If you’re an experienced and successful recruiter, you’ve probably thought about how much more money you would be earning if you set up your own recruitment business. And although it can be a big step to take on your own and there can be significant challenges to think about, the rewards will more than outweigh the risks.
No more Big Brother
By running your own recruitment business, as well as the obvious reward of keeping much more of the money that you bill, you’ll also no longer have any pointless KPIs or targets to stick to. There’s no threshold to reach before you can start earning bonus or commission and you don’t have to make 200 calls a day even though you know only 10 of them are worth making.
And although you’ll still have to put in the hours to get the rewards, being your own boss means you can be flexible with your time and so can dictate when you put those hours in. You can go for a run first thing and not worry about being a bit late to your desk, or go and see your child’s school play without having to ask permission first.
And if you’re billing £100,000 or more, you’re probably only seeing 30-40% of that depending on your basic salary and commission scheme. But with your own business, you could be seeing more like 75% of your billings and you’ll be able to maximise your income by earning via a self-employed basis rather than PAYE.
Mitigating those challenges
Of course, there are risks associated with any new business venture and running your own recruitment business is no exception. So it’s vital to be aware of them in order that you are prepared to deal with them.
The obvious one is start-up funding and cash flow – having enough cash to get the business up and running and surviving for the first few months while you get some bills in. And whilst there are a few companies such as ourselves who can provide this, you’ll still need to ensure you have enough saved to live off for the first few months. We’d actually recommend having 6-9 months’ worth of living expenses saved before you make the leap because even if you bill within your first month, depending on the candidate’s notice period and your client terms, it could be 4-6 months before the invoice is paid.
Paperwork and admin is another issue. Any time you are not spending on the phone to develop client and candidate relationships is costing you money because you have no chance of making a placement when you are having to sort out and submit your VAT return! And there is a surprising amount of admin involved in running a business. You’ll have to deal with numerous third parties for your database, website, accountancy, marketing, business stationery, bank account etc, as well as having to chase clients for outstanding invoices.
The cultural shift from being part of a team in a buzzing office environment to working alone from home can also be a challenge. Setting up on your own requires a highly motivated mindset that will cope with the lows as well as the highs.
But if you have the right level of determination and motivation, setting up your own recruitment business will be the best thing you’ve ever done. And you can significantly reduce some of the challenges highlighted above by partnering with an organisation such as Elliot Marsh Headhunting Partners which removes the need for start-up funding (other than your own savings for income), as well as undertaking all of the paperwork side for you.
It’s really important to choose the right partner though. There are a few companies who will provide support to recruitment start-ups but be aware of some of the hidden charges and fees such as a monthly management fee which will be chargeable no matter how much or little you make. Our model is built on success-only – so we’ll only make money when our partner does!