![](https://www.rec.uk.com/cache/thumbnails/b2669b160765ca9ffcbf97450aa30252.png)
![](https://www.rec.uk.com/cache/thumbnails/b2669b160765ca9ffcbf97450aa30252.png)
This intensive course provides everything you need to know to get your business off the ground. You’ll discover how to build solid foundations for your business, how to develop your brand, deep dive into understanding your client base and learn about key legislation that can affect your business.
Sponsored by giant finance+, tailored specifically for start-up to medium-sized recruitment agencies.
You are a recruiter who has a record of billing. You have undoubtedly been successful to date.
I suspect that you have been working for a recruitment organisation for a few of years.
Well, what have you learnt!
Most recruiters understand the recruitment cycle. You will also be used to dealing with clients, dealing with issues, and handling queries. During your time as a recruiter, you will have become used to quoting rates whether that is permanent or rates for contractors.
You will understand your terms and conditions and the things you need to look out for.
You may have negotiated several tenders giving you an appreciation of dealing with the minutia.
With all these activities you will have been supported, guided, and more than likely coached.
Now you are not only going to run a desk, but you are also going to run a business. The two roles are vastly different.
It seems sensible therefore to get help and assistance. Talk to an expert in the field whether that is an invoice finance company or a payroll company or a back-office support company or your bank manager or us at the REC.
During your start-up phase which can be as long as two years or when you break even for the first time. You will never forget the first time. Just a few things to note:
Take advantage of our Partnership network and the relationships we have built up.
The first year is tough and your focus should be on clients and candidates.
Decide what support you are going to need.
Have a look at our partner pages where you will see organisations that offer services to support both in the early years and as you grow and flourish
Join the REC and share our experience and knowledge of the recruitment sector.
So, you have had an idea! An idea in it itself is a huge step forward on a long road full of challenges and excitement. Key to making your business successful is your ability to adapt to changing situations. To help navigate the changing marketplace as well as to mitigate some of the risks you need to plan out your business journey, and that starts with creating a business plan and strategy.
A business plan is a dynamic blueprint of your business. It allows you to assess the feasibility of your idea before committing your time and money, it helps you plan out what and how you’re planning to achieve your goals, and it also helps you to secure funding from banks or potential investors, not to mention attract prospective partners.
Your business plan should include the following:
Executive summary
Company description
Products and services
Market analysis
Sales and marketing
Financials
Your business plan is your business roadmap, and as you progress so should your business plan – it must be a living and ever-evolving document that changes as your business grows.
You also should build a strategy plan, which shouldn’t be confused with a business plan. A strategy plan focuses on your mid-to- long-term goals and outlines the strategies for achieving them, it sets out your business priorities and the direction of where you want to take your business.
Developing your strategic planning requires you to outline:
What is your current business positioning?
Where you want to take your business?
How are you going to get there?
When creating your strategic plan you don’t need to do it alone – involve your business partner(s) or seek advice from a business mentor.
Strategic planning is about effectively positioning yourself in the current marketplace, so you may want to consider:
Conducting a SWOT (strengths, weaknesses, opportunities, threats) analysis, or
Using PESTLE (political, economic, social, technological, legal, environmental) model, or
Trying the Competitive Forces Model (Poster’s 5 Forces).
Use any framework (or a combination of) that is most suited for your purpose and needs.
Both strategy and business planning are essential for your business to survive in the initial start-up phase, and to prepare you for sustainable growth. Honest assessments, realistic planning and ownership are key in helping you making informed decisions (and take safer risks) for your business.
Discover the fundamentals of a recruitment journey with the Jump Advisory Group, from inception and initial set up to scaling and growth. Our experts share their key considerations to help set you off on the right path.
Having a strong Unique Selling Point or Unique Selling Proposition (USP) can help you define your position and give you a competitive advantage in the marketplace. USPs let you focus your energy and resources on building solutions that create value for your clients and candidates which in return could lead to developing stronger rapport with your customers and affiliations with your brand.
What job seniority and functions you’re specialising in supplying (executives, managers, office professionals, etc.)
What types of placements you’re making (permanent, temporary, fixed-term contract, etc.)
Is it your pricing strategy?
Is it your service offering?
Is it your standby service?
Is it your on-call service?
Is it experience in the sector?
Is it experience in the local area?
Is it experience nationally?
Do you have sector experienced professional individuals working for you?
Do you visit all of your clients’ premises or sites?
Do you introduce your contractors on their first day?
Do you offer on-site support to your client?
Do you offer local pay surveys to your clients?
Do you advise your clients what they should be paying?
Do you set SLA (service level agreements) up with your clients?
Do you survey your workers as to their placements?
Do you regularly conduct client reviews?
Are you a sector only specialist?
Are your operatives paid in the upper quartile for the skills they provide?
Do candidates regularly approach your organisation because of your reputation?
Do you operate any incentive schemes for your workers?
Do you take working references on your temporary workers /contractors?
Are you affiliated with a professional body that drives standards for your industry?
It’s possible that your prospective customers are having difficulties deciding which recruitment organisation to work with, so this is your opportunity to demonstrate that your company is worth their business. Your USPs should be obvious, value driven, and they should focus on providing a solution to your customers.
To demonstrate your value and your USPs, you may want to consider adding additional services for your clients.
For example, for permanent candidates ask yourself the following questions that could lead you to a new solution that can be added to your portfolio of services:
Do you offer career advice to your candidates?
Do you take a brief from your candidate as to what he/she is looking for from a recruiter?
Do you take a job brief from your client always including the MIT (most important thing)?
Do you ask for exclusivity from your candidates?
In addition, being an REC Corporate Member demonstrates your adherence to the REC Code of Professional Practice which underlines the core principles and values that all recruiters should portray when operating a compliant, ethically and socially responsible business.
More than likely that you have started on this journey by yourself (figuratively speaking).
The first years in business can be particularly challenging. You may be venturing into the unknown and may not foresee all the obstacles that lie ahead, so having someone to rely on for support and guidance, without any judgement and prejudice, is important. Consider who you are going to get advice from and more importantly support and guidance.
You will undoubtedly have a network of ex colleagues and friends that can help, but what you really need is somebody with an independent perspective to support your decision-making and help with your overall strategy and direction.
So, engaging with a Business Advisory or a Mentor could be invaluable to improving your business survivability and making a positive impact on your growth. Your trusted advisor can help you be more confident in the direction of your business, share the know-how, they can motivate and inspire you as well as challenge you to help you learn and grow.
Your training and development is key to your success at an individual level and now, as a business owner, it's vital to the growth of your business. Just because it's your business doesn't mean you have to do it alone - know your strengths and weaknesses and do not be afraid to seek help from others.
Discover more about our trusted Business Advisors and see how they can help you transform your business.
Our Business Partner Marsh outline the insurance requirements for a start-up Business, depending on whether you are supplying temporary or permanent staff.
When starting a business, keeping records of all income and expenses is important, especially as your business starts taking shape. Keeping your records up-to-date and accurate is not only a legal requirement but is essential for operating your business effectively.
Depending on the type of business you’re running (sole trader, limited company or other) will determine how you submit your company accounts to the Government for tax purposes. The information you require to submit will be based on your bank transactions, from sales to your outgoings, including any salaries you pay should you have employed any staff.
If at the initial stages you are planning on doing your own accounting, we’ve outlined a few helpful pointers that could help you get started:
Bookkeeping is part of your overarching accounting process; it could be complex and time consuming, especially as your business grows, so you may want to consider engaging with a professional business accountant that could help you save time and give you confidence that your books are being done properly.
Not sure why you need an accountant and how to choose one? Watch our video by Orange Genie for some simple tips.
As an owner of a recruitment business you have to beware of the metrics in your business.
A large proportion of the information is available on your CRM platform and you will usually have the ability to design your own reports. Spend some time generating a weekly report and then you will be able to compare your metrics over different periods of time.
You will be able to check the overall activity, whether that is new business or client calls, or CV send outs or new placements.
Most CRM systems will also give you a pipeline, whether that is for temps or perms.
While your company is bigger than just the name you choose to give it, it's a crucial element of your brand. It's likely to be the first interaction people have with your business, product or service offering.
While your brand name doesn't need to be informative or rational - otherwise we'd live in a terribly boring world filled with brands called 'We sell ____' or 'We make ___' - it does need to be memorable and distinctive. Brand familiarity, perception and reputation will be built and reinforced over a number of years, but in just a few words you can indicate your brand tone, personality and values.
How you set up your recruitment business can affect what taxes you should be paying and other legal obligations that you and/or your business will bear.
Depending on the type of business you will be running (be that a limited company, a sole trader or other) will determine what you need to do to set up your business and how you register it.
When operating your business in the UK you may also be required to pay Corporation Tax which is calculated on your annual profits (similarly to income tax for individuals).
Note: if you’re setting up as a Limited Company you MUST register with the Companies House. When registering with Companies House you can register for the Corporation Tax at the same time.
As a business, another consideration you need to make is whether over a 12-calendar month period your turnover exceeds (or you will expect it to exceed) the VAT registration threshold that is currently set at £85,000 in the UK. If yes, you are required by law to be VAT registered. Being VAT registered can also bring advantages to your business, from being able to reclaim VAT that you are being charged by other companies, to displaying your VAT registration number on your invoices or website, which can look appealing to your prospect clients.
If your company becomes VAT registered, you will be required to maintain accurate records throughout the 12-calendar month period and report any VAT returns on a quarterly or monthly basis (different rules may apply to companies with higher turnovers).
Another important thing to note is that under the Data Protection Regulations 2018 any entity that processes personal information will need to register with the ICO (the Information Commissioner's Office) and pay the data protection fees unless you may be exempt (you can check if your business may be exempt by completing the self-assessment). Be aware that organisations that don’t follow the rules and fail to pay their annual fees could be fined by the ICO; your organisation would also not be published on the Data protection public register which could cost you clients or suppliers, as many may not want to work with a non-compliant organisation.
Now you have started your business you need to determine the tools you're going to need to make it happen.
Naturally, this may change based on any personal preferences or business niche, but here are some basic requirements you will need to consider for your business to trade:
No doubt you already understand the importance of your database and means of contact (for more information, read our article on CRM here). But when looking for your service provider there are two key things to note.
A large portion of our start-ups use a VoIP (Voice over Internet Protocol, i.e., using phone through the internet, like Skype or Teams) which can offer a more flexible alternative to a fixed line. There are a number of suppliers in this market - as always shop around for both price and service.
While you know you will need a computer its worth considering what type works best for your business and your employees. Laptops and tablets are inherently more flexible, perfect for presenting to clients or making your office more agile. Although tablets may be restrictive in terms of functionality and processing for day-to-day work. Consider where you are likely to work - for example, whether you have a fixed address will indicate what will work best for you
As a start-up the key is to keep overheads low, working from home or remotely is attractive for this reason - but a shared office space on a short-term contract may enable you to network without signing up to a long-term commitment. Your working environment is important and one of the benefits of a serviced offices is you can switch off when you go home. Whatever you decide to do keep your work separate from your home life.
Wherever you decide to work from be sure, to have a comfortable set-up. You'll be spending an inordinate amount of time in front of your screen, make sure your body is getting the support it needs (namely Lumbar support - which maintains the natural curvature of your back).
While going paperless is admirable and something we should all strive towards, there will be occasions when you'll need a printer or scanner. Whether that's to scan important documents for your records (like passports scan to prove Right to Work) or handouts to encourage notetaking during client presentations.
While most of our work is stored electronically it might be an idea to have a small filing cabinet for sensitive documents like HMRC forms and VAT returns.
Company administration is a key part of setting up your company as is compliance with the regulations.
You must provide a registered office address when you set up a limited company. This is where all written communication must be sent.
If you use a third-party agent to handle your mail, you must make sure that the service includes sending all your company’s mail to your registered office address.
Companies registered in the UK needs to have a registered address. Your registered address is where you have all your official paperwork sent via the post, so it should be a permanent address that organisations such as Companies House and HMRC can send their letters and reminders to.
The Registered Office Address must also be displayed on your company letterheads and invoices.
Find out more about setting up a trading address on the government website.
When starting a recruitment business there are a number of areas to consider, and the starting point is to decide whether you will be carrying out permanent recruitment or temporary recruitment, or both - as they are very different.
Watch this film provided by REC buisness partner Brabners LLP, and check out our quick guide to the legal considerations when starting a recruitment business.
Whilst Croner understand and appreciate that your focus will be on making your business a success.
They outline what is important from the a HR perspective in terms of having the correct documentation
Recruitment supply chains have become more complex in recent years. There has been an exponential growth in intermediaries sitting between the employment business and the temporary worker. These include umbrella companies, CIS intermediaries, personal service companies and others. The important thing to focus on is what they do and how they do it, rather on what they call themselves. It is also essential to do appropriate due diligence on all intermediaries you consider engaging with.
An umbrella company is a company that employs temporary workers to carry out temporary assignments. The temporary workers regularly work through an agency for an end client. The temporary workers are typically paid PAYE as an employee of the umbrella company.
If you are considering using an umbrella company our advice at the REC is to focus on compliance and check the models that your workers are working under to ensure that there are no disguised deductions or tax avoidance schemes. Under the Conduct Regulations 2003 a Key Information Document (KID) is required to be provided to all temporary workers and the umbrella should give the correct information to the agency on pay and deductions before the contract is agreed with the worker.
REC has created a Key Information Document template that sets out essential information about the worker’s relationship with the umbrella company and your agency.
Be aware, however, that umbrella companies are not regulated. In fact, they are treated as work seekers for the purposes of the Conduct Regulations. However, the government has decided as part of its Good Work Plan to regulate umbrella companies. When conducting your due diligence before engaging with an umbrella company, you should also consider if the umbrella company is FCSA accredited, as this can give you additional assurance that the entity that you’re engaging with is compliant and is adhering to the industry’s best practice.
REC’s team of recruitment law specialists have carefully created a comprehensive library of legal model documents and contract templates available exclusively to our Corporate Members. Access the latest legal resources here..
We provide expert support to better protect your business and to help you navigate the complexities of UK recruitment legislation and compliance.
Starting and running a business comes with inherent risks, so getting the right insurance is crucial for your recruitment organisation, but what insurance you will need can vary.
Once you employ staff, legally you are only required to have Employers’ Liability (EL) insurance. However, depending on the clients you work with or sector(s) in which you operate, you may need to look into additional insurance.
For example, in certain sectors (e.g., the driving sector) you must have appropriate insurance in place for the supply of temporary workers - standard commercial insurance will not be enough. Also, check the contracts with your clients - do they require insurance over and above the cover you already have?
If yes, do you need to charge them an additional sum to cover the increased premium. Also watch out for indemnity clauses when engaging on your client's terms. We recommend that you do not agree to indemnify a client without first checking that your insurer. Again, you may need to charge an additional sum if you have to increase your insurance to cover an indemnity.
Some of the other insurances that you may want to consider (not exhaustive list) are:
Public liability (PL) insurance
Building and contents insurance (can be tailored to include portable equipment)
Professional indemnity (PI) insurance
Cyber liability insurance
Legal expenses insurance
Our Business Partner Marsh outline the insurance requirements for a start-up Business, depending on whether you are supplying temporary or permanent staff.
The recruitment industry is a tough market - when you're dealing in time and talent, margins are slim. In terms of market opportunities these are many and varied. It is worth remembering that your clients are likely to get between three and five canvas calls a week chasing new business.
The highest rewards tend to come from operating in a niche market. However, it is likely your first market opportunity will be in your local market. This will give you the opportunity to visit your potential clients and develop relationships. It also gives you an opportunity to develop and test your service offering.
Remember, you should always talk to your local market before you approach the bigger multiples.
In the majority of cases, particularly with national organisations, your clients will give you a pricing steer. But remember: your charge rates are down to your organisation and the service(s) you offer. Make sure you know your walkaway points so your non-negotiables are clear from the outset.
To help you understand what is and isn't an opportunity, we've pulled together some market benchmarks.
Expect whatever margin you've calculated to only decrease when working with national organisations.
Big companies come with big processes meant to drive cost efficiencies like a Preferred Supplier List, SLA agreements (to determine the scope of work therefore discouraging anything that falls outside of this) or a Balanced Scorecard (a management system that reviews every facet of the service as well as price).
As such national organisations tend to dictate, not steer, pricing. This is even true for temp/contract arrangements - to ensure uniformity of pay. With that in mind, during your start-up phase it might not be worth chasing this type of business: whatever slim margin you have is likely to have been reduced even further in exchange for an even higher service commitment.
During the start-up phase you'll be keen to drive your revenue line - but whenever engaging with a new client you need to be clear as to the type of business you're winning and what it'll mean for your organisation.
In our digital world, having an online presence can have a huge impact on the success of your recruitment business.
Some companies choose to not set up a website in the early stages of operating due to the challenges involved in SEO (Search Engine Optimisation), achieving a good search engine ranking and being unable to compete and rise above larger, more established organisations.
However, having a website boosts your credibility as a legitimate business, and as a start-up first impressions matter. Simply focusing on cold calling or emailing prospects without a website could damage trust with your customers as well as undermine your brand.
A website is a tool that can help you generate organic traffic in a cost-effective way through optimising your job boards and capturing visitor information which can support the expansion of your customer pools. It becomes a valuable part of your lead funnel and an important part of your brand identity.
Building a website can be inexpensive and as your business grows you can extend the functionality on your website. Simplicity is key – keep it clean, professional and easy to navigate.
Investing in creating a website for your business will save you time, money and resources in the long run. The data you capture and analyse will help establish trends and patterns which can in turn inform your strategy and allow you to make more informed decisions to drive your business forward.
In an industry built on people – your CRM system is your business.
In short – yes. Manually handling data is inefficient and if you want your business to grow, you need a solution that can help you organise, analyse and manage data; it will allow you to streamline your processes, create meaningful user journeys and allow you to focus on building rapport with customers and making sales.
Your CRM (Customer Relationship Management) database is key to engaging with your client and candidate base. Technology is an enabler so use it to your advantage by creating simple automation processes to send timely communications to your contacts, you can nurture your existing relationships and use the created time to generate business retention.
When doing your research on which CRM system will be best for your business it’s good to consider whether the system you choose is scalable and will continue to serve its purpose as your business grows. You don’t want to invest in a system that quickly becomes redundant. Although in the early days of your recruitment journey, your CRM system is a tangible measure of your value and therefore crucial for potential buyers in the future.
A good CRM system should control your internal processes. One of the key functions of your CRM is to help automate and execute recurring tasks and processes to make your business more efficient and effective, not to mention to minimise costs. Depending on the provider you can build in functionality like a built-in pipeline for your permanent division, a gross margin calculator so your temporary division can track their margins or payroll.
Before engaging with CRM companies, determine the priorities for your business. What do you want your CRM system to deliver? Once you’ve established this you’ll be able to determine the mandatories and measure of success while you shop around.
At its most basic you’ll need something intuitive and easy to use, you’ll want the migration to be as seamless as possible. A number of providers offer free trials which can help you put theory into practise. Many also offer add-ons that you can use to enhance your services as your business grows.
Here’s a list of some of the features that you should look out for when selecting a CRM system:
Automation – tools that allow you to automate tasks like sourcing, scheduling, mass email distribution and so on. Think of administrative tasks that take up most of your time and seek a solution that can help you automate them to reduce the burden.
User management – tools like ATS (applicant tracking system) which can help you source, organise and contact candidates, as well as onboard and manage new and existing clients.
Analytics – dashboards and report functionality is a must, as you need to understand the efficiency of your processes and identify areas for improvement (e.g. how long does it take to fill a position or your cost per hire).
Easy integration capability – as your business grows you may require different tools of functionality to support your clients, having a system that can easily integrate with other software or you can include add-ons can significantly improve your capabilities (e.g., project management tools).
Intuitive UI (user interface) – the system that you will be using should not be complex and require you to spend hours with a specialist to decipher how to get most value from your data. It should be easy to use and navigate.
Marketing tools – you may want to consider if the system can create and schedule marketing campaigns or emails to clients and candidates (e.g., when recruiting for a new position email a list of pre-selected candidates).
You are thinking about starting your own recruitment business in the UK, but you don’t know if the time is right or if the conditions are favourable. Let me start by saying that if you think like this, it will never be the right time to do it. To put this into a perspective, last year 1,843 companies were founded every day, that makes 77 start-ups every hour. SME businesses make up 99.9% of the total of 5.9 million companies in the UK (Office of National Statistics).
The reality is that many of the new businesses will not make it through the first three years. Of all small businesses 80% will make it through their first year of operation and that number goes down in half over the next two years (40%).
Looking at the data, there is usually more than one reason why this happens but according to research (CBInsights) the main reason (42%) is that there is no market need. Meaning that 2 in 5 cases start-ups fail to acknowledge the macro-economic conditions.
Understanding the macro-economic context will provide you with a useful indication of labour market activity, which is a key part of understanding the demand for workers, as well as how organisation plan to retain and develop their staff. Being aware of these interrelated factors and developments will allow you to adapt to changes with greater agility.
Finding the right information and monitoring development within the labour market and the economy will be key if you want to increase your chance of success. The official statistics in the UK are mostly published by the Office of National Statistics (ONS) but you should remember that most of them are backwords-looking, indicating past performance. Other reputable sources included the Confederation of British Industry (CBI), the British Chamber of Commerce (BCC) – look for a local chamber of commerce as they could provide you with a more targeted insight to your specific geography. The most influential forecasts that accompanies the government’s annual Budget are the Bank or England Monetary Policy Report, and the Office for Budget Responsibility’s Economic and Fiscal Outlook.
These all present you with great opportunity to understand the economic outlook within the UK. To succeed as a recruitment business, the Recruitment and Employment Confederation (REC) offers an unparallel support and resources to all our 3,200 members, or 80% of the UK’s £38.9 billion industry by turnover, and 11,500 individual recruiters.
The REC’s research is a renowned source of labour market intelligence used by recruitment businesses, Government, and other organisations across the UK. Alongside our partners, we produce three pieces of research on a monthly basis:
KPMG and REC UK Reports on Jobs – surveys 400 recruitment businesses on what has happened in the month just gone and is therefore used as a lead indicator on the labour market activity, demand and worker availability.
JobsOutlook – our monthly research into employers and their perception of the economic outlook and their hiring intentions.
Jobs Recovery Tracker - monitors job postings and provides valuable insight into demand for workers in across the UK.
Please note that the contents on this page is generic and it is not a substitute for detailed legal advice on related issues that arise and should not be taken as providing specific legal advice on any of the topics discussed.