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How to start a recruitment agency business

Are you the right candidate to start a recruitment agency? Read our start-up guide to help you launch your recruitment business

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What is a recruitment business?

In layman’s terms a recruitment business, or recruitment agency, is an organisation which matches employees to employers and this can be for full-time, part-time, permanent and temporary positions.

A recruitment business will work on behalf of the client to source and place staff.

Recruitment companies are used by a wide range of businesses – from small businesses looking for temporary cover for their receptionist to big corporations with an annual intake of 1,000 people or more which can’t physically deliver that many new employees on their own.

Recruitment agencies also operate across almost every sector of the economy, from doctors and supply teachers right through to cleaners and industrial placements.

In fact, it seems the only thing clients of recruitment agencies do have in common is urgency. According to Anne Fairweather, external relations manager at industry body the Recruitment & Employment Confederation (REC), one of the main reasons clients use agencies is for speed. “They want someone as soon as possible, usually yesterday!” she says.

In the UK, the recruitment industry is “thriving” and continues to grow.

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A 2016 study from recruitment finance provider Sonovate, which analysed Companies House records, found that more than 2,926 new recruitment agencies launched in the first half of 2016; a 10% increase on 2015, while the recruitment sector as a whole has grown by 144% on 2010.

Richard Prime, co-founder of Sonovate, highlighted rising demand for the services recruitment agencies offer:

“The UK recruitment sector is thriving, and the industry’s rapid growth is showing no sign of slowing. This is good news for the economy, especially during the current climate of uncertainty following the Brexit vote.

“As wage growth continues upwards, and the war for talent intensifies, skilled recruitment professionals are able to use their industry experience and networks to source the best talent.”

What’s more, trade body REC’s analysis shows that there are now over 9,500 recruitment agencies with annual turnover of more than £250,000 operating in the UK.

What you need to know about the recruitment industry

“You can’t go into recruitment thinking it’s just a job,” says serial recruitment entrepreneur Kevyn Robins.

Robins should know: having been in the industry for nearly 14 years and having ran a number of recruitment business, he is keen to emphasise that while there is money to be made in the industry, those who want to set up a recruitment agency must be aware that in recruitment, you are dealing with people’s lives.

“At the end of the day, it’s a really big decision for say a 35 year-old or 40-year-old guy with a couple of kids. You’re saying to him, leave your job you’ve been in for five or six years, because I’ve got this great opportunity for you.”

“To build a successful recruitment business, you’ve got to care, and you’ve got to be passionate about it,” Robins warns.

And if you don’t have the passion to set up a recruitment agency, someone else will: The REC’s recent Recruitment Industry Trends Report found that the recruitment industry is worth more to the UK economy than ever before, valued at £35.1bn per year.

Clearly, then, if you’re passionate and you’re confident you can deliver results on time, there’s money to be made in the recruitment industry and it’s a pretty sustainable business opportunity as Robins highlights:

“I wouldn’t say recruitment businesses are recession-proof or credit crunch proof, but the job still needs doing.”

REC chief executive Kevin Green has also commented on the size of the market: “With near-full employment in the UK and candidate availability tightening, recruiters will play an even more important role in 2017. We predict that the industry will have grown between 2.9% and 6.9% this year.”

So, if you’re weighing up whether to set up a recruitment agency, here are the pros and cons of starting a recruitment business:

  • Huge market worth over £35bn a year and growth continues to rise, despite concerns around Brexit
  • There is money to be made; more than 9,000 recruitment agencies in the UK are generating six-figure revenues
  • It’s quite a sustainable business opportunity; businesses will always need to hire staff
  • Starting a recruitment business demands a lot of focus and commitment – remember you’re dealing with people’s lives
  • It’s a highly competitive industry; there are thousands of recruitment businesses operating in the UK so you will need to work hard to make your recruitment business stand out. Look for niche recruitment business opportunities.

Ready to get started on your recruitment business idea? Find out everything you need to know about how to start your own business here.