Supporting recruitment businesses in a changing landscape: navigating challenges and unlocking growth

This is a guest blog from Roger Brown, Head of UK Partnerships at REC business partner Bibby Financial Services. 

As we close the chapter on 2024, we reflect on another turbulent and challenging year for businesses in general, and recruitment businesses in particular. The year began under a cloud of uncertainty, with the business community anticipating political and economic changes post the mid-year election. In our previous blog, we spoke about the cautious optimism that followed the election and how business strategies were adapting. We take a further look now at the challenges and opportunities facing the sector as we approach 2025. 

Even before the budget announcement, October's PMI data underscored the emerging challenges, showing a reduction in staffing levels for the first time since last year. This contraction, largely due to budget constraints and difficulties replacing voluntary leavers, sets a sobering tone as we head into a new year.  

The recent Autumn budget brought with it significant policy changes and cost implications for businesses, including adjustments to National Insurance and enhanced employee protections, which are set to reshape hiring practices and risk further labour market contraction. Insights from the S&P Global UK Business Outlook Survey reveal that businesses had already voiced concerns about these anticipated changes, fearing higher operational costs and reduced hiring capabilities. In our recent SME Confidence Tracker survey of 1000 SMEs,  87% of respondents  identified tax incentives as the most critical issue for the government to address to support them. However, instead of receiving the relief they hoped for, businesses now face higher costs. 

These headwinds highlight the need for recruitment strategies that are resilient and adaptable to evolving conditions. The undoubted challenges could suppress recruitment activity for some, but they also create an opportunity. Those providing specialist support and staffing solutions have a unique ability to step in and deliver tailored services to support clients. By offering expertise and flexibility, they can greatly assist businesses in hiring the right people for key roles. 

In this context, 2025 will require recruitment businesses to navigate potentially increased operational costs within their own businesses and a current and future client base who are also looking to drive cost and hiring efficiency. They will need to evaluate cost structures carefully to remain agile and competitive in this changing landscape. To support the pressures faced by their clients, some may also need to consider offering credit terms for the first time or respond to customer requests for longer payment periods, which could add further cost pressure.  

Partnering with a funding provider that can help manage cash flow effectively will be key to unlocking opportunities and sustaining momentum. Bibby Financial Services (BFS) has been dedicated to enabling growth in the recruitment sector for over four decades, providing tailored financial solutions. As businesses face cost pressures, external funding—such as Invoice Finance—could be key to maintaining a stable cash flow and unlocking growth. By releasing working capital tied up in invoices, you can use what you have already earned more quickly, rather than take on additional debt. Representing around one in ten of our total client base, the recruitment sector is a key focus for BFS, reflecting our commitment and expertise in meeting the sector’s unique needs.  

As we approach 2025, there are reasons to be cheerful. The UK economy remains resilient and interest rates are expected to stabilise at a base rate of 3–4%, creating a more predictable financial environment. With the right strategies and financial support, recruitment businesses can position themselves to succeed next year. BFS is ready to help businesses in the sector unlock their potential and achieve sustainable growth.