Get Funding for your Recruitment Agency

Unless you have managed to save a great deal of money through your glittering recruitment career, you are likely to require some sort of funding to establish your own agency. While there are many sources of business funding available it is important that you do not just accept any money that comes your way. There is no such thing as a free lunch, as the saying goes and your small business financing is no different. Weigh up the pros and cons for each source of funding before you say yes to make your money work for you, rather than the other way round.

Bank Funding

The first port of call for small business funding ought to be your bank. They are able to give small business loans and often lots of good advice, too. You do not have to use your own bank, especially if you still a good incentive at another bank, but it may be easier for you to secure the funds if you already have a relationship with your bank manager.

A key benefit of using a bank for funding is that you agree the repayment terms up front and it is non-negotiable. If you agree to a loan with a certain fixed interest rate, if your recruitment agency blossoms and becomes the next big thing, you will still pay the same, quite unlike the Investor Funding option.

Funding Through Friends and Family

This is an option fraught with difficulties. If you have a dream family that is keen to support you in your career, will offer you funding that they can easily afford and will defiantly not poke their noses into your business, then go for it. This, however, is not really that likely.

What is bound to happen is that you ask your family if they can afford to help you set up your business, they say when they really mean no, make judgements as to how you are spending the money and then tell you they couldn’t really afford to help you in the first place.

So, unless your friends or family fall into the first category, it is advisable that you gain funding for your new recruitment agency under your own steam.

Investor Funding

Gaining funding through an investor, whether it is a venture capitalist or a silent partner, can work wonderfully. You get to have some excellent commercial advice, financial support and quite possibly a list of networking contacts to boot. However, if your business does very well financially, your investor will take a chunk of your profits if you agreed percentage of ownership terms rather than simply paying them back, with interest. This can seem like a good idea at the beginning, but it can end up costing you far more. Think carefully before you sign away any portion of your business and keep the agreement to financial terms only.

Charitable Funding

If you are from a certain area or background, or are setting up a recruitment agency for an underprivileged location or group of potential candidates, you may be able to gain charitable funding. Organisations such as The Prince’s Trust or the National Lottery give money to worthy causes across the UK. Check out their websites to see if you are eligible. You will need to apply for their small business funding awards of which not all require paying back.