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How to: Set up a recruitment company

recruitment entrepreneurs
​How do I set up a recruitment business?

As the economy makes a healthy rebound from its coronavirus-inflicted downturn, the recruitment industry is reinvigorated and on track to be stronger than ever. If you are experienced in recruitment and ambitious, you may be considering taking advantage of this favourable climate to set up a business. But this is no straightforward task – read on for an outline of the process and challenges you will face.

The first step to establishing your recruitment company is creating a business strategy. Camino Partners’ CEO and co-founder, Sachin Ruparelia, cites the work of author Simon Sinek as providing the framework for Camino’s business strategy. First, define ‘why’ you are creating your business. Sinek writes that inspiration’s capacity to motivate people means that creating and communicating a clear purpose is vital to successful leadership. This can be manifested through company literature such as its mission, vision and values.

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Secondly, establish the ‘how’ – what are your processes and methods? It is important to set out in your business strategy the planned direction of the company, making sure you know how you plan to grow, including increasing your workforce or potentially expanding into new markets. Consider what the milestones are to reach new stages of growth and what plans reaching those milestones should trigger. 

A crucial part of the ‘how’ is the creation of a strategic hiring model. This covers deciding who you want to hire and how. If you are seeking to hire your recruiters on a graduate model, for example, you will need L&D capacity. While you will probably want to outsource this initially for cost-effectiveness, if your business grows as planned you will eventually need to bring it in-house. You will also need to decide whether you will employ rec2rec agencies or internal recruitment to execute this plan. Vital to a well-planned hiring model are cultural considerations – you must ensure that all hires are well-suited to your chosen company culture, and that the culture itself is aligned with the ‘why’ of your business strategy.

The final stage of business strategy formulation is the ‘what’. What are your service offerings? Who are you targeting as prospective clients? Important questions to consider here include whether you will offer a singular or tiered service, and are likely to be dependent on your chosen area and other aspects of your business strategy. For example, if you are recruiting across multiple seniority levels, it would make sense to offer a different type of package for senior or executive recruitment than entry-level or junior. But if you are focusing on a single level, such as graduate recruitment, this may not necessarily be the case. Additionally, make sure to have terms of business in place to codify these offerings.

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Business strategy, however, is not the only essential foundation for your fledgling company. Before opening your doors, you must set up your finance provision. This is likely to be outsourced at first, so it is important to find a reliable bookkeeping service which can handle basic services such as invoice issuing and financial reporting. If your recruitment business is focused on the temporary market, it is crucial to make sure you have an invoice discounting facility in place prior to opening. As your business grows, you should quickly look to add capacities such as credit control and management reporting. This can be done by upgrading your outsourced finance provision or bringing finance in-house and establishing your own finance function. 

Once your business is off the ground, there will be new challenges to confront. It is key that you establish strong client relationships as quickly as possible, as without these you are unlikely to have long-term viability. This should be something you pursue in accordance with your business strategy, meaning you have a clear idea of who you are targeting and why. But while you are likely to be experienced in business development and other front-office tasks, there will be a diverse set of less obvious but vital duties that you must do if your business is to be a success. It is therefore crucial that you are comfortable in a jack-of-all trades role, covering many areas you may have limited experience in, from compliance to operations. In the short-term, at least, you are responsible for everything, right down to ordering office supplies.

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Setting up a business is one of the most challenging and ambitious things you can do. If successful, you can gain the immense satisfaction (and financial reward) of watching your company grow to maturity. Even in failure, you can take valuable lessons that can be utilised in your next challenge. With Camino Partners’ speciality in back-office hiring for the recruitment sector, we can help fulfil your strategic hiring model, and advise on who you should bring in to maximise your growth and chances of success. So when it comes to making that first hire, don’t hesitate to get in touch:

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