Starting a new business is always a risk. Indeed, it is estimated that 95% of businesses which are created this year will not exist in five years’ time. With that in mind, for anyone thinking of starting a business, the odds are stacked against you making a success of your business. How can you reverse the odds, so they are in your favour?
- Get your incorporation structure right. Personally, I recommend recruitment firms set up as LLPs. This is the legal structure typically used by law, accounting and consulting firms as it is designed to allow for fluidity when it comes to people having equity. At the same time, ongoing costs will be lower, due to partnerships operating on a more effective income tax structure. Finally, with the changes to dividend tax, you would need to be earning £250k+ for you to make more from dividends.
- Have a fee-earning business partner in a complimentary area. Speaking for myself, of the recruitment firms I have seen set up, excluding pure lifestyle businesses, the only ones I have seen succeed are the ones which have more than one founding director. Having a peer to bounce ideas off will give you a sounding board to ensure that your energy is focused in the right areas.
- Focus on the immediate. In the short-term quick wins will be more important than anything else, therefore, given the most finite resource you will have is your time, target winning clients where you can get fast decisions, even if the volume is lower. This may mean politely declining offers to work with bigger clients in your first year; don’t be afraid to do that if they aren’t prepared to offer you terms which protect you at this stage.
- Be prepared to innovate: for example, platforms such as Hiring Hub will mean you can get instructed on jobs outside your immediate client network straight away.
- Be ruthless with costs: for example, instead of having an office, why not invest in a membership to a private members’ club for meeting candidates and work from home the rest of the time? At the very least, for your first six months income will be at a premium, so build a disciplined budget where you link overheads to your income and only increase costs as income rises.
- Make candidates your clients. As a new business, your USP will be you. By positioning yourself as a career counsellor, where you can advise people on what their best steps are and you can build your business around having a pool of
top quality candidates, registered exclusively with you. - Invest
into your personal brand. As a recruiter, to start with you will be trading on your name first, your business name second. Therefore make sure to investinto your digital footprint, across LinkedIn, Twitter, etc, so you can get your message broadcast to a wider audience. - Take some training. Identify where your skills are most in need of a booster and get training in that area. For example, it could be you have training
on financial management so you can organise your business finances better. - Keep abreast of regulatory changes. As an example, the General Data Protection Regulation has profound implications for the recruitment industry; make sure you are on top of what regulatory changes mean, so you can keep your business compliant.
Budget for the necessary tools from the beginning. If an artist needs a canvas, in the new digital economy a recruiter now needs online access to candidate profiles and information about job flow. Vacancy Tracker will enable you to source information about when clients and targets alike post jobs online, meaning your BD is optimised. Your time is your most precious resource, so guard it closely.
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