How do I Get My Recruitment Agency Started?

Q.

I am an IT contractor with my own LTD company, however with the current job market in peril, I wanted to see If could put my skills to use and startup a recruitment agency for IT personnel.

Do I simply advertise my LTD company to potential employers? How do I get candidates to send me their CV's so I can then put them forward to those clients who wish to do business with me?

A.

While it is a good idea to be open to new ideas at times of economic difficulty, you may want to reconsider your plans.

The Bad News

Recruitment agencies traditionally have a hard time during economic downturns as potential clients are keen to reduce their overheads. As recruitment fees are typically 10 to 20 per cent of the candidates first year annual salary, cutting recruitment agency budgets is a popular way to cut costs.

It is true to say that recruitment still occurs at such times, but it is unlikely that a new recruitment agency will flourish under such conditions. Even the major players find they need to substantially reduce their fees and many smaller agencies find cash flow problematic. This is even worse if you provide temporary employment solutions as your temps will still need paying even if your clients are slow to pay their invoices.

The Good News

However, there is no need to simply look at the glass half empty. Many companies find that they can take advantage of economic crises by adding value to their offer and responding quickly to changing market demands. When the recent banking redundancies occurred, some quick thinking recruitment consultants set themselves up in coffee shops to make sure they had access to the best financial employees just as they got their P45s.

If you have considerable knowledge of the IT sector and a bulging client list, not to mention plenty of money to help you through early-days cash flow issues, you may be able to make a go of it.

Practical Advice

You would need to gain some expert advice as to changing the nature of your LTD company and to register as an employment agency. Your local Business Link can help with this, as can the Recruitment and Employment Confederation (REC). There may even be grants and support available if you look in the right places.

You will also be able to gain information about advertising for both clients and candidates. There are a number of rules and regulations that require you to state clearly that you are an agency (you will recognise the ‘agy’ at the bottom of newspaper adverts). You will also need to have a clear Terms of Business drawn up - there are basic templates available on the Internet.

Recruitment is a rewarding and satisfying career choice, especially if you are the one taking the lions share of the fees, but do be prepared to get on the phone and work hard.