment process.

Need Help Building Your Recruitment Website?

At Abstraction Labs, we specialise in creating stunning recruitment websites that deliver results. Our team of experts can help you create a website that:

1) Attracts top talent: Showcase your employer brand and culture to attract the best candidates.

2) Generates leads: Convert website visitors into clients with effective lead capture forms.

3) Improves SEO: Optimize your website for relevant keywords to increase visibility.

4) Drives traffic: Implement effective SEO and content marketing strategies to attract more visitors.

Conclusion

Starting a recruitment agency requires a lot of hard work and dedication, but if you’re passionate about helping people find jobs, it can be a rewarding and lucrative business.

If you would like help with your recruitment website or just have any general questions then you can call us on 020 7205 4515 or by using the contact form!