I fell in love with the recruitment industry the minute I set foot in it back in the 1980s and coming from the harsh world of door-to-door sales and other roles in the direct sales industry, working in the recruiting industry was a dream – people actually wanted to talk to me and I gained a tremendous amount of satisfaction from finding a candidate a job or filling a hiring requirement for a company.
In the early 1990s, I started my own technology recruiting company and established an office in South London, before growing and expanding the company all over the world.
How to start a recruitment agency
It is an industry that anyone can join and there are no real barriers to entry other than establishing a company and obtaining a license if you need one. You will also need to think about the various insurances you will require and it will certainly pay you dividends to join the Recruitment and Employment Confederation as there is a huge amount of resources available to help and support you.
You will also need to decide on what type of recruitment service(s) you want to provide to your clients.
Finally, it will make life a lot easier if you have some form of specialist recruitment software, rather than two boxes of cards on your desk when I first started – one for your clients and one for candidates!
Now that we have that out of the way, let’s get straight into my tips for starting a recruitment agency in the UK and I am aiming this at the experienced recruiter who wants to take the next step and start your own business, but if you have a sales background and really want to ‘jump in,’ it is possible, but you will need to get some training and I would strongly suggest you join an established agency first and make sure you learn the trade first hand and that it is for you.
#1 – Make Sure Your Are Crystal Clear On Your Purpose
Recruiting has come a long way since I started and I went through three recessions that severely tested the mental and financial strength of myself and my company, but I never ever forgot the purpose of what I needed to do and no, it is not simply placing candidates by filling jobs for your clients – it was to save candidates and companies time and money by providing a fast, efficient, professional and more importantly an ethical service.
Pay particular attention to the word ‘ethical‘ as there are a lot of bad recruiting agency practices out there that give the good recruiters a bad name and also the employers don’t get out of this either, because some of them are guilty too, of recruiting bad practices, but you must focus on your side first and simply be aware of the other.
Client companies are seeing the effects of automation in the form of lower prices, so on this side of things they love it…but there is a ‘trade-off’ and it doesn’t always lead to better overall customer experience.
You may think that all of the technology that is available will enhance your purpose and on the face of it, it will…but…it has also brought a sense of laziness to the industry, with people now over-using technology and forgetting the next tip that I am going to outline, which will give you the chance to differentiate massively…
#2 – Maximize The Human Touch
The fastest route to market from a standing start is to pick up the phone! It is that simple and in today’s world of email, instant and Social Media messaging, there is a serious lack of good old-fashioned calling!
Make sure that you make your phone your friend and use it. I used to have concentrated blocks of calling, then a short break and I am talking 10 to 15 minutes at the most and that included lunch. It is simple – the more people you talk to, the more chances you have for success and when you are going it alone, you need to make the maximum impact in the shortest possible time.
With the amount of calling you will be doing, it is only a matter of time before you will get appointments to meet your candidates and clients and you should meet as many as possible, where possible. This again is a step that is being avoided by so many because, in my opinion, the industry is becoming more ‘technology focussed,’ rather than sales. Also, take advantage of technology and use Skype or whatever to at least communicate visually.
The human touch will give you a huge advantage, but you have to be consistent and not give up early on say the calling process, just because you are not enjoying immediate success.
#3 – Make A Realistic Plan And Set Realistic Goals
You have taken the decision to go it alone and you must be acutely aware that many businesses including recruitment agencies do not make it, so it is vital to look at business planning, but make sure you have a laser focus on the number of sales (placements) you will make and be conservative as to when the cash will flow!
When I started operating from my living room in a two-bedroom apartment in London, I lived off a credit card and gave myself 12 weeks to invoice my first deal and projected the income for that deal to arrive in month 5. It was way out in terms of my sales ability and performance, but I was starting a new company and I couldn’t spend all my time selling as I had other issues such as doing all of the administration, keeping track of my expenses and in those days, my biggest expense was my phone bill!
Make a worst-case plan and ensure that you have adequate finance in place to support it. On the subject of finance, make sure you investigate all of the recruitment finance options out there – in my day it was very difficult to get finance, but things have changed and this will be essential if you are placing contract or temporary workers.
Finally, you are going to have to decide what you are going to charge and this is a decision you will have to make at the agency fees are so varied and I remember my target operating margin was 20% and for many years I held that margin. Nothing ever remains the same of course and over time it became seriously eroded, especially in the US, where there were so many legal and compliance issues that margin erosion became the norm at least in my sector.
Remember that people only buy ‘perceived value’ and that means if the service you provide is proven to be of value, the price does not really become an issue unless the pricing structure has been dictated to you by your clients, which became more and more the norm over the years in my experience.
Niche sectors command higher pricing and that is why they are good to operate in.
#4 – Start The Sales Process By Finding A Good Candidate
My absolute preferred method of selling in the recruitment sector is to market candidates. This is exactly how I was taught many years ago and a process that I refined over the years and would still use myself if I were starting an agency today.
I will outline the process as I did it, so you get the idea. There was no Linked-in in my day and finding good candidates was a serious challenge and it was done by good old-fashioned networking. Today, people are bombarded by recruiters on a daily basis and when you add the bad agency practices to the mix, it is no surprise that the industry gets a bad name.
My approach was to network as you would expect, but I refined my approach to the candidates by explaining that I wanted to work with the top 20% of candidates in their respective fields and represent those candidates at the highest level to the companies that could use, develop and challenge their skills.
It was, in a way, reverse marketing as you will see in my next tip detailing how to approach the companies. By taking this approach, I was forced to spend more time with the candidates and that was a good thing because I really got to know them and had some of them working for me for a very long time. Today, it seems that the candidates in the worst cases are viewed as ‘commodities’ simply to facilitate deals for recruiters – I heard this a lot in the US for example.
The goal is to find the right candidates, find out what drives and motivates them and trust me it goes far beyond money and then to represent those candidates to the right companies with a personal, human approach.
#5 – Now Do Your Job By Finding One For Them!
Now I had a selection of candidates, my next task was to make contact with the companies, and here is where I differentiated once again. My approach was to research the hell out of my industry, what drives it, where it has come from, and where it is going.
This allowed me to gain a lot of information, which I would turn into intelligence – anyone can simply gain information, but ‘intelligence’ is turning that information into $$$.
I would call marketing departments, analyze reports and financial information, and basically think like an investor. I am not going to break tradition with this article and not mention the word hedge-fund – you have to think like a hedge fund manager and that means thinking ahead. I never wanted to scramble around trying to make deals by fighting the enormous competition. I wanted to set myself apart by my thinking, the recruiting strategies I developed, and really solving client problems through a deep understanding of their business and by working in anticipation. In my thinking, when you put out a vacancy it is already too late from the recruitment perspective as every recruiter will jump all over it. I was looking for the opportunities down the line.
My approach also had two other effects – it would create opportunities as clients would literally find slots for exceptional talent and because many liked my approach, they would also give me a list of their current vacancies so it was a huge win!
Now to make the approach, I literally tried to contact the CEO – well there is nothing better than starting at the top, but I targetted specifically the Executive Assistant and my approach was usually a well-drafted and personal email, explaining that I had researched their company, identified their pain points and had amassed a specialist talent pool to help them. I also explained that in the first instance, I liked to contact the companies at the highest level, hence my approach and then ask for direction to the various heads of business functions because I wanted to understand their problems more deeply and I had made a commitment to the candidates that I would represent them at the highest level.
I never actually got to a CEO, but I did get to the Boardrooms and met with some very senior executives who simply loved the approach.
Think about this and don’t be put off when people tell you that CEOs and the Executive Leadership team are not interested in your level of recruiting and they most certainly are – people make companies and by working with the top 20%, you are making a real difference.
With a well-thought and structured approach, you will have success and it will set you apart from your competition and when you are starting out, you can adopt this approach from the start and perfect it in your own way.
The worst-case scenario with this approach is that you get pushed down to where you would have been if you had gone straight to the hiring managers, but remember, this is the worst-case and only happened to me on a few occasions…but it is far better to be introduced from the top than to try to make a cold call from the start.
#6 – Now It Is Time To Scale
As you start to perfect the approach a load of wonderful things will be happening:
- You will be growing your network at the highest level
- You will be working with the top 20% of candidates
- You will be building valuable relationships and gain valuable information before your competition gets it
- You will be working ‘ahead’ and be out of the daily ‘vacancy scramble’
- You will be attracting attention which is only a good thing
- You will be building a high-value reputation
Because this is all based on your own efforts, you will have a fantastic sense of control and now you can look to make your first hire if you are a one-person operation or add to your staff if not.
I had the best success in hiring trainees who demonstrated passion, hunger, drive, determination, and showed a willingness to learn.
You have built your own system and it will be yours, so it is therefore easy to train someone to replicate it.
What you are trying to do is to humanize the whole process to give the best customer experience, but to augment the human aspects with state-of-the-art technology.
Technology must definitely be used, but as a support mechanism as far as I am concerned and where the industry sits today.
Certainly, I can envisage a day where AI does everything, but we are a long way off that today – remember machines are not good at emotion, creativity and non-repetitive tasks, so make the most of the ‘human factor’ while we still can!
- 7 Things to consider before starting your own business (can you do it)
- How to start a business in the UK (Steps to starting your business)
Last modified: May 29, 2020