Recruitment Business

Wk74239

I am thinking of starting a recruitment business and have a business plan made. I have a degree in business with human resources. Just wondering if this sounds like a viable business to set up. And how much of a percentage do I charge my clients etc.

Peterdalkey

Do you have any experience as a professional recruiter?

Buttercake

Anywhere between 1-100%

Surely part of your business plan will include market research for how much Recruiter A charges or Recruiter B or Recruiter C??. Recruiter A is online and charges 10%, B is face-to-face and charges 20%, C is executive recruitment and charges 40%

What are you going to offer me as a client over A,B or C? and why should I give you 15% when recruiter A who has a database of 10,000 students only charges 10%??

Its a piece of string question, If I'm going to start a window cleaning business, I will find out how much other window cleaners charge

If you know the industry you will know the going rates. If not, I would go back to the drawing board with your business plan.

Wk74239

Buttercake wrote: »

Anywhere between 1-100%

Surely part of your business plan will include market research for how much Recruiter A charges or Recruiter B or Recruiter C??. Recruiter A is online and charges 10%, B is face-to-face and charges 20%, C is executive recruitment and charges 40%

What are you going to offer me as a client over A,B or C? and why should I give you 15% when recruiter A who has a database of 10,000 students only charges 10%??

Its a piece of string question, If I'm going to start a window cleaning business, I will find out how much other window cleaners charge

If you know the industry you will know the going rates. If not, I would go back to the drawing board with your business plan.

Well I will be making a website for candidates to upload cv or apply for jobs clients come to me with. I will interview candidates and meet clients to discuss job specification and rates. The usual rate is 10-15 % of candidate annual salary. But I will charge a lower rate to get market penetration. I will have a low cost-high quality marketing strategy.

pedroeibar1

Peterdalkey wrote: »

Do you have any experience as a professional recruiter?

OP, that is the question that needs an answer. What your strategy is will be subservient to your experience (or lack thereof).

Wk74239

pedroeibar1 wrote: »

OP, that is the question that needs an answer. What your strategy is will be subservient to your experience (or lack thereof).

I have 3 years sales experience and recruitment is basically sales orientated as you have to sell your company to the client as a viable place to do business and sell your company to the candidate as an advantageous company to find employment.

Peterdalkey

you could make the same contention about most service industry businesses with equal validity, in my opinion, none.

Wk74239

Peterdalkey wrote: »

you could make the same contention about most service industry businesses with equal validity, in my opinion, none.

Well I need some helpful advice to get me started, not negative view points.

lucky john

Wk74239 wrote: »

Well I need some helpful advice to get me started, not negative view points.

I thought sales people had thicker skins than that.

Wk74239

lucky john wrote: »

I thought sales people had thicker skins than that.

Didn't say it got to me, just said some helpful advice would be more appropriate as opposed to to tell me things I already knew. I get that I have no recruitment experience but I have an honors degree in business with human resources which taught me a great deal.

Atomico

Like any business, a variety of factors will determine whether it succeeds. You sound determined so I am sure you have as good a chance as anyone. However, you are planning to go into a very competitive, possibly saturated industry with no experience or contacts in that industry - and of course the opposite is the case for your competitors.

Is there a particular reason you chose recruitment? Low barrier to entry? Is there not another area that would be a closer fit with your own experience?

Buttercake

I don't know what positive points there are, it's not an exciting industry, there are no enterprise incentives and it's highly competitive, almost I would say cut-throat industry with a lot of businesses going to the wall every year, survival of the fittest and all that. I would seriously consider working within recruitment before embarking on your venture. Plus you'll build up contacts and know the commission percentages. If you had a revolutionary idea or found a gap then I would be more positive. But just doing something for cheaper than the others as a USP is never a good thing IMO.

If it's another of those jobs4ireland4ujobs.com websites, I wish you luck.

whatnext

I have been in the industry for many years so there are a couple of pointers I'll give you to think about.

Last year I spent over 35k on advertising, between websites, press and online databases. I generate very little through our own website, despite best efforts on seo etc and two full time staff spending most of there day running it. As a company we turnover several tens of millions and have huge buying power. I would suggest the rate card equivalent of that advertising is close to 100k. Have you thought about that as a cost?

Without experience it can be tough to get "real" work on. When I pitch to a client they want references and testimonials.
Other contingent work is very hit and miss. if you are one of 5 agencies working on a requirement that means you have a 20% chance of getting paid for the work you do at best.

Have you looked into getting a licence?

Have you looked into cash flow in your business plan. rent / software / advertising are usually paid up front. especially for a start up, and most clients take 60 days to pay up, despite what any contract says.

Have you done any recruitment? Its not as straight forward as you may think. Clients don't always keep their promises, they change their minds in mid process. Not only that, but your "product" also has an opinion and is prone to changes of mind, misrepresenting the facts and themselves and even lying. The same goes for your clients to to be fair, I've yet to be told by a client that they have a dead end job that needs filling.

The one piece of advice I would give you above all is go work for a recruitment company for a year. The worst possible outcome for you is that you will get a little training, learn a few tricks and see how others operate before going to the expense of setting up a company.

The rewards can be huge, but the job is not for everyone and the only thing I can guarantee you from all those I have seen come and go over the years is that the job is nothing remotely like what it seems like from the outside.


Good luck what ever you decide to do

Wk74239

whatnext wrote: »

I have been in the industry for many years so there are a couple of pointers I'll give you to think about.

Last year I spent over 35k on advertising, between websites, press and online databases. I generate very little through our own website, despite best efforts on seo etc and two full time staff spending most of there day running it. As a company we turnover several tens of millions and have huge buying power. I would suggest the rate card equivalent of that advertising is close to 100k. Have you thought about that as a cost?

Without experience it can be tough to get "real" work on. When I pitch to a client they want references and testimonials.
Other contingent work is very hit and miss. if you are one of 5 agencies working on a requirement that means you have a 20% chance of getting paid for the work you do at best.

Have you looked into getting a licence?

Have you looked into cash flow in your business plan. rent / software / advertising are usually paid up front. especially for a start up, and most clients take 60 days to pay up, despite what any contract says.

Have you done any recruitment? Its not as straight forward as you may think. Clients don't always keep their promises, they change their minds in mid process. Not only that, but your "product" also has an opinion and is prone to changes of mind, misrepresenting the facts and themselves and even lying. The same goes for your clients to to be fair, I've yet to be told by a client that they have a dead end job that needs filling.

The one piece of advice I would give you above all is go work for a recruitment company for a year. The worst possible outcome for you is that you will get a little training, learn a few tricks and see how others operate before going to the expense of setting up a company.

The rewards can be huge, but the job is not for everyone and the only thing I can guarantee you from all those I have seen come and go over the years is that the job is nothing remotely like what it seems like from the outside.


Good luck what ever you decide to do

I'd love experience of working for a firm but it's finding that experience that's the problem, they generally ask for experience in recruitment as a minimum requirement for applying for a job.

whatnext

Wk74239 wrote: »

I'd love experience of working for a firm but it's finding that experience that's the problem, they generally ask for experience in recruitment as a minimum requirement for applying for a job.

Most recruitment companies are always looking, if you can't sell yourself to one of them this is not the game for you. How many recruiters have you met / spoken to? If its less than 50 you haven't really tried. Sending an email doesn't count. If it is more than 50 and you still have not got anywhere there is a problem, and its not everyone else.

Peterdalkey

Wk74239 wrote: »

Well I need some helpful advice to get me started, not negative view points.

I was not being negative, just realistic. It seems that I had correctly guessed from the lack of even basic industry knowledge evident from your original post, that you had no experience or expertise in the area. That you seem to think that some degree in the general area somehow makes you ready to set up in the business was also a red flag!
You were wise to post on this forum, as you have benefited from some very decent and experienced counsel. I fear little of it is what you wanted to hear.

JD Dublin

Peterdalkey wrote: »

I was not being negative, just realistic. It seems that I had correctly guessed from the lack of even basic industry knowledge evident from your original post, that you had no experience or expertise in the area. That you seem to think that some degree in the general area somehow makes you ready to set up in the business was also a red flag!
You were wise to post on this forum, as you have benefited from some very decent and experienced counsel. I fear little of it is what you wanted to hear.

The recruitment business is a tough environment, companies and candidates are heartless and ruthless when it comes to pursuing their own interests.

You need a far thicker skin than already displayed here, you will face rejection many times a day and have to pick up the phone with a smile after each and every one if you are to suceed. It is almost purely sales-orientated so if you are a good salesperson, can get people to like you quickly and are hard shelled then you will go a long way.

By way of background I worked in recruitment for a brief period, it wouldn't be my cup of tea and I salute the lads and lassies that work in recruitment every day.

As mentioned by one poster, if you gave up on the recruitment industry after the first 50 applications to become a recruiter, then you are not suitable to being in the recruitment industry. You wil need more sticking power than that.

Anyway best of luck, I hope you gained some knowledge from the advice you got there.

Atomico

JD Dublin wrote: »

The recruitment business is a tough environment, companies and candidates are heartless and ruthless when it comes to pursuing their own interests.

You need a far thicker skin than already displayed here, you will face rejection many times a day and have to pick up the phone with a smile after each and every one if you are to suceed. It is almost purely sales-orientated so if you are a good salesperson, can get people to like you quickly and are hard shelled then you will go a long way.

By way of background I worked in recruitment for a brief period, it wouldn't be my cup of tea and I salute the lads and lassies that work in recruitment every day.

As mentioned by one poster, if you gave up on the recruitment industry after the first 50 applications to become a recruiter, then you are not suitable to being in the recruitment industry. You wil need more sticking power than that.

Anyway best of luck, I hope you gained some knowledge from the advice you got there.

I had a couple of phone calls with a recruiter last week, she was the owner of the business which has been around since 2001.

To say she was all business was an understatement, she was perfectly nice and very polite and wasn't rushing things along exactly, but you could picture a Gordon Gekko-style 'time is money' clock above her head in her office.

You'd want to have a very thick skin and that ruthless business streak to survive never mind succeed in that business I think.

GabbyJay

Hate to sound negative but I agree with all the posters here. Recruitment Industry is all about the hustle. It's not a "tough" industry in the sense that it's difficult, it's tough in the sense that you need to be persistent, sharp, and savvy (your competitors and your clients will both be trying to pull the wool over your eyes).

Yes, they are skills also present in sales. Were you a good sales person? If you left your sales job because you were not good at sales, then you would also struggle with a recruitment agency.

But if your sales skills are good, you're passionate and committed, you have a good brand that looks professional, and you have a niche focus in the industry, then you have a chance.

There are also tools and tricks of the trade. How to search for candidates. How to get them on the phone. How to make them feel confident that you are worth their time. How to entice those candidates, coach them, and make sure that they show up on their first day. Even though you studied Human Resources, you would not be tuned into all the different things that the recruitment agencies are doing. If you had ever worked in a recruitment agency, even for a few months, you would be aware of a lot of these techniques already and some of them are critical to a successful recruitment business.

If you insist on going ahead, I recommend you find a partner who is an industry veteran. Ask him to help you out, you're a one-man show so you're no threat to his main business. Maybe give him a % of the company. Milk him for all his knowledge, ask him questions all the time, when you've got a big req, he might throw you a bone, some good candidates, etc., and it will make all the difference.

The previous poster who mentioned that they get very few candidates through their website, despite investing in SEO and marketing, is dead on. Forget that option. You will never make a placement from your crappy website (no offence). The only way you could make placements from your website is if your site has a strong industry focus and a reputation in that industry. For example, there is a site called Creative Ireland, a community full of creative people in Ireland (designers, etc.). The owner could request CV's from everyone with view to making placements and he would probably make a few bob out of it. But that's because he's already established with a great website that has a real purpose.

Regarding costs, aside from the marketing costs and set up / operations costs, you must consider things like LinkedIn. Your competitors have LinkedIn Recruiter accounts which cost $10k per year and allows them to see full details of everyone on LinkedIn. Job boards are also very expensive. You might want to consider outsourcing the candidate sourcing, or hiring someone with sourcing skills.

Having said all that, there are still opportunities. If you have a niche focus and build a track record with some placements at some good companies, then you can gain credibility with that. Some industries are set to boom in the coming two years, while other industries are set to collapse. If you pick the right one and hit the crest of a wave then you can ride it to prosperity. There have been times in history when everybody involved in recruitment was making lots of money. Then there have been times (e.g., 2009) when nobody was. It is nice to work for yourself, and if you keep your costs down, then you could make money even if you're just getting 1 placement every quarter.

Spiderman1975

I'd be very concerned if the best marketing tactic you can come up with is undercutting the opposition. Given your lack of experience, it's ludicrous to suggest that you've discovered a method that can run your business less than those in the business for years.