Starting a recruitment company, need advice

[harrybuk]

Hello everyone,

I have decided to try to start a small business for myself as a small time recruitment consultant (perm only). I am a complete and utter beginner to starting and running my own business, but I have some experience in recruitment.

I have two questions, I appreciete helpful answers, or links to useful resources!

1. what are the usual terms and conditions that consultants offer to clients in terms of employee termination? I.e, 50% back if they leave within a month or free candidate replacement search?

2. What are the best ways to resource for candidates... i.e which job boards to advertise on?

Thanks very much indeed?

 

[Richie N]

Hello everyone,

I have decided to try to start a small business for myself as a small time recruitment consultant (perm only). I am a complete and utter beginner to starting and running my own business, but I have some experience in recruitment.

I have two questions, I appreciete helpful answers, or links to useful resources!

1. what are the usual terms and conditions that consultants offer to clients in terms of employee termination? I.e, 50% back if they leave within a month or free candidate replacement search?

2. What are the best ways to resource for candidates... i.e which job boards to advertise on?

Thanks very much indeed?

If you don't know the answer to these two basic questions then I think you are best off not starting your own agency.

 

[harrybuk]

If you don't know the answer to these two basic questions then I think you are best off not starting your own agency.

if you are going to give discouraging responses like that, then you are probably better off not posting on this forum.

 

[Richie N]

if you are going to give discouraging responses like that, then you are probably better off not posting on this forum.

It's the truth. Sorry if you only want to hear what you want to hear but i've been in recruitment 15 years, I have qualifications and have trained in this industry.
If you don't know the answers to these very basic questions then you shouldn't start an agency, this is my opinion and this is what a forum is about. If you can't handle it then why post in the first place.

Get a job in an agency, learn what you need to learn then set up an agency.
It's start ups like this that give the industry a bad name when they know nothing about the job. It's a tough job as it is these days.

 

[harrybuk]

Well as a matter of fact I have a pretty good idea about most aspects of recruitment as I have been using them for a long time and worked a small time with Reed. It is really these two questions that I am not too sure about. I don't intend to run a large agency on a high street. Just a small family run operation.

I was not asking for your opinion as to whether I am suitable for doing something like this, I will learn from my own mistakes thank you very much. So please don't bother responding unless you intend to actually kindly answer my questions or at least show a bit of encouragment. Thank you

 

[Richie N]

Well as a matter of fact I have a pretty good idea about most aspects of recruitment as I have been using them for a long time and worked a small time with Reed. It is really these two questions that I am not too sure about. I don't intend to run a large agency on a high street. Just a small family run operation.

I was not asking for your opinion as to whether I am suitable for doing something like this, I will learn from my own mistakes thank you very much. So please don't bother responding unless you intend to actually kindly answer my questions or at least show a bit of encouragment. Thank you

Using agencies and actually running an agency is entirely different.
Like I said if you are asking these questions then you don't know enough to start an agency, these are the basics.
You need to know about other aspects and if you can't get these right, then I doubt you will succeed.
If you can't handle listening to people's opinions then you are in the wrong place and certainly in the wrong industry!!

 

[harrybuk]

I can listen to advice and critisism but why should I be content for someone to put me down completely? Obviously I am not going to start up properly until I know the answers to these kinds of questions. I would frankly not risk the embarresment of going into something like this without understanding these things. That is WHY I am asking these questions to make sure I do fully understand.

Anyway, since you have the experience I would appreiciete if you could be so kind as to help me and not just try to discourage me. Thanks

 

[Richie N]

I can listen to advice and critisism but why should I be content for someone to put me down completely? Obviously I am not going to start up properly until I know the answers to these kinds of questions. I would frankly not risk the embarresment of going into something like this without understanding these things. That is WHY I am asking these questions to make sure I do fully understand.

Anyway, since you have the experience I would appreiciete if you could be so kind as to help me and not just try to discourage me. Thanks

I am not putting you down and it's not personal. I say it to anyone that posts and to be honest, we get these posts every other day. You could do a search on here and you will see how many we get.

I am sure if I posted on here that I was going to start an accountancy but didn't know the basics, an accountant would come along and tell me to gain experience first.

Visit the REC website, they have a starter package for recruiters, maybe it's worth the investment if you are set on this.
If you get it wrong the first time, it will affect your business.

 

[tony84]

I have no industry knowledge in the slightest, but when i was told i was being made redundant i looked on a few websites.

Maybe look at where you would look for jobs as a starter?

As for the other question i dont have a clue.

 

[Emma Fryer]

Surely it is easy enough to search on recruitment co's websites to see some T's and C's

Can I point you in the direction of a great book 'The E Myth' by M Gerber I think it's worth you having a read a very good resource.

 

[gregs2769]

What are your experiences with recruitment exactly?

 

[Richie N]

What are your experiences with recruitment exactly?

Very little it seems...

 

[Tax-UK]

If you place permanent staff you may have to offer up to nine months candidate replacement in regards to the best jobsites it depends on the type of industry you will recruit. My suggestion is that you google your chosen industry and see which jobsites come on top

 

[harrybuk]

As mentioned I have a little bit of experience; as well as being a candidate for many years with many agencies, I worked as an intern with Reed for 3 months. In this time, I spent most of it finding candidates CVs on job sites and on the Reed database, calling them up to try to match them to jobs available. The problem is that those sites are very expensive and I do not have the capital to purchase a recruiters log in. I also spent time finding potential clients and calling them to generate business.

However, I was not involved in negotiating rates with clients, so this is area I need advice on. I would like to take a business model that involves minimum overheads in the startup phase. I plan to use free job advert sites, the job centre and social media... It will be hard at first. I only plan to charge a low agent fee, as I am cutting many overheads by working from home. I won't charge an up front fee.

 

[Tax-UK]

permanent rates normally are 25% to 30%

freelancers it depends on how much you can get away with.

Minimum overheads= work from home

No money to place adverts on jobsites= you need to find the money, what I suggest is that you start advertising after obtaining the job spec to minimize your costs.

Low margins= small salary

As mentioned I have a little bit of experience; as well as being a candidate for many years with many agencies, I worked as an intern with Reed for 3 months. In this time, I spent most of it finding candidates CVs on job sites and on the Reed database, calling them up to try to match them to jobs available. The problem is that those sites are very expensive and I do not have the capital to purchase a recruiters log in. I also spent time finding potential clients and calling them to generate business.

However, I was not involved in negotiating rates with clients, so this is area I need advice on. I would like to take a business model that involves minimum overheads in the startup phase. I plan to use free job advert sites, the job centre and social media... It will be hard at first. I only plan to charge a low agent fee, as I am cutting many overheads by working from home. I won't charge an up front fee.

 

[harrybuk]

permanent rates normally are 25% to 30%

freelancers it depends on how much you can get away with.

Minimum overheads= work from home

No money to place adverts on jobsites= you need to find the money, what I suggest is that you start advertising after obtaining the job spec to minimize your costs.

Low margins= small salary

Yes I intend to work from home. I understand that the rates for high street agencies is around 20%. Since I intend to work from home without the overheads of high street rent, staff salaries etc; I feel I can undercut those rates significantly. The part I was not too sure about is the rolling scale in terms ot termination refund. For example, would 75% refund before 1 month, 50% before 2 months and 25% beore 3 months be reasonable? Since my rates would be much lower, perhaps the percieved risk from the client would be less.

Thanks for advice

 

[Tax-UK]

Sorry, can't help you there. I would suggest you create your own package refund, a client will not be happy to know that he will only receive back 25% of his money if the employee left within x amount of days.

On the other hand they may place their trust in you if they know that within 9 months you will replace the candidate for free.

PS- Note that returning money is taboo conversation, offer everything to please the client but never money refunds

Yes I intend to work from home. I understand that the rates for high street agencies is around 20%. Since I intend to work from home without the overheads of high street rent, staff salaries etc; I feel I can undercut those rates significantly. The part I was not too sure about is the rolling scale in terms ot termination refund. For example, would 75% refund before 1 month, 50% before 2 months and 25% beore 3 months be reasonable? Since my rates would be much lower, perhaps the percieved risk from the client would be less.

Thanks for advice

 

[Richie N]

1) The rates quoted are far too high, you need to be competitive, especially as you've no experience.
2) You need money to advertise, this will be your biggest expense. No job sites are free except job centre these days.
3) No need to offer a 9 month rebate, 3 months is more than enough, unless you charge the higher fees then offer the extra rebate.

Saying this, it depends on the sector you choose to work in. IT charge higher fees, commercial lower, catering lower, medical higher etc.

 

[harrybuk]

1) The rates quoted are far too high, you need to be competitive, especially as you've no experience.
2) You need money to advertise, this will be your biggest expense. No job sites are free except job centre these days.
3) No need to offer a 9 month rebate, 3 months is more than enough, unless you charge the higher fees then offer the extra rebate.

Saying this, it depends on the sector you choose to work in. IT charge higher fees, commercial lower, catering lower, medical higher etc.

In terms of my high rates, do you mean refund rates? The 20% was what I understood of high street rates (Reed was doing about that). I was planning to come in at between 5% and 10%.

In light of the low cost, would you say that my suggested refund policy is fair, or under or over where it should be? Or to take tax-uk's advice and just offer a free replacement? (Or maybe free replacement and if I can't find, then the refund policy applies).

I understand about the job site fees. I knew about the job centre as well. I found a few free websites... I might try the best that I can with those and see how I do. Hopefully I could net something and use the capital for that to invest in posting on premium job sites. To be honest, right now I want to start small with limited costs to get not only the capital, but experience also. I understand I am a novice and therefore don't want to take a huge fat risk if I can avoid it at this stage.

Thanks for advice

 

[Richie N]

In terms of my high rates, do you mean refund rates? The 20% was what I understood of high street rates (Reed was doing about that). I was planning to come in at between 5% and 10%.

In light of the low cost, would you say that my suggested refund policy is fair, or under or over where it should be? Or to take tax-uk's advice and just offer a free replacement? (Or maybe free replacement and if I can't find, then the refund policy applies).

I understand about the job site fees. I knew about the job centre as well. I found a few free websites... I might try the best that I can with those and see how I do. Hopefully I could net something and use the capital for that to invest in posting on premium job sites. To be honest, right now I want to start small with limited costs to get not only the capital, but experience also. I understand I am a novice and therefore don't want to take a huge fat risk if I can avoid it at this stage.

Thanks for advice

This is why I said get the experience first....you thought I was being personal but seriously you need to know this before anything.

10% is fine. Rebates, go up to 10/12 weeks by 10% each week.
Free replacement is always better than giving money back but with your limited advertising budget this may not be possible.

 

[billie1]

I would honestly advice you against this. Being a recuitment consultant is a glorified sales job (not that there's anything wrong with sales people). You have to be good at sales and to be honest the recruitment market is very tough.

I was adviced against it a few years ago, I still went ahead with it. I closed down with a year.

 

[Richie N]

I would honestly advice you against this. Being a recuitment consultant is a glorified sales job (not that there's anything wrong with sales people). You have to be good at sales and to be honest the recruitment market is very tough.

I was adviced against it a few years ago, I still went ahead with it. I closed down with a year.

Although I don't agree with "glorified sales job" part of your post, I do agree with the rest and this is why I advise those that have no experience in recruitment agencies not to start their own agency until they have this.

I too have been there and that was after a year's experience as a consultant, but I went away and joined a large recruitment company, got the training and knowledge to become a successful and experienced consultant.

 

[harrybuk]

I have plenty of sales and other kinds of experience with many different types of roles. I have no concerns about that side of things.

I don't intend to become huge and I'm not going to risk a substantial amount of money into it and I will work from home. I will start very small and maybe scale up as I become more experienced. Thank you for the sceptical advice but I'm gonna give it a shot anyway... I will at least test the water before diving in; I have my strategy.. lets see how it goes.

I guess I will start with easyish jobs to fill, ask for 5% only, offer free replacement before 3 months or 10% refund each week as per advice of Rich. If I get some success like this, I will use the capital to resource on premium job sites and cautiously scale up. If anything, it will be a learning experience.

 

[ebevington]

Hello,

Unfortunately I cannot help you with your questions but I was thinking and we could work together to offer some candidates professionally designed CV's.

As CV's are notoriously difficult to produce and make look interesting people will be willing to pay a little bit extra to stand out against other candidates and this is where I could help by designing them for you and then you selling them on?

PM me if you are interested.

Emma

 

[gordano]

An interesting thread. Recruitment is a competitive market, have you thought about researching a niche to focus on?

 

[gregs2769]

Card rates are around 20-30% but can often, with out too much work can be brought down to circa 10%. Sourcing candidates is alot different to selling your services to an employer......I wish you the best of luck, but it will a uphill battle as you have no real experince or clients to draw upon.

I recomend going to work for an agency for 6-12 months. Understand it and get some clients.

 

[harrybuk]

An interesting thread. Recruitment is a competitive market, have you thought about researching a niche to focus on?

I understand its competetive.... but I will offer just 5% initially... I think that my model of keeping overheads to a minimum and vastly undercutting other companies would give me an edge.. though I understand it is not the only thing that is important to clients... but at this rate, hopefully they will give me a punt; and can build relationships like that.

I don't think I could enter a niche market because I dont have any particulary industry experience unfortunatelly... I might stick to office, sales and customer service.. the easier roles to find candidates for.

 

[LicensedToTrade]

Surely it is easy enough to search on recruitment co's websites to see some T's and C's

Two reasons why you should never steal (or be 'inspired by') someone elses T&Cs.

1. It's theft
2. How can you be sure that their T&Cs were written by a suitably qualified and experienced legal bod?

As for the OP, may I advise that the first person you recruit should be someone to work for you that has a little more experience or working as a senior in a perms recruitment agency.

 

[Richie N]

I understand its competetive.... but I will offer just 5% initially... I think that my model of keeping overheads to a minimum and vastly undercutting other companies would give me an edge.. though I understand it is not the only thing that is important to clients... but at this rate, hopefully they will give me a punt; and can build relationships like that.

I don't think I could enter a niche market because I dont have any particulary industry experience unfortunatelly... I might stick to office, sales and customer service.. the easier roles to find candidates for.

Niche is better and have more chance of succeeding in this climate than a generalist, leave that to the big players.

Don't go down to 5%, that's way too cheap and you want clients to pay for your work, never underestimate your worth or your candidates.

 

[harrybuk]

Two reasons why you should never steal (or be 'inspired by') someone elses T&Cs.

1. It's theft
2. How can you be sure that their T&Cs were written by a suitably qualified and experienced legal bod?

As for the OP, may I advise that the first person you recruit should be someone to work for you that has a little more experience or working as a senior in a perms recruitment agency.

The answer to question 2, is that my dad is a lawyer

As for your advice, I don't plan to recruit anyone.. I am happy to go at this strictly as a small and simple family business (well at least initially).

Niche is better and have more chance of succeeding in this climate than a generalist, leave that to the big players.

Don't go down to 5%, that's way too cheap and you want clients to pay for your work, never underestimate your worth or your candidates.

Interesting suggestion. From my experience in resourcing; I found that it was generally harder to find people with very specific skills, I had to rifle through job sites looking for CVs (this kind of recruitmer membership is very expensive) which would take ages, and there would be far less response from job adverts.

I understand that this approach would be more logical from a competition point of view as there would be less competitors, and fees could be higher. My main competative factor is that I could undercut the big competitors rates significantly... therefor I could perhaps compete in the "mainstream" sectors?

Maybe you are right about 5% being too low.... maybe I could start with 10% but negotiate if need be. Given my limited experience and the fact that this is my first venture; gaining experience and relationship building are my main prioritites for now, and as a poor unemployable graduate on JSA living at home, even a few hundred pounds here and there would be SO welcome

 

[LicensedToTrade]

The answer to question 2, is that my dad is a lawyer

Which begs the question why are you asking for advice on terms and conditions from an online forum when your dad is a lawyer?

As for your advice, I don't plan to recruit anyone.

In that case you might struggle to operate a successful recruitment agency...

 

[harrybuk]

Which begs the question why are you asking for advice on terms and conditions from an online forum when your dad is a lawyer?


In that case you might struggle to operate a successful recruitment agency...

I was asking about fee rates and conditions of business, not about legal aspect;, I have that side covered already.

And I what I meant is that I don't mean to recruit anyone to work for me, that I will keep the business in the family

 

[jhardy2008]

1. At least 25% back.....
2. Online Job Portals

 

[Richie N]

The answer to question 2, is that my dad is a lawyer

As for your advice, I don't plan to recruit anyone.. I am happy to go at this strictly as a small and simple family business (well at least initially).



Interesting suggestion. From my experience in resourcing; I found that it was generally harder to find people with very specific skills, I had to rifle through job sites looking for CVs (this kind of recruitmer membership is very expensive) which would take ages, and there would be far less response from job adverts.

I understand that this approach would be more logical from a competition point of view as there would be less competitors, and fees could be higher. My main competative factor is that I could undercut the big competitors rates significantly... therefor I could perhaps compete in the "mainstream" sectors?

Maybe you are right about 5% being too low.... maybe I could start with 10% but negotiate if need be. Given my limited experience and the fact that this is my first venture; gaining experience and relationship building are my main prioritites for now, and as a poor unemployable graduate on JSA living at home, even a few hundred pounds here and there would be SO welcome

These agencies that charge low flat fees, to get a few hundred pounds in, actually affects the rest of us that think we are worth what we charge for our candidates, especially those in a shortage skilled market.

These low fee agencies end up going bust as they can't cover their costs, so don't go too low.

Licensed to Trade has a valid point about the T & C's, this is why I recommend joining REC to get your legal documents. They will provide you with everything you need.

 

[LicensedToTrade]

And I what I meant is that I don't mean to recruit anyone to work for me, that I will keep the business in the family

I knew what you meant, I was just quoting you out of context because I couldn't help myself

 

[harrybuk]

These agencies that charge low flat fees, to get a few hundred pounds in, actually affects the rest of us that think we are worth what we charge for our candidates, especially those in a shortage skilled market.

These low fee agencies end up going bust as they can't cover their costs, so don't go too low.

Licensed to Trade has a valid point about the T & C's, this is why I recommend joining REC to get your legal documents. They will provide you with everything you need.

I doubt I will go bust with my business model... if and when my overheads increase, then my rates will also.... in fact if I find success then I might raise my rates anyway without raising overhead costs.

 

[harrybuk]

Licensed to Trade has a valid point about the T & C's, this is why I recommend joining REC to get your legal documents. They will provide you with everything you need.

I have the legel docs I need... just need to edit them to include my T&Cs
http://www.scribd.com/doc/62559161/Client-Terms
http://www.scribd.com/doc/62559159/App-Terms
How are they?

 

[kate1]

Richie N, what industry sector do you deal with or is it all, and have you got a website?

 

[Richie N]

Richie N, what industry sector do you deal with or is it all, and have you got a website?

Catering, Kate. Are you in recruitment?

 

[kate1]

No Im not Richie, was just interested to know what industry sector you covered