recruitment startup business plan

How to write a business plan for recruitment in 2024 (template included)

Roger Smart

  • Published on June 3, 2020
  • Updated on February 12, 2024

recruitment startup business plan

Writing a business plan in recruitment has always played a crucial part in the interview process for a number of recruitment agencies around the world.

A comprehensive business plan can demonstrate a recruiter’s commitment, knowledge and commercial acumen. During economic uncertainties in 2023, these qualities are more important than ever.

Arriving at an interview armed with a comprehensive business plan before you’re even asked will no doubt set yourself apart from other recruiters.

During economic uncertainties, managers will need to present a business case to leadership for budget approval in order to make a hire. Your business plan will be an important element of this business case. An impressive business plan could be the difference between landing an offer today, or falling into a pipeline of other candidates.

In this article, we share a step-by-step guide outlining how to create a comprehensive business plan. We walk through the key components and include examples.

At the end of the article, you can download a free recruitment business plan template which is tailored towards the key components mentioned in this article.

A business plan should be packed full of relevant information but should be compressed and to the point. Avoid verbiage, stay specific and keep to 4 – 6 pages.

Introduction

Start with a title. Include your name and the company you’re writing the business plan for. A little personalisation will go a long way.

Underneath your title, outline the objective of your business plan and again personalise it towards the agency you’re interviewing with. While you have the hiring manager’s attention, this paragraph is an opportunity for you to demonstrate how comprehensive your business plan is. The aim is to capture the hiring manager’s interest so they continue to read each component:

“The objective of this business plan is to outline the value I can add to employer’s name.

In this business plan, I have highlighted my specialism, hiring activity in my market, my candidate and client strategies, my methodology, how I plan to recruit through economic uncertainties in 2023, my competition and my personal revenue projections over 12 months.”

You can use this paragraph as a way to introduce your business plan verbally if you’ve called up a hiring manager. You can also use this extract in a cold email.

Your specialisation

This is a crucial positioning statement for your value-add. It sets out precisely where your network and experience lies and what you intend to bring to the table in your new role.

Your specialisation can be described clearly by outlining what roles you will specialise in, what industries you will target, what level of seniority you will focus on and what geographies you will cover.

For ease of reading, you can use each component as a title and use bullet points to expand upon your answers.

Taking a Technology recruiter as an example:

What roles I will specialise in:

  • Product Management permanent roles
  • UX/UI Design permanent roles

What industries I will target:

  • Series A – C funded technology startups (high investment, high growth and high volume of roles)

What level of seniority I will focus on:

  • Mid to senior (120 – 180k salary range for Product Managers, 140 – 200k salary range for Designers)

What geographies I will cover:

  • Based in Singapore, the local market will be my core market
  • Secondary markets include Jakarta, Bangkok and Kuala Lumpur due to less competition from recruiters and high volume of roles

Hiring activity trends

The hiring activity trends section provides an opportunity for you to demonstrate and portray your knowledge of the market.

The 3 important components of this section are: hiring activity over the past 3 years, hiring activity for next year and how you predict hiring activity to shift beyond that.

Utilise your own knowledge of the market but back it up with research gained from reputable sources related to your market e.g. Tech in Asia, Tech Crunch, Channel News Asia, The Straits Times or The Financial Times.

You’ll want to cover how hiring activity has increased or decreased, what the drivers of growth are in your industry and what the threats and challenges are within your sector.

Candidate strategies

Moving on from market trends, this section indicates how you will acquire candidates for your desk. It offers an opportunity for you to demonstrate the experience you’ve learnt in candidate management from your previous firm, but also an opportunity for the employer to ensure that your approach aligns with theirs.

3 key components of this section include: how you will generate candidate leads, what challenges you expect to face and how you will overcome these challenges.

Taking a Front Office Banking & Financial Services recruiter as an example:

How do I plan to generate candidate leads:

  • Direct headhunting using a LinkedIn Recruiter account, this costs approximately $X amount, the key benefits being access to a high volume of InMails and enhanced search capability. This has been the sourcing tool for 60% of my previous placements

Challenges I expect to face:

  • In light of economic uncertainties in 2023, highly sought-after candidates may be risk-averse and may not see this as a good time to move jobs

How I will overcome these challenges:

  • I will develop relationships with these candidates for the future but I will adjust my sourcing strategy accordingly by increasing volume of direct approaches

Client strategies

A similar section to candidate strategies but geared towards clients. Arguably more important than candidate strategies during a recession as the market could be job-short – even in the good times, strong business development capabilities in recruiters are harder to find.

This section includes 6 key components including how you plan to onboard new clients, how you plan to sustain relationships with clients for repeat business, what industries your clients are in, the challenges you expect to face and how you will overcome these challenges.

Take these bullet points as a basic example:

How I plan to onboard new clients:

  • During a recession, I plan to cultivate relationships by helping and consulting clients on non-recruitment related issues, such as advising clients on the current state of the market
  • I plan to generate leads by making 25 cold calls per day during the ramp-up period, to again offer support and advice where needed, and to leverage any open roles
  • A soft approach of connecting with hiring managers, HR contact and C-Level candidates on LinkedIn, to establish working relationships and eventually convert into clients

How I plan to sustain relationships with current clients and win repeat roles:

  • The most important way to sustain relationships is by offering a service that is superior to competitors. That is by being transparent, sticking to deadlines and delivering results
  • Regularly catch up with clients on a monthly basis to see how they’re doing and see if you can generate new roles
  • Keep yourself updated on company news and congratulate clients on milestones e.g. if they generate a Series C round of funding

What industries I will target clients in:

  • Series A – B funded technology startups
  • During a recession there is less of an appetite to use agencies due to an unprecedented volume of great candidates available in the market
  • Offer free support to companies currently not using agencies, provide an impressive service and convert into paying client post-recovery

The 6th component is “examples of target clients” and this is where you can really demonstrate tangible market knowledge. Use company names, find the potential contact in each company and add your comments, such as the volume of roles you expect from that client. 5 examples should be enough to peak your hiring manager’s interest.

You can use a table to display this information with ease:

It goes without saying that you should never be tempted to use information that is proprietary to your previous employer. This information can be openly found with some basic LinkedIn research.

My methodology

Are you a recruiter that is focussed on crunching numbers? Are you a recruiter who is focussed on cultivating long-term relationships? In this section, you can include a few quick bullet points to explain how you approach recruitment. This information gives your hiring manager an indication about whether you hold similar values and whether you have similar working styles.

How you can adapt to recruiting during a possible economic downturn

This section is a new one in response to market conditions in 2023 but can demonstrate how you are prepared to deal with current and upcoming challenges.

You can use this section as the title and include bullet points to outline how you will adapt to these market conditions.

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My key competitors

Which recruiters and agencies offer the greatest competition? Demonstrating your knowledge in this area highlights that you are commercially aware outside of your core market.

Include about 5 different competitors who are directly competing in your patch. You can use the table below to display this information:

Personal revenue and target projections

In many business plans, financial projections are of utmost importance and can demonstrate your commercial acumen. If you’ve ever watched Dragon’s Den, you’ll know what happens when you don’t know your numbers!

Project your personal revenue for 4 quarters. You can start your calculations by predicting the average annual salary of a candidate in your patch. You can project your average percentage fee agreed with clients and from there you can calculate your average fee. Once you have this, you can predict the amount of placements you’ll be making per month.

Make sure your revenue projections are realistic and achievable. Avoid the temptation to predict vastly optimistic revenues, especially during a possible recession. You must allow time to ramp-up and there must be a logical relationship between your historical and predicted revenues.

The plan only includes project revenue. Your historical revenue should be on your CV.

Take the below as an example:

My predicted average annual salary of candidates:

My predicted average percentage fee agreed with the client:, my predicted average fee:, my predicted average placements per month, my projected revenue over 12 months.

Underneath, you can also include the KPIs you will set yourself to guide you in achieving these numbers. For example, you can set yourself a guideline for how many CVs you need to send, how many candidate meetings you need to arrange, how many client meetings you need to arrange and so on.

The template

We’ve constructed a free template built around the components mentioned above, so you can create your own for when you reach out to hiring managers.

To download this template, please add your email below and you’ll be redirected to the template.

By downloading our busines plan, you agree to our  Privacy Policy and Notification Settings .

This step-by-step guide should give your hiring manager a clear idea of your plan. If executed successfully, you’ve already demonstrated your commitment, knowledge and commercial acumen before even attending an interview.

The way you’ve structured your plan will give your hiring manager a very clear indication of your methodology and whether you’d fit their structure. Keep in mind that if your methodology is focused on high volume recruitment, it’s not going to work well with an executive recruitment agency.

As a next step, learn this plan inside and out. Be prepared to pitch your plan to your hiring manager and answer detailed questions surrounding each component.

Leave your interviewer with no room for concern and secure that role! Lastly, if you enjoyed the article, please consider subscribing or following us on LinkedIn to have new articles for recruiters like this delivered directly to your inbox.

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As Founder of Charterhouse Partnership, I led the opening of 5 international offices, hiring & training hundreds of recruiters. Please subscribe to our weekly newsletter where I share my insights on the recruitment industry.

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Recruitment Business Plan Template & Guidebook

For any business looking to take their recruitment efforts to the next level, having an effective plan of action is a must. The #1 Recruitment Business Plan Template & Guidebook offers an easy-to-follow framework for creating a step-by-step recruitment strategy that will get results. This comprehensive guide includes everything you need to know to develop an actionable plan backed by best practices and insightful tips from industry experts. Let's explore what this powerful tool can do to help you increase your hiring success.

Nick

Get worry-free services and support to launch your business starting at $0 plus state fees.

  • How to Start a Profitable Recruitment Business [11 Steps]
  • 10+ Best & Profitable Recruitment Business Ideas [2023]
  • List of the Best Marketing Ideas For Your Recruitment Service:

How to Write a Recruitment Business Plan in 7 Steps:

1. describe the purpose of your recruitment business..

The first step to writing your business plan is to describe the purpose of your recruitment business. This includes describing why you are starting this type of business, and what problems it will solve for customers. This is a quick way to get your mind thinking about the customers’ problems. It also helps you identify what makes your business different from others in its industry.

It also helps to include a vision statement so that readers can understand what type of company you want to build.

Here is an example of a purpose mission statement for a recruitment business:

Our mission is to provide world-class and innovative recruitment solutions that help organizations find and hire the best talent to increase their competitive advantage. We strongly believe in the power of bringing together the right people and nurture a culture of employee satisfaction, growth and development.

Image of Zenbusiness business formation

2. Products & Services Offered by Your Recruitment Business.

The next step is to outline your products and services for your recruitment business. 

When you think about the products and services that you offer, it's helpful to ask yourself the following questions:

  • What is my business?
  • What are the products and/or services that I offer?
  • Why am I offering these particular products and/or services?
  • How do I differentiate myself from competitors with similar offerings?
  • How will I market my products and services?

You may want to do a comparison of your business plan against those of other competitors in the area, or even with online reviews. This way, you can find out what people like about them and what they don’t like, so that you can either improve upon their offerings or avoid doing so altogether.

Image of Zenbusiness business formation

3. Build a Creative Marketing Stratgey.

If you don't have a marketing plan for your recruitment business, it's time to write one. Your marketing plan should be part of your business plan and be a roadmap to your goals. 

A good marketing plan for your recruitment business includes the following elements:

Target market

  • Who is your target market?
  • What do these customers have in common?
  • How many of them are there?
  • How can you best reach them with your message or product?

Customer base 

  • Who are your current customers? 
  • Where did they come from (i.e., referrals)?
  • How can their experience with your recruitment business help make them repeat customers, consumers, visitors, subscribers, or advocates for other people in their network or industry who might also benefit from using this service, product, or brand?

Product or service description

  • How does it work, what features does it have, and what are its benefits?
  • Can anyone use this product or service regardless of age or gender?
  • Can anyone visually see themselves using this product or service?
  • How will they feel when they do so? If so, how long will the feeling last after purchasing (or trying) the product/service for the first time?

Competitive analysis

  • Which companies are competing with yours today (and why)? 
  • Which ones may enter into competition with yours tomorrow if they find out about it now through word-of-mouth advertising; social media networks; friends' recommendations; etc.)
  • What specific advantages does each competitor offer over yours currently?

Marketing channels

  • Which marketing channel do you intend to leverage to attract new customers?
  • What is your estimated marketing budget needed?
  • What is the projected cost to acquire a new customer?
  • How many of your customers do you instead will return?

Form an LLC in your state!

recruitment startup business plan

4. Write Your Operational Plan.

Next, you'll need to build your operational plan. This section describes the type of business you'll be running, and includes the steps involved in your operations. 

In it, you should list:

  • The equipment and facilities needed
  • Who will be involved in the business (employees, contractors)
  • Financial requirements for each step
  • Milestones & KPIs
  • Location of your business
  • Zoning & permits required for the business

What equipment, supplies, or permits are needed to run a recruitment business?

  • Internet access
  • Recruiting software
  • Phone line (landline or mobile)
  • Business license and permits in accordance with local government regulations
  • Advertising resources (e.g. newspapers, job boards, recruitment websites)
  • Office space (if applicable)
  • Business cards, stationery, brochures

5. Management & Organization of Your Recruitment Business.

The second part of your recruitment business plan is to develop a management and organization section.

This section will cover all of the following:

  • How many employees you need in order to run your recruitment business. This should include the roles they will play (for example, one person may be responsible for managing administrative duties while another might be in charge of customer service).
  • The structure of your management team. The higher-ups like yourself should be able to delegate tasks through lower-level managers who are directly responsible for their given department (inventory and sales, etc.).
  • How you’re going to make sure that everyone on board is doing their job well. You’ll want check-ins with employees regularly so they have time to ask questions or voice concerns if needed; this also gives you time to offer support where necessary while staying informed on how things are going within individual departments too!

6. Recruitment Business Startup Expenses & Captial Needed.

This section should be broken down by month and year. If you are still in the planning stage of your business, it may be helpful to estimate how much money will be needed each month until you reach profitability.

Typically, expenses for your business can be broken into a few basic categories:

Startup Costs

Startup costs are typically the first expenses you will incur when beginning an enterprise. These include legal fees, accounting expenses, and other costs associated with getting your business off the ground. The amount of money needed to start a recruitment business varies based on many different variables, but below are a few different types of startup costs for a recruitment business.

Running & Operating Costs

Running costs refer to ongoing expenses related directly with operating your business over time like electricity bills or salaries paid out each month. These types of expenses will vary greatly depending on multiple variables such as location, team size, utility costs, etc.

Marketing & Sales Expenses

You should include any costs associated with marketing and sales, such as advertising and promotions, website design or maintenance. Also, consider any additional expenses that may be incurred if you decide to launch a new product or service line. For example, if your recruitment business has an existing website that needs an upgrade in order to sell more products or services, then this should be listed here.

7. Financial Plan & Projections

A financial plan is an important part of any business plan, as it outlines how the business will generate revenue and profit, and how it will use that profit to grow and sustain itself. To devise a financial plan for your recruitment business, you will need to consider a number of factors, including your start-up costs, operating costs, projected revenue, and expenses. 

Here are some steps you can follow to devise a financial plan for your recruitment business plan:

  • Determine your start-up costs: This will include the cost of purchasing or leasing the space where you will operate your business, as well as the cost of buying or leasing any equipment or supplies that you need to start the business.
  • Estimate your operating costs: Operating costs will include utilities, such as electricity, gas, and water, as well as labor costs for employees, if any, and the cost of purchasing any materials or supplies that you will need to run your business.
  • Project your revenue: To project your revenue, you will need to consider the number of customers you expect to have and the average amount they will spend on each visit. You can use this information to estimate how much money you will make from selling your products or services.
  • Estimate your expenses: In addition to your operating costs, you will need to consider other expenses, such as insurance, marketing, and maintenance. You will also need to set aside money for taxes and other fees.
  • Create a budget: Once you have estimated your start-up costs, operating costs, revenue, and expenses, you can use this information to create a budget for your business. This will help you to see how much money you will need to start the business, and how much profit you can expect to make.
  • Develop a plan for using your profit: Finally, you will need to decide how you will use your profit to grow and sustain your business. This might include investing in new equipment, expanding the business, or saving for a rainy day.

recruitment startup business plan

Frequently Asked Questions About Recruitment Business Plans:

Why do you need a business plan for a recruitment business.

A business plan for a recruitment business is important because it serves as a roadmap outlining the objectives, strategies and action plans for the business. It can also help to identify potential risks, as well as ways to manage those risks, and establish financial goals. Furthermore, a business plan can help to attract potential investors or lenders and provide a basis for evaluating the success of the business.

Who should you ask for help with your recruitment business plan?

You should ask for help from an experienced recruitment consultant, business consultant, or a professional business coach. They can provide you with valuable advice and resources to help you create a successful business plan. Additionally, you may want to consult with a lawyer or accountant who have expertise in the recruitment industry.

Can you write a recruitment business plan yourself?

Yes, it is possible to write a recruitment business plan yourself. However, it may be more beneficial to consult a professional business plan writer to ensure the plan meets industry standards and contains all the necessary components. A professional also has experience in writing successful plans, which can greatly increase the chances of success.

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I'm Nick, co-founder of newfoundr.com, dedicated to helping aspiring entrepreneurs succeed. As a small business owner with over five years of experience, I have garnered valuable knowledge and insights across a diverse range of industries. My passion for entrepreneurship drives me to share my expertise with aspiring entrepreneurs, empowering them to turn their business dreams into reality.

Through meticulous research and firsthand experience, I uncover the essential steps, software, tools, and costs associated with launching and maintaining a successful business. By demystifying the complexities of entrepreneurship, I provide the guidance and support needed for others to embark on their journey with confidence.

From assessing market viability and formulating business plans to selecting the right technology and navigating the financial landscape, I am dedicated to helping fellow entrepreneurs overcome challenges and unlock their full potential. As a steadfast advocate for small business success, my mission is to pave the way for a new generation of innovative and driven entrepreneurs who are ready to make their mark on the world.

How to Start a Recruiting Business

This type of business requires the recruiting agency to establish positive relationships with its clients, by matching businesses with professional, well-qualified candidates.

Recruiting agencies do best when they establish positive relationships with candidates, by providing them with significant interviews with suitable companies.

As distinguished from temporary work agencies, recruiting agencies typically focus on sourcing skilled professional individuals for full-time, long-term positions.

Learn how to start your own Recruiting Business and whether it is the right fit for you.

Ready to form your LLC? Check out the Top LLC Formation Services .

Recruiting Business Image

Start a recruiting business by following these 10 steps:

  • Plan your Recruiting Business
  • Form your Recruiting Business into a Legal Entity
  • Register your Recruiting Business for Taxes
  • Open a Business Bank Account & Credit Card
  • Set up Accounting for your Recruiting Business
  • Get the Necessary Permits & Licenses for your Recruiting Business
  • Get Recruiting Business Insurance
  • Define your Recruiting Business Brand
  • Create your Recruiting Business Website
  • Set up your Business Phone System

We have put together this simple guide to starting your recruiting business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas .

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

What will you name your business?

  • What are the startup and ongoing costs?
  • Who is your target market?

How much can you charge customers?

Luckily we have done a lot of this research for you.

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Recruiting Business Name Generator

If you operate a sole proprietorship , you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name , we recommend researching your business name by checking:

  • Your state's business records
  • Federal and state trademark records
  • Social media platforms
  • Web domain availability .

It's very important to secure your domain name before someone else does.

Want some help naming your recruiting business?

Business name generator, what are the costs involved in opening a recruiting business.

This business can be started as a sole owner/operator. Here are the basic requirements for this business:

  • A business license (around $300)
  • Form an LLC (around $500)
  • Business cards ($50)
  • Promotional materials ($100)
  • Service agreement forms ($25)
  • Space to work from (can be a home office or allow $500 per month rent)
  • A telephone ($50 per month)
  • A computer ($500)
  • Software (cloud services are $50 to $100 per month)
  • An Internet connection ($50 per month).
  • A business banking account (free)
  • An accountant (if you are not going to keep these records yourself)

If you plan to sell a large amount of items, you may need a storage space for your inventory. You can find storage spaces for around $75 per month.

This business can easily be started for less than $2,000.

What are the ongoing expenses for a recruiting business?

The monthly expenses are rent, telephone, Internet connection, promotional materials, conference/convention attendance fees, and other marketing expenses. A simple one-person operation may have expenses of less than $1,000 per month.

Who is the target market?

The best clients are larger organizations who have a constant need to fill a vacancy and have steady employee turnover at the senior management levels.

The other side of the business is recruiting top talent and having a strong database of professionals to draw upon for any placement opportunities that come up.

How does a recruiting business make money?

If the organization decides to hire a person brought to them by a recruiter, then they will pay a commission to the recruiter, which is a percentage of the new hire’s salary as compensation. Another business model is possible if the recruiter is paid a monthly retainer to search for potential employees, regardless of whether a new hire is found.

To help get new business and clients, some recruiting agencies will allow clients to hire job candidates on a contract basis and pay the recruiting agency a variable commission based on the number of hours worked under the contract.

By being successful in these efforts, recruiting agencies create repeat clients.

The typical commission for a placement is around 10% of the annual salary for the position or the equivalent of one month’s pay.

Some organizations like to outsource some or all of their recruitment efforts to companies that specialize in doing this work. In this case, the recruiting agency will have a contract that provides for the payment by the organization of a monthly retainer for the ongoing recruitment efforts. This monthly retainer can be a few thousand dollars to many thousands per month depending on the extent of the recruitment activities.

How much profit can a recruiting business make?

An average recruitment and placement can take between 30 to 90 days. If the annual salary for the available job is $100,000 and the commission for the placement is 10%, then the revenues for a successful placement would be $10,000 minus the expenses. If the recruiting agency is a simple one-person operation and only one position is filled during each three month period this would create $10,000 - $3,000 = $7,000 in net profits or about $28,000 per year.

Many recruiting agencies make multiple placements per month, so the profit potential for this business is very attractive.

How can you make your business more profitable?

The easiest way to increase profits is to place people in positions that pay higher salaries. Some recruiting agencies specialize in placing C-level senior management. The positions of CEO CFO, CTO, COO, and CMO all command very high salaries. Recruiting companies who successfully place people in these C-level positions make significant commissions.

Organizations like to work with top performing recruiting agencies to fill C-level positions because typically the people who are qualified candidates for these jobs are already employed by other companies. By working with a recruiting agency, the entire process can be kept confidential until the person and the business that is hiring them agree to the terms of an employment contract.

Recruiters who make themselves available to talk with potential placement candidates after work hours and on weekends increase their chances of finding good candidates. This is because many prefer to have confidential conversations about taking a new position from their homes, instead of taking such calls at the work site of their current employer.

Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship , partnership , limited liability company (LLC) , and corporation .

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your recruiting business is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services . You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

You can acquire your EIN through the IRS website . If you would like to learn more about EINs, read our article, What is an EIN?

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil .

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

  • Separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • Makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Get a business credit card

Getting a business credit card helps you:

  • Separate personal and business expenses by putting your business' expenses all in one place.
  • Build your company's credit history , which can be useful to raise money later on.

Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a recruiting business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits .

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses .

Services Contract

Recruiting businesses should require clients to sign a services agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, and service level expectations.

Non-Discriminatory Practices

As of the time of this writing, there are no federal licenses required to become an independent recruiter. However, the practice is subject to the same legal considerations for anyone responsible for hiring new talent. If you're not careful, it is possible to unintentionally ask unlawful or even discriminatory questions to potential candidates. Adhere at all times to federal discriminatory laws regarding race, ethnicity, religion, marital or family status, physical or mental disability, gender, age, and sexual orientation.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance . This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance . If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

FInd out what types of insurance your Recruiting Business needs and how much it will cost you by reading our guide Business Insurance for Recruiting Business.

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners , we'll give you helpful tips and advice for creating the best unique logo for your business.

Recommended : Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker .

If you already have a logo, you can also add it to a QR code with our Free QR Code Generator . Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market a recruiting business

Marketing your business requires networking with the human resource managers of many companies. It also involves lots of “cold-calling” of potential employees. Email marketing is possible if you build up a list of contacts.

One way to meet the human resources managers of larger corporations and their staff is to attend employment trade shows. Going to business conferences in the industry sectors that you are interested in working with is another good way to make personal contacts with potential employers and find good candidates for employees that might need placement.

It is important to build long-term relationships because both employers and employees may not have a current need, yet you will want them to call you if a need arises in the future.

How to keep customers coming back

The best way to build a steady flow of business and keep previous clients coming back for more is to be very successful in making placements. If both the employees and the employers are happy with the results of your work they will use your services again if another need arises. They can also help by spreading the word about your successful efforts to other professionals and organizations.

A report on NPR notes that up to 80% of the job vacancies are filled without the available positions being published . The candidates are found through various networking relationships including by using recruiting agencies.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business .

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

  • All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
  • Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
  • Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Recommended : Get started today using our recommended website builder or check out our review of the Best Website Builders .

Other popular website builders are: WordPress , WIX , Weebly , Squarespace , and Shopify .

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.

Recommended Business Phone Service: Phone.com

Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.

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Is this Business Right For You?

This business is good for people who like to reach out to others, enjoy talking on the phone with them, and want to support the development of those with professional careers by placing them with organizations looking for top talent.

Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

Entrepreneurship Quiz

What happens during a typical day at a recruiting business?

There are two facets of this business. The first major activity is finding organizations that will agree to sign a contract and pay a commission fee to a recruiter who brings a qualified professional person to the organization’s attention that the organization subsequently hires.

The other side of this business is for recruiters to find qualified professionals and build up a database of those people that might be interested in a potential placement by the recruiting agency. These professional workers may not be actively looking for a new job and may be currently employed. However, in the interests of career advancement, they may consider taking a new position, which offers better pay and greater benefits than the current job they already have.

Most of an agency’s day will be spent sending in résumés of qualified candidates and corresponding with both clients and businesses.

What are some skills and experiences that will help you build a successful recruiting business?

Recruiting is a “people” business. It is important to understand the needs of both the employers and the employees. The goal is to become a good matchmaker that places people in employment positions where they are most likely to succeed. It is important for the employer to be satisfied with the work that they do and the employee to like the new job.

It helps to have previous experience working for another recruiting agency, before going out and starting one of your own. Being an expert at networking with business professionals and organizations is a necessary skill. Having an extensive list of business contacts gives someone an advantage in starting up a new recruiting agency.

What is the growth potential for a recruiting business?

Many recruiting agencies focus on a local area as well as people who are willing to relocate. A recruiting agency also has the potential to expand nationally and internationally.

One of the largest recruiting agencies is the Robert Half Agency , which specializes in placing accounting, finance, and technology professionals. The company has over 400 offices worldwide in many different countries. During 2015, the Robert Half Agency had revenues of over US $5 billion. The market valuation in January 2017 for the company is US $6.65 billion. The stock trades on the New York Stock Exchange as RHI.

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Take the Next Step

Find a business mentor.

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

What are some insider tips for jump starting a recruiting business?

One person worked for eight years at a recruiting agency before starting his own company ABrecruit . He recommends using the database software offered by Chameleoni , which can be started for free and as the activities increase, is a low-cost way to manage the recruiting agency.

How and when to build a team

After having some success with initial placements and earning enough commissions, it is possible to expand staff to increase the placement activities. Each new staff member can concentrate on expanding the opportunities in a particular industry sector or working with a certain type of professional. By using this strategy it is possible to build up a good reputation from efforts that are focused on gaining useful expertise and contacts in a particular industry.

Useful Links

Industry opportunities.

  • American Staffing Association
  • Franchise opportunity with FPC, F-O-R-T-U-N-E Personnel Consultants

Real World Examples

  • Workbox Staffing

Further Reading

  • One person’s story about starting a recruiting business
  • How to Open & Operate a Financially Successful Staffing Service Business: With Companion CD-ROM by Atlantic Publishing Company

Have a Question? Leave a Comment!

Maximize Your Startup Recruitment Efforts With These 7 Essential Tactics

recruitment startup business plan

The startup space may not have the same resources that established tech companies do, but what it lacks in funds, it makes up for with passion. The thrill of industry disruption naturally attracts people who are motivated by new ideas and innovation, and startups boast tight knit teams unified by their dedication to their values and work. You want to onboard candidates who will be able to bring your company’s mission to life, so you can’t just hire anybody. In fact, recruiting the right candidates to build your dream team is easier said than done.  

Sunny Betz contributed reporting to this story.

What Is Startup Recruitment?

Founders looking to recruit for their startups have a number of hoops to jump through. For one, the average cost of hiring a new employee hovers around $4,400 — an expense that can be extremely high for new companies. But startups have unique advantages over other companies when it comes to onboarding new talent. Instead of strictly sticking to traditional recruiting channels, startups can leverage social media, existing personal connections, and other avenues to find potential teammates. Startup leaders promise new candidates the opportunity to explore brand new horizons in tech, and that prospect alone can be enough to draw in passionate applicants.

Your employees can make or break your startup, so no matter the tools you use to find candidates, be picky about who you hire to build a team that’s truly excited about and engaged with your brand. To help you determine where to focus your energy, we created this recruiting for startups guide.

Table of Contents

  • Create a Compelling Employer Brand

Showcase Your Company Culture

  • Know Who You are Looking for
  • Show Off Your Employer Brand with a Recruitment Marketing Strategy
  • Build a Talent Pipeline that Yields Top Candidates 
  • Leverage Unique Sourcing Strategies

Hiring Strategies For Startups

It can be challenging to know how and where to recruit great candidates, or even know what a great candidate looks like. Not only that, but recruiting trends and tactics are always changing as employers get more crafty with their sourcing techniques.

The first thing you need to do when creating a recruitment strategy is to determine your goals along with metrics to track your efforts and measure your success. There are several recruitment metrics you should identify and measure so your team can improve at every stage of the recruitment life cycle but it’s especially important to understand the true cost-per-hire of new employees. 

Get 40 tips from multiple leaders who have guided their company through four unique stages of growth.

There are a number of factors that contribute to hiring costs, and as a startup, you can’t waste time, money or resources. By figuring out how much a new hire should cost on average and how much your team is spending on different aspects of the recruitment process, you’ll be better able to tailor your recruitment strategy.

Another unique factor startups have to take into account when planning their recruitment strategy is how funding affects its ability to hire and grow as a company. It’s important to know that recruiting tactics will change before, during and after a round of funding , so anticipate your hiring needs and develop loose strategies for whether or not you are currently raising funding.

startup-recruitment-branding

Create a Compelling Employer brand

In order to get candidates in the door, they need to think of your company as an employer of choice. Startups are smaller in size and not as well-known as big-name brands, so it’s harder to get on candidates’ radar. For that reason, it is critical that startups create a stellar employer brand to gain the trust of job seekers and encourage them to apply. 

Start by drafting your mission statement, which should summarize your purpose, goals and core values . Your mission statement and core values will help you define your employer brand and the reputation you want to have with employees, job seekers and key stakeholders.

Your employees most accurately reflect your actual employer brand, so it’s smart to start building your internal employer branding team. To better understand where your team stands, ask employees to complete an employer branding survey .

From there, you can build out your external employer branding strategy with a strong social media plan and promote employee spotlights . Your employer brand will help candidates get excited about working for your company because they’ll have a better understanding of what it's like to work there.

startup-recruitment-culture

Having a small team makes defining a particular type of company culture more difficult. Not only that, but each new hire will have a much greater effect on your culture than they would at a larger company. Though tricky to implement, the desirability of startup culture among job seekers is a huge advantage.

Whether you have a flat hierarchy, more flexibility or exciting opportunities for growth, it’s important to share all that you have to offer with candidates through your employer branding efforts. And if you’re not satisfied with your culture, test out some new company culture ideas and check out these examples of great culture for inspiration.

startup-recruitment-who-to-look-for

Know who you are looking for

Sourcing candidates is one of the biggest challenges any company faces in its recruitment efforts. However, there are a number of tactics startups can use to improve the quality and quantity of candidates they bring in the door. 

Long before you start engaging with job seekers, it’s important to create candidate personas for each role that opens up. These personas will help you determine everything about the role, including skill requirements, preferred experience level, geographical location as well as where and how you will find the individual.

In addition to candidate personas, create an employee value proposition (EVP) . This will define both the attributes of your ideal candidate as well as the attributes your company has to offer the candidate. By defining what you are looking for as well as what you have to offer, you will be better prepared to sell your company while assessing a candidate's fit . 

With your role and EVP defined, you can create clearer job descriptions with all of the information candidates need to evaluate the opportunity. Make sure to include additional information on job descriptions beyond requirements and responsibilities, like perks, benefits and compensation, to make your company stand out from all the other mundane job descriptions candidates review during their search. 

Also, be mindful of any unconscious biases that may affect your teams’ decision for selecting great candidates. Just because you are a smaller and emerging company does not mean that you are exempt from prioritizing diversity, inclusion and equity as part of your hiring and retention process. Aside from it being a reflection of moral high ground, two out of three candidates actively look for companies that not only value diversity and inclusion but actively make an effort to create a workplace that welcomes and values all.  

startup-recruitment-marketing-strategy

Show off your employer brand with a recruitment marketing strategy

As a startup, it can be difficult to connect with top candidates amidst the noise of better-known employers. Job seekers likely don’t know how to find your company and even if they do, there is a lack of trust with an unknown company. That’s why it’s absolutely necessary for startups to create a robust recruitment marketing strategy that shows off their unique employer brand .  

While there are a number of recruitment strategies you can use to market your company, your candidate personas, mission, values and employee value proposition will help you identify the most pertinent information to share with candidates. 

No matter your strategy, the one platform candidates will always land on and go to for information is your career page . This should hold all of the information you include in your recruitment marketing content and more. From job descriptions to perks and benefits, company culture, recruitment process FAQs and employee testimonials, your career page should be the one stop shop for candidates to learn everything about your company.

Identify third-party platforms to connect with specific candidate personas on the platforms they use most. Social media recruiting should be a significant part of your strategy as the vast majority of candidates find jobs on social media. Additionally, creating social media content for employer branding is a great way to show off your unique startup culture in a more natural and candid way. 

Creating employee spotlights helps employees share their favorite parts of working for your company and allows job seekers to gain insight from reliable sources. Ask employees questions about their work experiences and share their responses as social posts, or create recruitment videos with several employees to provide a broader showcase of your teams.

Another part of your employer branding strategy should include highlighting information about your company culture. Promote team outings, celebrations, events and anything that provides insight on a day in the life of your employees. Company culture videos can be repurposed across platforms, making them well worth the investment.   

startup-recruitment-pipeline

Build a talent pipeline that yields top candidates 

For startups, it’s even more important to create a memorable candidate experience . Top candidates are going to apply to all the best jobs, so to keep candidates interested in your opportunities, you need to stand out through every interaction you have with them. 

As you start attracting candidates, you’ll want to have a plan in place for how you intend to move prospects through your talent pipeline . From initially identifying candidates to screening and interviewing them, it’s important to have a clear path in place for who and how your team will continue to nurture candidates throughout your recruiting life cycle . 

Keep in mind that since you are just getting started, you may not always need to hire full-time employees. Instead, it may be in your best interest to hire part-time, short-term or freelance employees to determine which roles are critical for your company’s success. You should also look for candidates who have experience working with startups and the ability to wear multiple hats within the company, that way you can hire a full-time employee who can balance multiple duties.

When you start to choose top candidates, it’s important to differentiate those that are going to fit into your culture and those that are going to be culture adds , meaning they have all the qualities needed to succeed in the role, plus a unique background or different experiences. These people will bring new ideas and challenge your current conventions, not to mention build out a more diverse team.

Don’t forget about the interview process. It’s already taxing enough for candidates to be on the job hunt, let alone taking the time to research a company and submit an application that is exhausting and time intensive. By simplifying your application process , candidates will be more likely to start and complete applications, creating a wider talent pool for your team to choose from. 

Candidates that make it to the in-person interview are the ones you really want to ‘wow’ with a unique interview process . Even if candidates don’t end up getting an offer or they don’t accept your offer, a positive experience will make them more likely to reconsider employment at your company in the future or at least recommend your company to people within their network.  

startup-recruitment-sourcing

Leverage unique sourcing strategies

As you continue to grow and hire new people, know that you don’t always have to source candidates from scratch. Instead, you should always start by looking within your company to identify employees who would be suitable for an internal promotion . By providing professional growth opportunities and showing your best employees you value their work, you’ll reduce recruiting costs as well as boost employee engagement . 

Even if you don’t have any suitable employees for the role, you can still ask employees for help filling roles. Create an employee referral program that encourages employees to refer qualified people within their networks, and if their referrals are hired, reward employees with prizes or monetary bonuses. 

It’s also beneficial to host regular recruitment events to get to know people within your community and build your employer branding awareness. You don’t have to spend a ton to make a successful event. Learn more about different recruitment event ideas to determine which is most suitable for your budget and will vibe with your ideal candidate personas.

And for the people within each of these different networks, it’s important to create a meaningful talent community . These are the people who have engaged with your brand as a prospective employer, but aren’t right for your current open roles. Continue to stay in contact with these people on a regular basis and make sure they’re the first ones to know about open roles. This will save you time and resources connecting with candidates who have already shown an interest in your employer brand. 

As a startup, your recruitment tactics will be a bit different from other companies and that’s OK. The most important thing is to leverage the unique features your company has to offer candidates throughout your recruitment strategy to stand out as an employer of choice. For more information on building a stellar recruitment strategy, check out our other tech recruiter resources .

Great Companies Need Great People. That's Where We Come In.

How to Start a Recruitment Business

Setting up a recruitment agency can bring you freedom, flexibility and the chance to get paid to do what you love. But how do you get started? Follow the Recruitment Entrepreneur guide to success.

Taking the first steps on your journey to setting up a recruitment agency is exhilarating, but also daunting. It’s a competitive industry and you need to be able to fight for clients, candidates and recruiters for your team. But when you get it right, you’ll experience a feeling of freedom like no other. More and more recruitment professionals are realising that there is a huge potential for individual and agency growth.

With a swelling market and increasing corporate and client demand, you need to identify how to start a recruitment agency that will stand tall for years to come. In this guide, Recruitment Entrepreneur identifies how to stand out in a competitive landscape, how to source recruitment business funding for a successful start-up, and how to launch a recruitment agency.

In this guide we’ll look at the following:

  • Writing a recruitment business plan
  • Start-up costs
  • Identifying your niche
  • Marketing and branding
  • Business support infrastructure

Creating your own recruitment business plan

When you set up your recruitment agency, it’s essential to have a clear strategy and recruitment business plan. You should plan each quarter, managing cash requirements and setting realistic targets and goals. Having a clear road map ahead will help you keep on track and see the forest for the trees. Your business plan will also help you win investment funding.

What to include when writing a recruitment business plan

  • Personal profile – What makes you a good recruiter and a good businessperson? Why do you want to launch a recruitment agency? Lay out your experience, contacts, qualifications and other personal qualities, as these will provide the insight into you as a person that potential business partners and investors will be keen to see.
  • Business profile – Set out the sectors your agency will specialise in and why, what types of clients and candidates you are looking to work with, and the demographic you will target. Are you going to work alone or with a partner? Will you build a team? You should also specify how you will source recruitment business funding
  • Market research – Discuss your target market, competitors, the challenges you will face and how you will overcome them. How do you plan to attract new clients and candidates? Is there a geographic area you will focus on? Think ahead and prepare for every business eventuality to show that you are invested in making your business a success.
  • Business costs and forecasts – Outline all the business costs you expect to incur, from marketing to renting office space, and business insurance to take-home salaries and commission for you and your team. Include profit projections for Year 1, Year 2 and beyond.

Writing a detailed recruitment business plan should be the first thing you think of when looking to seriously launch a recruitment agency, so it’s important you take your time on this.

Recruitment agency start-up costs

When thinking about how to launch a recruitment agency successfully, the first thing on your mind may be recruitment business funding. It’s estimated that 75% of recruitment start-ups budgeted over £10,000 to launch their business. How are you going to get the money to get your business off the ground? 

Costs to consider for the business

  • Marketing – You’re going to need to design yourself or pay for the development of a website, a domain name, and site hosting to create your own digital calling card. Organic social media marketing is free, but if you’re considering paid advertising online then this should fall under your marketing budget.
  • Memberships – If you’re joining premium job boards, CV databases, and recruitment portals, factor in the monthly and annual cost spent on these memberships. A prime example of professional-level access to these portals is your LinkedIn Recruiter License.
  • Office space – This is easy if you’re going to be working from a home office, but if you have a team or plan on renting office space, then this should also be factored into your recruitment business costs.
  • Insurance – It’s vital you acquire business and employers’ insurance to ensure you’re compliant with all governing bodies. You can incur fines if you try to fly under the radar, so factor this into your business costs too.

Then, of course, comes to the costs to consider for if and when you take on a team and scale your business.

Costs to consider for your team

  • Salaries – If you’re starting out with a few team members or plan on scaling up in the near future, you need to decide on starting salaries and factor these into your costs. The same can be applied to commission schemes, too.
  • Holiday pay, sick pay, and benefits – When planning on incorporating staff benefits into the business, this needs to be calculated, as do employer obligations like holiday pay and sick pay.

Understanding your costs and sourcing the funding forms a healthy portion of the successful launch of a new business, especially in recruitment. By seeing the bigger picture of where your money will feed into the different arms of your business set-up, you can move forwards on solid ground.

Discuss your recruitment business funding options

You can talk to your team or your business partner about how to finance the business and launch a recruitment agency. However, if it’s just you, you may want to seek out a recruitment mentor to discuss financing options.

At Recruitment Entrepreneur, we’re one of the most successful private equity investors in start-up and scaling recruitment businesses. Since 2014, we've invested in more than 32 talented founders, enabling them to launch and scale successfully. Our results lie in our ability to provide not just knowledge, but also know-how. Our portfolio of clients is ever-expanding and we provide mentorship for ambitious entrepreneurs seeking to build their name and brand.

Identify your recruitment agency niche

You can’t be all things to all people. You need to find a niche – an area of recruitment that you will operate in. Identifying your recruitment niche will help you narrow down your target clients and candidates, increasing the chances of both establishing your brand name in a competitive arena and becoming a chosen supplier.

Utilise your specialist area to your advantage. If you’re setting up a recruitment agency after working in a previous industry role, take the experience of the client base with you to inform your niche. Use an industry or sector you excelled and placed multiple candidates in.

If you’re setting up a recruitment agency and coming from a non-recruitment background, then use your experience in previous job roles and your own professional interests to capitalise on potential gaps in the market. Use your inside knowledge and understanding of the challenges of the sector to your advantage.

For example, Baldwin Boyes achieved success by partnering with Recruitment Entrepreneur and focussing their business model around recruitment for Board, Executive and Leadership level roles for legal firms. By capitalising on their own experience in the Legal recruitment sector, they have seen enviable growth.

Recruitment marketing and agency branding

This is the fun part of setting up a recruitment agency – creating your branding! You need to create a solid brand to be able to stand out from the crowd. Here are some of the things you’ll need to consider. Remember to give it a bit of the personal touch:

Your business’ logo needs to communicate who you are visually, which can be tricky. It will set the character of your business, your brand’s tone of voice, and become the emblem you’re recognised for. Through competitor research and your own intuition, creating a logo and tagline can be quite fun.

These same principles go hand-in-hand with your business name . What may partially inform the process of naming your business is whether there are any other recruitment companies geographically or professionally bordering your own. Is there are anyone in your vicinity or your niche operating with a similar business name?

Not only is this something to consider from a competition point of view, but also for purchasing a domain name for your website and setting up social media handles.

Once you’ve settled on a business name that is viable for both your digital identity and operational in your sector, claim your social media handles . Set up your LinkedIn and Facebook pages, and any other platforms you want to use, so you can take those usernames off the menu for other businesses and institutions.

When you’ve solidified your business name and branding, it’s time to take them and create a website with them. There are platforms you can use to design your own site that include hosting and domain name costs, but there are also options for professional web developers to design you a bespoke site.

Once these steps are complete, you’ve essentially created a digital footprint for your new business.

Putting in business support infrastructure

A business doesn’t run on its own. You need to set up systems, software and processes to streamline your business set-up and launch for all involved. Consistency is key.

When you run a business, you need to make sure your bookkeeping, management accounting, invoicing, payslips, VAT, insurance and more are taken care of.

This can be difficult for a new business owner to juggle, especially because so much of business accounting is time sensitive and relies on the correct documentation. Will you handle this yourself, or will you need someone to support you?

Many start-up business owners find it more comfortable to take on accountancy support. You may want to hire an accountant or outsource it externally.

Customer Relationship Management (CRM) software

A good CRM will give you a holistic overview of the entire recruitment process, from applicant tracking and nurturing through to your overall company activity in one centralised portal.

Not only is it time saving and efficient, but it also creates a universal hub of information, making it easy to introduce new team members to your client base and internal processes when scaling up.

Investing in time-saving technology will ultimately reward your business as you’re able to spend more time with people rather than on processes.

Recruitment business mentoring

Seek guidance and mentorship from professionals who have been in your shoes before. Starting a new recruitment business is intimidating, especially if this is the first time you’ve considered striking out on your own. There is no shame in asking for help as a fledgling business, especially when you want to make that business a success.

At Recruitment Entrepreneur, we have fostered a community of businesses that benefit from the expertise of our dedicated team who provide; funding, financial expertise, operational strategy, back-office support, legal advice, marketing, and talent attraction solutions, all of which enable our partner businesses to flourish.

We make seeking investment for your recruitment start-up easy, and we’ll help you kickstart your new recruitment business.

Find out more from Recruitment Entrepreneur

Starting a recruitment agency is fun and exciting, but it doesn’t happen by itself. The better you plan before you launch, the bigger your chances of success. The answer to ‘how to set up a recruitment agency’ isn’t a simple one, but it’s a highly rewarding and commercially lucrative one. It begins with a comprehensive recruitment business plan, identifying a niche where you can operate, and securing the recruitment business funding you need to keep you on track.

Ensure you’re operating legally by preparing all your company registry details, insurance and business formation. Then, set yourself up for a successful start by seeking how to start a recruitment agency and secure funding and financing through Recruitment Entrepreneur and our network of experts.

Bolster your business today and apply for investment with Recruitment Entrepreneur .

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How to start a recruitment business

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Written and reviewed by:

Bryn Glover - Startups

Our independent reviews are funded in part by affiliate commissions, at no extra cost to our readers.

Today's recruitment companies are very busy. Post-COVID, the so-called ‘great resignation' has taken place, with employees up and down the country searching for better jobs made available thanks to the advent of remote working.

Companies are now grappling with a cross-sector labour shortage, while immigration issues caused by Brexit have only aggravated the situation. While this is undeniably a hard environment for recruitment companies to deliver in, the medium to long-term prospects for the industry look very different.

As a recession looms, job seekers are likely to lose confidence in switching roles. Soon, the risk of saying goodbye to a stable salary during a cost of living crisis will outweigh the benefits created by finding a new employer.

Given the mixed bag of opportunities available, any recruitment startup needs to stay on top of the market and ensure they are setting up a business that meets the exacting demands of clients. Below, we'll get you fully up-to-date on how to set up recruitment firm. We'll through the type of experience and level of expertise required, to the kind of fees and profits you can look forward to.

There's a lot of planning that needs to go into launching a successful recruitment agency. Thankfully, one area which needn't cause undue stress is creating a website to promote your business. Thanks to modern templates like the one below , you can create one of your own in under an hour.

Recruitment Agency Website Template

At Startups.co.uk, we test and rate website builder tools, and we've identified Wix as one of the best you can choose for creating a business site. Wix even has a selection of  custom website templates designed specifically for recruitment agencies  – you simply drop your own company information, wording and preferred imagery into your chosen template. Better still, it's completely  free to try  for yourself.

Create a recruitment business plan

Recruitment pricing structure, find your niche, recruitment startup costs, financing your recruitment business, recruitment laws and regulations, final thoughts.

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What Does Your Business Need Help With?

As with any business, don’t do anything before you’ve created your recruitment business plan. Our easy-to-use template will take you through each step of the process, but you essentially need to cover the following points:

  • About you – Discuss what makes you a good fit to run a recruitment business, and why you want to run one. Discuss your experience, contacts, qualifications, and personal qualities, and make sure to sell yourself
  • About your business – There are a wide range of recruitment types, so you’ll need to make clear exactly what your recruitment business aims to do. Which sectors do you want to work in? Do you want to focus on full-time or part-time employees? Is there a particular demographic you feel an affinity with and can target? You’ll also need to explain staffing, and crucially, how you plan to finance your business.
  • Market research – Here you can go into more detail on your target market and competitors – how are you going to stand out and attract business? Identify a geographic area that you’ll initially focus on – even if you don’t have an office to start with, you’ll likely need to meet candidates and clients in person, so choose the location for your business carefully.
  • Costs and business forecast – Here, you’ll need to outline all the costs your business might incur – everything from website development to office space and business insurance. You’ll also need to give a realistic business forecast that explains how much profit you’ll make in Year 1, Year, 2, Year 3 etc.

While it may not be quite as satisfying as building your own recruitment business from scratch, opening a recruitment franchise has several key advantages. You’ll be able to use an established brand, get expert advice from experienced recruiters, and may also find it easier to get finance than if you were starting a completely new recruitment business.

The total investment varies, but Travail Employment Group , a leading company in this area, suggests a total of £30,000 will be required – including an initial franchise fee of £12,000.

This might be a particularly suitable role for those with little recruiting experience, due to the much greater level of support offered.

Need help staying organised?

Starting a recruitment business will take a number of steps and it's important to keep everything tracked.

Project management tools are a great way to keep everything moving in the right direction – you can assign tasks, track progress and create projects that everyone can chip into.

Get expert help finding the right project management software for your business .

Expert insight: John Lennon, THRYVE

How to start a recruitment company - John Lennon, THRYVE

John Lennon (no, not that one) built innovative tech recruiter THRYVE from scratch to £4mn turnover and told Startups that, when starting out, you should think about all the realities of owning your business rather than just focusing on how you'll go about getting clients and attracting candidates:

“If I could go back in time, my first hires would be an operations manager and a marketing manager. When you first set up a recruitment business you are a salesperson, a marketer, an accountant, bookkeeper, administrative expert, tax expert, events coordinator and so much more.

“It was only when I started THRYVE that I realised how little I knew about how to run a business. This is why so many recruitment companies fail – most recruitment business owners are great recruiters, but struggle with the transition to becoming a business owner.

“Make sure you educate yourself on basic business principles, understand how to read a profit and loss statement, understand how to forecast, take advice, get mentors and surround yourself with positive people in your space who can help you.

“And, most importantly, be really mindful of cash flow and your outgoings.

“After all, your revenue figures mean nothing if your profit levels aren't where you need them to be.”

One of the most important decisions you’ll make is how to price your services. This should be a crucial part of your business plan.

The fee you charge will vary depending on whether you are recruiting permanent or temporary staff.

Permanent employees

Rates vary, but research by recruitment training company Social Talent indicates that you can expect to charge a one-off fee of 15-20% of the role’s annual salary for most roles, with this rising to 25% for roles that are particularly difficult to fill. This matches the view of Tim King of IT recruitment specialist Matchking , who charges his clients 20-25% of the employee’s annual salary.

This assumes that you operate on a contingency basis – in other words, that you’re only paid once the job has been filled by a candidate you put forward. In this case, you’ll often be competing with other agencies.

The other option is retained recruitment , where you are exclusively assigned to find candidates for a role. This usually involves a more in-depth process, and is often associated with more senior roles. Consequently, you are able to charge more – 30% is common, while experienced professionals in specialist niches charge up to 50%.

You’ll also be expected to factor a rebate into your fees, where you return part of the fee if the hired candidate leaves the job after a certain period of time. Again, the period and percentage returned varies between agencies.

This variation in fees reflects the fact that recruitment can involve many different processes, from writing job ads to interviewing candidates, and even conducting reference checks. As a recruiter, how many of these tasks you take on will determine the fee you charge.

When starting out, you may also want to be flexible with your fees in order to build long-term commercial relationships.

Temporary employees

Things are a little more complicated when you’re hiring temporary employees.

You’ll need to factor in the following:

  • The cost of the worker
  • Holiday pay
  • National Insurance
  • Your desired margin

These costs are initially paid by the agency, before being reclaimed from the client.

The rate may also vary depending on whether the position is fixed-term or paid by the day.

The same Social Talent research found that for a fixed six-month post, agencies would charge 12-15% of the equivalent annual salary ( not the six month period the employee was being hired for).

For a temp position that paid £300 a day, agencies would charge around 15%, so approximately £45 per day in this case.

For both permanent and temporary workers, some agencies are also shifting to a flat fee structure, as this can make them more attractive to clients.

AB Recruit

As a newly established recruiting agency, you’re unlikely to survive unless you develop a specialist area. Trying to compete in the general recruitment space is incredibly difficult given the established brands and high visibility of the major players.

Many of the most successful smaller scale recruitment agencies have prospered by sticking to a specialist area they know inside out.

Adam Bolton gave great insight into how he started ABrecruit from scratch on the Undercover Recruiter blog. What really comes across is how he always knew he wanted to focus on .net development, and how he leveraged his experience in this area. He knew the field, knew the people, and knew how to appeal to both companies and candidates – a plan that resulted in a thriving company which has now been going for seven years.

A look at the Startups 100 reveals similar success stories – JHP Recruitment has prospered by focusing on veterinary recruitment, Debut has made waves with its clever platform for graduate recruitment, and The Dots is providing creative professionals with a new way to be seen and hired.

If you can, follow their lead.

Expert insight: James Lloyd-Townshend, Frank Recruitment Group

How to start a recruitment company - James Lloyd-Townshend, Frank Recruitment Group

The chairman and CEO of technology recruitment company Frank Recruitment Group , James Lloyd-Townshend has over 23 years of experience in the recruitment industry. Speaking to Startups, he said that while it may feel like you're turning down chances to make money, choosing a specialist area and sticking to it is the key to long-term success:

“When starting a recruitment business, you need to understand that not every opportunity is an opportunity.

“This is one of the most common pitfalls, especially in this industry. It’s easy to think that, for instance, that any sector is a potential area to operate within.

“However, that can come at the expense of having the specialist knowledge that can actually be of value to your customers.

“So for us, knowing our niche and focusing just on that, allowed us to provide a level of service that a lot of our competitors have struggled to match and has allowed us to stay out in front.”

Tempo

Like any other startup, new recruitment businesses can prosper by doing what their larger competitors can’t (or won’t) do.

Being agile is the key. Adam Bolton of ABrecruit made the decision early on to work from 8am to 9pm on weekdays and all day on Saturday – a punishing schedule that enabled him to talk to candidates outside work hours, and have relaxed conversations about what they were really looking for. It’s a great example of the sort of creative thinking you’ll need to employ to make your mark in the early days.

Depending on what sort of candidates you’re targeting, you may also need to consider tech-driven solutions. Already, the job search has largely shifted from laptop to mobile, and the likes of Tempo are trying to reinvent the recruitment process by using AI, video, and rich CVs that include ratings and reviews. All this has the potential to hugely streamline the recruitment process – Tempo boasts that its fastest hire was made in just 27 minutes.

Further along in the process, the traditional supremacy of the interview is also under threat – with alternative and complementary solutions including soft skills assessments, job auditions, and even virtual reality.

As a recruitment startup, keeping on top of these trends is key. While you may not have the established reputations and brand awareness of the big boys, you’re ideally placed to innovate and operate more efficiently.

Expert insight – Malcolm Burenstam Linder, Alva Labs

How to start a recruitment company - Malcolm Burenstam Linder

Groundbreaking recruitment startup Alva Labs is taking aim at one of the central pillars of the common recruitment process – CVs. Instead it wants to use logic and personality tests to remove human bias from the hiring process and quickly find candidates that match the requirements of the role and the culture of the hiring company. This innovative approach has already earned Alva major clients like Arla and Deloitte, and co-founder and CEO Malcolm Burenstam Linder told Startups that the impetus for the company came from seeing traditional recruitment processes fail over and over again in his previous jobs:

“I previously worked for a flourishing private equity company and a rapidly growing ecommerce company, both of which had big problems with staff turnover – hiring managers were in a constant battle with the revolving door and staff weren’t staying because they simply weren’t the right people for the job.

“At both companies, I couldn’t understand how we could be so dependent on data and analytics for almost every decision, but when it came to recruiting new team members, we were relying on gut feeling and personal preference. This is when the extent of the recruitment problem dawned on me.

“By failing to talk and think about talent in an objective manner, we let bias creep into the process and demolish our chances of hiring the best people.

“And by letting our own experiences drive our definition of what ‘great’ looks like in a candidate, we directly stunted company growth.

“Eventually, I found myself waving goodbye to the stability of private equity to kickstart my own recruitment business, Alva Labs, with a vision of improving the quality, efficiency and inclusivity of the job market worldwide.”

There are only two things you definitely need to start a recruitment business – a phone and an internet connection. You can even use your personal mobile at the outset, although a dedicated business handset could cost you as little as £6 a month – check out our guide to the best business mobile phone plans for more info.

However, to really spread your wings and fly, you’ll want to invest in the following:

If you’re a recruitment agency, your website is really, really important – it’s the public face of your business, and it’s how candidates and companies will judge you.

There are a huge range of options available, as detailed in our guide to small business website costs . If you want to take the DIY approach, companies like Wix and Squarespace offer packages for around £10 a month, while a professional web design company should charge you around £1,000.

Make sure your site is set up for mobile – a recent report from recruitment platform Glassdoor found that 58% of Glassdoor users are looking for jobs on their mobiles .

You can find software that promises to help you with practically every aspect of your business, but two areas are really worth looking into for recruitment businesses – CRM software and accounting software.

  • CRM software – CRM stands for Customer Relationship Management, but as a recruiter, you should think of it as Candidate Relationship Management. Numerous pieces of bespoke software are available to help you easily keep track of who’s applied for which job, and sort candidates according to skills and experience.
  • Accounting software – Not many people (apart from accountants) love the financial side of running a business – running payroll and putting together tax returns can quickly make you question the wisdom of getting set up on your own. However, while you’re unlikely to be able to afford an accountant in the early days, investing in accounting software that lets you track expenses and payments could really pay dividends. You can make sure you stay on top of your finances, and don’t have any sleepless nights when it comes to filling in your tax return.

Office space

You might start off in your bedroom, but sooner or later, you’ll want to find a proper space where you can meet candidates and run your business. A co-working space is a great first step, getting you out of your living room but saving you the responsibility of single-handedly renting a space. You can find out more in our in-depth guide to the costs of co-working , but expect to pay anything between £100 and £600 a month in London depending on location and facilities. Outside the capital, prices fall dramatically – with a co-working space in Sheffield, for example, costing approximately £200 a month.

As a recruitment business, you shouldn’t need much in the way of equipment. The days of fax machines are long gone, and contracts can be electronically signed using services like Docusign . Make sure you have a good phone and internet connection, as well as a selection of private spaces where you can meet candidates.

Location is also important: you’ll want to ensure you’re based somewhere that’s easy for candidates to get to, and also consider whether there’s a part of town which is a particular hub for the industry that you specialise in.

There’s no getting around this one – as soon as you employ your first member of staff, you’ll need employers’ liability insurance that covers you for claims of up to £5m. It’s also a good idea to consider getting public liability insurance, which would cover you if anything happens to a candidate or client on your premises, while any vehicle used by the business must have a motor insurance policy in place.

Recruitment is commonly associated with two things – high salaries and high turnover.

Let’s tackle salaries first. While this is likely to be your biggest ongoing expense, it’s a bit of a myth that recruiters are always on high salaries. Nationally, PayScale data indicates that the average UK salary for a recruiter is £26,443 – notably below the UK average of £31,772 a year (or £611 a week).

Of course, this masks significant regional variation, with LinkedIn Salary data indicating that the average for a recruiter in London is £35,000 – compared to £27,500 in Manchester, £29,500 in Sheffield, and £29,500 in Leeds. And you’ll likely need to also factor in commission, which averaged £5,000 according to PayScale and £10,000 according to LinkedIn.

In terms of staff turnover/staff churn, there’s no doubt that this is an issue for recruitment businesses, with rates commonly cited that are double or even triple the national average of 15%. The common turnover factors still apply – make sure you’re open to flexible working, and that salaries keep pace with the industry at large – but dealing with rejection is often cited as the most difficult part of working in recruitment.

It might therefore be a good idea to ensure that a system is in place for employees that are struggling. For a startup, this could be as simple as an empathetic senior member of staff that can offer the benefit of their experience. As you grow, investing in dedicated mental health support could really pay dividends.

With a recruitment business, awareness is key. You need everyone to know what you do, and how you go about it – which makes marketing really important. Consider targeted digital and social media marketing campaigns, as well posting on online job boards.

While it can be difficult to know how much to spend, make sure you don’t commit to a campaign before you know it will deliver a solid ROI. Start small, and then scale up if you see positive results.

Project management software

With so many things to juggle, using project management software can make a huge difference to your recruitment business. Easily keep track of everything that needs to be done, and instantly see which tasks are overdue. Some programs can even automate processes completely to significantly improve efficiency.

Given the myriad costs discussed above, making sure you can finance your recruitment business should be one of your first priorities. Given the delay between outlay and financial return, cash flow is a common issue for recruitment agencies.

Alongside trying to secure investment or a business loan, make sure you consider invoice factoring. This is common in recruitment, and is a great way to manage a temporary shortfall – find out more in our guide to invoice factoring fees .

Two finance providers that specialise in the recruitment industry are Sonovate and Quba Solutions.

Sonovate specialises in invoice finance, allowing businesses to borrow against their outstanding invoices in order to free up cash and pay their contractors on time. It has already funded over £500m in invoices to date.

Quba Solutions

Quba Solutions is a contract finance provider that offers finance and back office services to recruitment firms. Its packages allow you to easily generate invoices, chase payments, and ensure that your cash flow remains positive.

Expert insight: Gary Ashworth

How to start a recruitment company - Gary Ashworth

Recruitment veteran Gary Ashworth has over 40 years experience in the industry, founded his first recruitment company when he was just 21, and is currently chairman of three different recruitment companies. Speaking to Startups, he stressed the importance of having a coherent financial plan in place:

“If you want to take advantage of running contract or temporary staff as well as charging a fee for making them permanent, then you’ll have to have a line of credit in place to cover their wages, since you might not get paid for 30-60 days or longer.

“You’ll also need a more sophisticated back office to process all of the transactions and that will come at a cost.

“It's absolutely crucial you get the numbers right – you should be turning 20% of your net fee income into profit .

“If you’re not doing that, then you’re either paying your staff too much or your establishment costs are too high. You don’t want to be a busy fool who works hard but barely makes a profit!”

The main piece of legislation that covers the recruitment industry is the Employment Agencies Act 1973 . If you want to set up a recruitment business, you’ll need to make sure you know this legislation inside out. The REC has a helpful guide, and this infographic nicely summarises the main points.

Employment Legislation

Source: Agency Central

Alongside members and key figures from the world of recruitment, the REC has also created the REC Code of Professional Practice, which aims to promote consistent standards across the industry. This covers the following 10 areas:

  • Respect for Laws
  • Respect for honesty and transparency
  • Respect for work relationships
  • Respect for diversity
  • Respect for safety
  • Respect for professional knowledge
  • Respect for certainty of engagement (ensuring that workers are fully informed of the pay and working conditions for the role they are being employed in)
  • Respect for prompt and accurate payment
  • Respect for ethical international recruitment
  • Respect for confidentiality and privacy

As is the case with any business, starting a recruitment agency is not for the faint hearted – but following the steps laid out above should ensure you avoid some common pitfalls.

Starting off with a good business plan is crucial – one that makes it clear what your business strategy is, has detailed cash flow forecasts, and demonstrates your in-depth knowledge of your target market. If you’re starting out with no recruitment experience, then taking on an employment franchise could be a great option – and regardless of whether you’re franchising or going it alone, choosing the right pricing structure is key.

The UK recruitment industry is already a crowded market. Finding your niche is extremely important, as is having an innovative mindset that’s open and ready to implement new recruitment solutions.

With initial costs likely to include a website and marketing, and later steps on the ladder entailing expenses like office space and CRM systems, having the right finance in place should be a cornerstone of your business strategy. Finally, make sure you have an in-depth knowledge of the UK’s employment agency legislation to ensure you’re operating legally.

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Related articles.

a man writing on paper

How to write a business plan for a recruitment agency

Table of Contents

Why a business plan is important

Provide direction,  minimise risk , reduce spending, market research , budgeting and financial planning, examples of swot analysis for a recruitment agency, opportunities , how countingup can benefit your recruitment agency.

If you’re looking to start a recruitment agency, you’ll need to create a business plan as any other startup would. Remember, though, that you’ll need to also account for the specific situations that might arise while working in the recruitment industry.

This article will serve as a guide to writing a great business plan for your recruitment agency. We’ll look at what your plan should look like, as well as why a plan is important. The topics we’ll cover include:

There are a few different reasons why you need a business plan before starting a business , but one of the most important is that it will guide your business going forward. Without a plan, no matter how simple the plan is, you’ll likely struggle to develop your business and make effective decisions. 

A business plan doesn’t have to be set in stone — you can adapt it to account for any unique events that affect your recruitment agency. That said, it’s essential to have at least a vague idea of the purpose your business will serve, the potential obstacles you might encounter, and how you’re going to deal with those obstacles.

A business plan is also necessary to minimise the risk you’ll face when starting a recruitment agency . One of the key sections of a business plan is the SWOT analysis, where SWOT stands for strengths, weaknesses, opportunities and threats.

In order to minimise risk effectively, it’s vital that you analyse both the weaknesses of your agency as well as the threats it may face. In doing so, you’ll be able to fix your weak points and avoid potential threats more effectively.

Finally, business plans are important because they provide valuable data for minimising your spending. For example, during your SWOT analysis and financial planning , you may find that you’ve budgeted a large amount of spending to support a part of your business that’s actually very strong. 

In a recruitment agency, this might mean you’ve planned to spend a lot of money on marketing, but your business already has a strong brand because you (as the owner) have many good personal contacts in the industry. In this instance, you can safely reduce your marketing budget and save your business money. 

Thorough market research is the best first step when you’re writing a business plan . Market research means examining the industry your business will exist in, and finding out the needs and preferences of that industry’s consumers.

For a recruitment agency, a key research topic for your business plan would be finding out the impact COVID-19 has had on the market. Many new markets emerged during the pandemic, which you can provide your services to. As the UK is currently recovering from the pandemic, it would also be wise to look into which industries are now recruiting heavily after laying off staff in recent years.

Planning out how you’ll spend your money when starting your agency is also a key part of a good business plan. You need to consider your budget for starting the business as well as how you’ll manage your business finances going forward.

It’s smart to prepare a budget for each section of your business. For instance, you might set aside different amounts for recruiting staff, purchasing business premises, and marketing. Your advertising budget is particularly important when you’re a small business , as you may not be able to rely on personal contacts or existing clients for referrals, so you’ll need to attract clients independently.

Conducting a SWOT analysis is a great way of evaluating your business even after starting up, but it’s particularly helpful when you first put together your business plan. SWOT stands for strengths, weaknesses, opportunities and threats, so a SWOT analysis requires you to think of an example of these for your business. In a recruitment agency, these might be:

As mentioned above, it may be that you have a good reputation because you have a wealth of experience and personal connections in the recruitment industry, so you’ll not need to worry as much about marketing.

Recruitment agencies frequently have to use a lot of software to track their clients’ needs and organise candidate applications. If you’re not very good with technology, you may need to hire staff who are to account for this weakness.

The UK is currently rebounding from the struggles of the COVID-19 pandemic, and this presents a wealth of opportunities for a good recruitment agency.

You need to take immense care when you’re handling people’s personal information, which you’ll often do at a recruitment agency. Sending this information to the incorrect person can have a considerable negative impact on your business, as there is a lot of new legislation regarding privacy. 

Your business plan should include a good amount of financial planning, as tracking your cash flow (your incoming and outgoing cash) is hugely important in any business. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one app. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here .

Countingup

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Additional Resources

Understanding the Importance of a Business Plan

A well-structured business plan is the cornerstone of success for recruitment agencies. It   serves as a blueprint outlining  your agency’s vision, mission, goals, strategy, and financial projections. 

Here is why it is crucial for the success of a recruitment agency. 

  • A well-crafted business plan is a strategic tool that enables recruitment agencies to stay focused on their objectives, create a competitive edge, and ultimately achieve long-term success. 
  • Notably, it allows you to identify potential challenges and opportunities, set realistic expectations, and allocate resources efficiently.
  • By providing a clear roadmap for growth, a comprehensive business plan helps you navigate the complexities of the recruitment industry and adapt to the ever-changing market conditions.
  • It helps you make informed decisions and strategies effectively. 

The 7 Stages of Writing a Startup Recruitment Agency Business Plan

Writing a business plan from scratch for your recruitment agency can be challenging. We’ve compiled a comprehensive step-by-step guide to explain the process.

Here are the seven stages involved in putting together this critical document:

  • Defining your recruitment agency’s vision and mission
  • Identifying your business model and services
  • Conducting market research and analysis
  • Developing a marketing and sales strategy
  • Building your team and infrastructure
  • Defining financial projections and funding
  • Outlining risk assessment and mitigation strategies

Stage #1: 3 Steps Procedure for Defining Your Recruitment Agency’s Vision and Mission

Creating a solid   vision and mission statement  for your start-up recruitment agency business plan is crucial to guiding your business in the right direction.

To do this, follow the below steps:

  • Define your purpose.
  • Establish your goals.
  • Outline your values.

With a trusted partner like Recruiter Startup

costs to start your recruitment desk are minimal compared to starting from scratch

Step #2: Establish your goals.

Set measurable goals to work towards, such as:

  • Place 100 candidates in new jobs within the first year.
  • Generate £250,000 in revenue by the end of year two.
  • Build a network of 500 vetted clients and 1,000 active candidates in the UK.

If you’re putting together a start-up recruitment agency business plan, it’s important to review and revise your goals regularly based on your progress and market conditions. 

Step #1: Define your purpose.

Establish the underlying reason for starting your recruitment agency in the first place. Do you want to help people find meaningful work, support growing businesses, focus on a niche industry, or something else? Whatever the reason, your purpose should align with your values.

For example:

  • To help UK technology startups attract top talent.
  • To provide job opportunities for disadvantaged groups in local communities.
  • To become the go-to agency for healthcare recruitment in the UK.

Step #3: Outline your values.

The values that guide your agency will shape your culture and brand.

Examples include the following:

  • Integrity:  We’re honest and transparent and keep our promises.
  • Excellence:  We strive to exceed expectations and deliver the highest quality service.
  • Diversity:  We believe in providing equal opportunities regardless of gender, ethnicity, or background, in line with the  UK Equality Act 2010 .

Your vision, purpose, goals, and values provide the foundation for your recruitment agency business plan. Refer to them often when making critical decisions to stay on track. 

Stage #2: Identifying Your Business Model and Services

Next, consider which business model suits your needs: focusing on permanent placements, contract staffing, or both.

The services you offer should align with your expertise and target market. For instance, if you have a background in IT, specialising in tech recruitment might be ideal. However, starting with generalist roles could be more suitable if you’re new to the industry.

Lead generation

Developing a comprehensive recruitment agency business plan in the UK (or any other country) can be complex and often impractical for new agency owners. A more efficient alternative is to join a recruitment franchise like  Recruiter Startup .

We provide the necessary infrastructure, tools, training, and support to help you launch your agency quickly, enabling you to start matching candidates with jobs and generating revenue immediately. 

Stage #3: A 4-Step Checklist for Conducting Market Research and Analysis

Performing market research for your recruitment agency is essential for understanding your target market, competitors, and industry trends.

This involves the following activities:

  • Surveying businesses in your area
  • Researching competitors
  • Tracking industry trends
  • Analysing data for opportunities

Step 2: Researching Competitors

Investigate what competitors offer and how they operate — research their fees, services, and client attraction strategies. The UK recruitment industry is highly competitive, comprising  over 27,700 agencies . Hence, understanding your competition will help you differentiate your agency.

Step 1: Surveying Businesses in Your Area

Determine hiring needs and budgets by surveying local businesses. As of 2022, the UK had approximately  5.5 million  private sector businesses, providing ample opportunities to explore various industries and niches. 

Step 4: Analysing Data for Opportunities

After gathering data, analyse it to identify opportunities and establish a competitive advantage. Look for unmet needs or new trends to capitalise on.

Step 3: Tracking Industry Trends

Stay updated on trends like remote work, which increased significantly during the COVID-19 pandemic, with   17.4% of the UK workforce   working from home in 2020. Also, monitor the demand for contract staff, as the gig economy has grown in recent years. Adapting to the ever-changing recruitment landscape is vital for long-term success.

Starting a business from scratch can be hectic. As an alternative, consider joining a recruitment franchise like Recruiter Startup. We have an established brand and in-depth industry knowledge, helping you begin your journey with a solid foundation.

Check out our  associates recruitment model  to learn more about how we operate and how much you can earn working from home.

Stage #4: 5 Tips for Developing a Marketing and Sales Strategy

A solid marketing and sales strategy is crucial for building a successful business, recruitment agencies inclusive.

These five tips can help outline a compelling start-up recruitment agency business plan, which is vital if you’re looking to convince investors to fund your enterprise:

  • Define your target market.
  • Build your online presence.
  • Develop a marketing strategy.
  • Source great candidates.
  • Provide excellent service.

1. Define your target market.

To identify your ideal job-seekers, focus on an initial niche, such as IT professionals, nurses, or teachers. You may go on to specify locations, experience levels, and skills.

For example, you may focus on recruiting in the healthcare niche, a highly viable market — the UK has a high demand for healthcare professionals, with the NHS employing o ver 1.4 million people . Targeting your market makes reaching them more manageable.

2. Build your online presence.

About   61% of job-seekers  in the UK used online job boards to find employment in January 2022 alone.

Take advantage of this viable marketplace by developing a professional website to showcase your agency’s credibility. Optimise for search engines using essential keywords, like “recruitment agency” and your location, e.g., “London.” Create LinkedIn, Facebook, and Twitter profiles for networking with candidates and clients.

Our post on how to start a recruitment agency expounds more on the need to achieve a robust digital profile.

3. Develop a marketing strategy.

An excellent recruitment business plan example outlines how it plans to generate leads.

  • Identify the best ways to promote your agency. 
  • Consider advertising on job sites like Totaljobs, Reed, CV-Library or in industry publications. Offer discounts and promotions to new clients and attend local networking events to form personal connections. 
  • Lastly, regularly email your contact list with job openings and agency updates.

4. Source great candidates.

Post jobs on your website, social media, and platforms frequented by your target candidates. You may also utilise your network to gather referrals but thoroughly screen candidates to ensure the best matches for your clients. 

5. Provide excellent service.

Strive to build lasting relationships with clients and candidates — regularly check in to ensure satisfaction and address any issues promptly. Go above and beyond expectations, such as assisting a new hire’s onboarding process.  Up to 83%   of satisfied clients and candidates will likely refer others and return to your agency, boosting profit margins by 25%.

By following these steps, you’ll be well on your way to developing a successful marketing and sales strategy for your UK recruitment agency. While crafting a comprehensive recruitment agency business plan can be challenging, focusing on the essentials lays a solid foundation for your agency’s growth.

Stage #5: Building Your Team and Infrastructure: A 4-Point Checklist

Assembling a team of qualified professionals and establishing the necessary infrastructure is crucial when building a recruitment agency, so you must consider it in your recruitment agency business plan. However, this can be challenging and costly, as outlined in our post on recruitment agency startup costs.

Adhering to the following checklist can make your task easier:

  • Hiring recruiters
  • Administrative support
  • Office space
  • Technology infrastructure

2. Administrative Support

Your agency needs administrative staff to manage daily operations, such as answering phones, organising schedules, and updating records. An administrative assistant’s average salary in the UK is  £20,664 annually . Any candidate you’re hiring should have strong organisational and communication skills.

1. Hiring Recruiters

Recruiters are the backbone of your agency. Aim to hire experienced recruiters with proven success in your target industry or job function.

In the UK, the average salary for a recruiter is   £31,489 per year , with bonuses and commission potentially increasing earnings. Recruiters must excel in networking, interpersonal, and sales skills to effectively find candidates and maintain client relationships.

3. Office Space

If not operating virtually, secure office space for your team. Consider a location easily accessible for candidates and clients, with room for private offices or cubicles, a reception area, conference rooms, and storage. In the UK, office rental costs vary by location, with London prices ranging from   £50 to £150  per square foot per year.

4. Technology Infrastructure

Invest in a robust technology infrastructure, including the following:

  •   Applicant Tracking System (ATS):  Essential for managing candidates. Popular options in the UK include   Bullhorn  and  Firefish .
  • Customer Relationship Management (CRM) system:  Vital for tracking clients and placements.  Salesforce  and  HubSpot  are widely used in the UK.
  • Fast internet connectivity:  Important for efficient operations.
  • Enterprise-level security:  Crucial for protecting sensitive data and complying with UK data protection regulations like  GDPR .
  • Virtual communication tools:  Video conferencing platforms like Zoom or Microsoft Teams facilitate remote collaboration.

Setting up a recruitment agency’s team and infrastructure is a significant undertaking, requiring substantial resources. For those considering an easier route, a franchise model like Recruiter Startup provides the essential components and support, allowing you to focus on growing your business. Check out  what others are saying about us .

Stage #6: Defining Financial Projections and Funding

To create a comprehensive recruitment agency business plan, it’s essential to determine funding sources and estimate projected returns on investment.

Financial projections and funding

2. Finding Funding Sources

With financial projections in place, you can then explore the following recruitment startup funding options:

  • Business loans:  Banks, credit unions, and online lenders offer loans, but they require collateral and solid financial projections. The  British Business Bank   can help you find suitable financing options in the UK.
  • Angel investors : These are wealthy individuals who invest in exchange for equity and high potential returns.  The UK Angel Investment Network  can help connect you with investors.
  • Crowdfunding:  This involves raising small amounts from multiple contributors. Platforms like Seedrs and Crowdcube are popular but require dedicated effort.
  • Franchising : Pay an upfront fee to access a proven model and brand, e.g.,  Recruiter Startup . Note: With Recruiter Startup, your upfront fee is only £750 + VAT per month, a far lower expense than starting your own recruitment agency.  

1. Creating Financial Projections

Attract funding by showcasing realistic financial projections for your agency.

Consider the following factors in doing so:

  • Revenue : Estimate the number of placements you can make annually and the average fee per placement. In the UK, the average fee for permanent placements is around 15–20% of the candidate’s annual salary. Don’t forget to account for seasonal fluctuations in the job market.
  • Expenses : Calculate rent, payroll, marketing, and other business expenses. In London, for example, office rental costs can range from £50 to £150 per square foot per year.Note: When you set up as a franchise recruiter with Recruiter Startup, your expenses will be slashed as you won’t need to spend on office space or staff.
  • Profit:  Determine your projected profits by subtracting expenses from revenue. This demonstrates the potential ROI for investors.

To secure funding, present a well-developed business plan with solid financials and explain how the investment will drive growth and profits.

Stage #7: Outlining Risk Assessment and Mitigation Strategies

Considering potential risks and creating strategies to address them is crucial for the success of your recruitment agency.

Here are some key areas to focus on:

1. Identifying and Addressing Risks

When designing your recruitment agency business plan, anticipate challenges and develop solutions.

Common risks include the following:

  • Economic downturns : A weak economy slashes hiring rates. Maintain cash reserves and diversify your client base to mitigate this risk.
  • New competitors:  Stay competitive by focusing on niche markets and building strong client relationships. There are over 27,700 recruitment agencies in the UK, making it essential to stand out.
  • Key staff departures : Retain top talent by implementing training programs and offering incentives. Take note that ensuring high employee turnover can be costly and disruptive.

2. Meeting Legal Requirements

Compliance with legal regulations is vital for your agency’s reputation and success.

To achieve this, ensure you do the following:

  • Adhere to data protection laws : Obtain consent for storing and using client/candidate information. In the UK, compliance with the GDPR is mandatory.
  • Follow employment regulations:  Verify candidates’ right to work and provide fair pay/contracts. UK agencies must comply with the  Conduct of Employment Agencies and Employment Businesses Regulations 2003.
  • Register as an employment agency:  Requirements vary across countries and states. Registration with the  Employment Agency Standards (EAS)   Inspectorate is necessary for the UK.

Saving Time and Cost With the Franchise Recruitment Model

Starting a recruitment agency from scratch can be time-consuming and expensive, especially when considering investing in a robust recruitment agency business plan. However, a franchise recruitment model can save time and money, allowing your business to become operational more quickly and efficiently.

The key benefits of choosing a franchise recruitment model include the following:

Saving time and cost

  • Accelerated business setup : Franchising allows you to leverage an established brand and proven business model, significantly reducing the time and effort required to start your agency.
  • Existing customer base:  As a franchise recruiter working from home, you can tap into the franchise agency’s existing customer base, reducing the need to invest heavily in marketing and brand awareness campaigns.
  • The lion’s share of all placement fees : When you register as a franchise recruiter with an agency like Recruiter Startup, you get to keep 80%–90% of all your placements.
  • Comprehensive business plan:  Franchise recruitment eliminates spending months perfecting your business plan, as the franchise agency provides a tried-and-true plan to follow.
  • Online presence and marketing materials:  Franchise recruiters can bypass the hassle of building a website and online presence by using the franchise agency’s established website and marketing materials.
  • Cost savings:  The franchise recruitment model often includes software requirements and supplies provided or subsidised by the franchise agency, leading to significant cost savings.
  • Expert guidance and training:  Franchise recruiters can benefit from valuable insights and training from an experienced franchise agency that’ll guide them through setting up and operating their recruitment desk.

Choosing a franchise recruitment model allows aspiring agency owners to start placing candidates and generating revenue much sooner. This approach saves time compared to spending months designing a recruitment agency business plan. The franchise model is an attractive option for those looking to enter the recruitment industry hassle-free.  Contact us  now to get started!

Failing to comply with legal obligations can result in fines, reputational damage, or even forced closure. Hence, prioritise compliance from the outset.

Recruitment Agency Business Plan - Frequently Asked Questions

Recruitment agencies make money primarily by charging their clients (employers) fees for successfully placing candidates in job roles. These fees can be either a percentage of the candidate’s starting salary or a fixed fee, depending on the agreement with the client. Some agencies also charge candidates a fee for job search assistance or other career services.

Yes, starting a recruitment agency can be a good idea if you possess strong industry knowledge, networks, and the ability to match job seekers with suitable employers. The recruitment industry can be lucrative and rewarding. However, it’s essential to be aware of the challenges, such as competition, changing market conditions, and the need for adaptation to new technology. 

Some of the   best industries   to start a recruitment agency are:

  • Medical and Healthcare
  • Information Technology (IT)
  • Renewable Energy
  • Construction and Engineering

Yes, the recruitment industry can be challenging due to several factors, including the following:

  • High competition: With over 27,700 recruitment agencies in the UK alone, competition is quite steep.
  • Economic fluctuations: Economic conditions often affect the industry, impacting job availability and demand.
  • Changing technology: Keeping up with new technologies like AI and automation may require adaptation and learning.
  • Building relationships: Developing solid relationships with clients and candidates is crucial but time-consuming.

Based on data from several sources, the UK recruitment industry is experiencing growth but at a   slower pace . However, over 50% of recruitment agency experts forecast a 1%–25% revenue increase for 2023. While the industry continues to grow, it’s essential to consider factors such as competition and market fluctuations when assessing its overall health.

In Conclusion

So, there you have it — a complete guide to a recruitment agency business plan. As you can see, it’s no easy feat and requires a significant time and financial investment to get off the ground. The business plan alone can take months of work.

Why go through all that hassle when there’s a more straightforward solution?

Franchise models like Recruiter Startup offer a turnkey solution to get your recruitment agency up and running in no time. We provide the systems, training, and support so you can focus on what matters — finding great candidates and clients.

Stop wasting time on business plans and start building your dream recruitment agency today with a working business model. The opportunities are right here, so  take that first step now . You’ll be glad you did!

I’m interested, what are the next steps?

Let's talk about starting your recruitment desk.

Additional Resources

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7-Step Guide to Starting a Recruitment Agency

Looking to start your own recruitment agency? Download this ultimate guide to getting started and making profits from home.

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How to Start a Recruitment Business

  • Small Business
  • Types of Businesses to Start
  • Starting an Agency
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What preliminary steps should a company take when developing a recruiting strategy, how to start your own resume writing service.

  • How to Write a Company Profile for a Graphics Firm
  • The Role of Human Resource in the Evaluation of Strategies

Starting a recruitment business typically involves using your skills in locating, interviewing and hiring the best personnel available for client businesses. Using the resources provided by the Small Business Administration, you can get training in business management and starting a business. Planning, launching and growing a recruitment business takes effort, but the lucrative rewards make it worthwhile.

Conduct market research to determine if recruitment agencies in your area fulfill all needs. Identify an unfilled niche, such as customer support representatives. Use your experience and connections to identify a target market.

Write a business plan by starting with a free template from a website or develop your own format tailored to your recruiting expertise.Include an executive summary that describes how you will fill a void not met by other temporary or permanent placement agencies. Describe how you plan to organize and structure your company, market your services and finance your startup business. Define the type of personnel you have experience recruiting and can send to potential employers to fill vacancies in their organizations.

Project in the financial statement of your business plan how much you intend to charge. For example, charge a 50 percent markup to clients. Therefore, if an employee gets paid $20 per hour, charge the client $30 per hour.

Rent or buy office space so that you can conduct interviews and other administrative efforts, such as background checks for your clients. Initially, renting space until your business grows makes sense.

Create a website to advertise your services and arrange for payment, such as by credit cards or PayPal. Describe your services including writing job descriptions, soliciting applications, conducting reference checks, evaluating skills, interviewing and screening potential employees. Describe the incentives you plan to offer recruits, such as dental, medical and disability insurance as well as a 401(K) plan for retirement savings.

Recruit by publishing job descriptions in local newspapers, magazines and industry trade association publications.

Establish a sample contract and pricing model. Download a free template from a website, such as Microsoft Office Templates. Document communication between your business and a client’s Human Resources department, such as personnel offers, acceptances and terminations.

Hire personnel to help. Use a virtual assistant if no trained personnel are available in your area to handle business processes such as payroll processing, answering phone calls and data entry processing.

Develop policies and procedures to support your recruitment business operations. Evaluate and purchase recruitment software tools to help you manage and retrieve profiles so that you can match them with job descriptions or work defined by your clients. Use the tools provided by the Society for Human Resource Management to conduct interviews or create your own interview tips, techniques and checklists.

Use the resources provided by the Business.gov website to structure your business, adhere to federal, state and local regulations and pay your taxes.

  • Bplans.com: Employment Agency Business Plan
  • Workforce: News

Tara Duggan is a Project Management Professional (PMP) specializing in knowledge management and instructional design. For over 25 years she has developed quality training materials for a variety of products and services supporting such companies as Digital Equipment Corporation, Compaq and HP. Her freelance work is published on various websites.

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How to Start a Recruiting Agency

start a recruiting agency

Starting a recruiting agency can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful recruiting agency.

Importantly, a critical step in starting a recruiting agency is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here .

Download our Ultimate Business Plan Template here

14 Steps To Start a Recruiting Agency :

  • Choose the Name for Your Recruiting Agency
  • Develop Your Recruiting Agency Business Plan
  • Choose the Legal Structure for Your Recruiting Agency
  • Secure Startup Funding for Your Recruiting Agency (If Needed)
  • Secure a Location for Your Business
  • Register Your Recruiting Agency with the IRS
  • Open a Business Bank Account
  • Get a Business Credit Card
  • Get the Required Business Licenses and Permits
  • Get Business Insurance for Your Recruiting Agency
  • Buy or Lease the Right Recruiting Agency Equipment
  • Develop Your Recruiting Agency Marketing Materials
  • Purchase and Setup the Software Needed to Run Your Recruiting Agency
  • Open for Business

1. Choose the Name for Your Recruiting Agency

The first step to starting a recruiting agency is to choose your business’ name.  

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your own agency:

  • Make sure the name is available . Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
  • Keep it simple . The best names are usually ones that are easy to remember, pronounce and spell.
  • Think about marketing . Come up with a name that reflects the desired brand and/or focus of your recruiting agency.

2. Develop Your Recruiting Agency Business Plan

One of the most important steps in starting a recruiting agency is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

Your business plan should include the following sections:

  • Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your recruiting agency.
  • Company Overview – this section tells the reader about the history of your recruiting agency and what type of recruiting agency you operate. For example, are you a recruiting agency specializing in a specific type of job, such as technology or healthcare jobs, or are you a generalist that places employees for any kind of job?
  • Industry Analysis – here you will document key information about the recruiting and staffing industry. Conduct market research and document how big the industry is and what trends are affecting it.
  • Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
  • Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
  • Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
  • Product : Determine and document what products/services you will offer 
  • Prices : Document the prices of your products/services
  • Place : Where will your business be located and how will that location help you increase sales?
  • Promotions : What promotional methods will you use to attract customers to your recruiting agency? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
  • Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
  • Management Team – this section details the background of your company’s management team.
  • Financial Plan – finally, the financial plan answers questions including the following:
  • What startup costs will you incur?
  • How will your recruiting agency make money?
  • What are your projected sales and expenses for the next five years?
  • Do you need to raise funding to launch your business?

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3. choose the legal structure for your recruiting agency.

Next you need to choose a legal structure for your recruiting agency and register it and your business name with the Secretary of State in each state where you operate your business.

Below are the five most common legal structures:

1) Sole proprietorship

A sole proprietorship is a business entity in which the owner of the recruiting agency and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

2) Partnerships

A partnership is a legal structure that is popular among small business owners. It is an agreement between two or more people who want to start a recruiting agency together. The partners share in the profits and losses of the business. 

The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a recruiting agency include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a recruiting agency is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your recruiting agency, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your business banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

4. Secure Startup Funding for Your Recruiting Agency (If Needed)

In developing your recruiting agency business plan, you might have determined that you need to raise funding to launch your own business. 

If so, the main sources of funding for a recruiting agency to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a recruiting agency that they believe has high potential for growth.

5. Secure a Location for Your Business

When looking for a location for your recruitment business, you’ll want to find an area that has a lot of potential employees. You’ll also want to find an area that is affordable and has good transportation options. In order to find this location, you’ll need to do some research on the surrounding areas. You’ll also want to talk to people in the area and do some test runs of your own by going into different buildings during peak hours. This will give you an idea on what the commute is like and how easy it is to enter and exit buildings.

Once you find your location, you’ll need to negotiate a lease with the landlord. This will be a long-term agreement so make sure that both parties are more than satisfied with the terms of the agreement before signing anything. You can use other real estate agencies to help with this process. Once you have signed the lease, you’ll need to install office furniture and fixtures. You’ll want open spaces for employees to work and comfortable seating for visitors.

6. Register Your Recruiting Agency with the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.

7. Open a Business Bank Account

It is important to establish a bank account in your recruiting agency’s name. This process is fairly simple and involves the following steps:

  • Identify and contact the bank you want to use
  • Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
  • Complete the bank’s application form and provide all relevant information
  • Meet with a banker to discuss your business needs and establish a relationship with them

8. Get a Business Credit Card

You should get a business credit card for your own recruitment agency to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing a small business loan and getting credit lines for your business in the future.

9. Get the Required Business Licenses and Permits

In order to start a recruiting business, you will need to obtain a business license from your local government. You will also need to register with the state workforce agency and complete an employer application. You will also need to register with the IRS as an employer and obtain an EIN.

10. Get Business Insurance for Your Recruiting Agency

You’ll need business insurance for your recruiting agency. 

Types of business insurance policies you should consider for your recruitment firm include:

  • General liability insurance : This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
  • Auto insurance : If a vehicle is used in your business, this type of insurance will cover if a vehicle is damaged or stolen.
  • Workers’ compensation insurance : If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
  • Commercial property insurance : This covers damage to your property caused by fire, theft, or vandalism.
  • Business interruption insurance : This covers lost income and expenses if your business is forced to close due to a covered event.
  • Professional liability insurance : This protects your business against claims of professional negligence.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.

11. Buy or Lease the Right Recruiting Agency Equipment

First and foremost, you’ll need a computer with internet connection. This will be used to manage your files and keep track of your clients and employees. You’ll also need software that can handle payroll and scheduling. As for hardware, you’ll need a printer, scanner, and fax machine. You may also want to invest in a good quality phone system.

12. Develop Your Recruiting Agency Marketing Materials

Marketing materials will be required to attract and retain customers to your own recruitment business.

The key marketing materials you will need are as follows:

  • Logo : Spend some time developing a good logo for your staffing agency. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
  • Website : Likewise, a professional recruiting agency website provides potential customers with information about the services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
  • Social Media Accounts : establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media platforms will help customers and others find and interact with your recruiting agency.

13. Purchase and Setup the Software Needed to Run Your Recruiting Agency

There are a few software programs that are necessary for the operation of a recruiting agency. The first is a customer relationship management (CRM) program, which helps to keep track of interactions with potential and current clients. The second is a job board software program, which allows the agency to post jobs and receive applications. The third is an accounting software program, which helps to manage the finances of the business.

14. Open for Business

You are now ready to open your own recruiting agency. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.

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How to Start a Recruiting Agency FAQs

Is it hard to start a recruiting agency.

No, it's not hard to start a recruiting agency. In fact, it's a great business to start if you're looking for a way to be your own boss and make your own hours. There are a few key things you'll need to do in order to get your agency started, but once you're off and running, you'll be able to bring in new clients and help them find the best employees for their businesses.

How can I start a recruiting agency with no experience?

There are a few things you can do to get started in the recruiting industry with no experience. First, read up on the industry and familiarize yourself with the terminology and concepts. Secondly, attend industry events and meetups to network with other industry experts. This can help you learn from their experience and find mentors. Finally, start volunteering or interning with a recruiting agency to gain hands-on experience.

What type of recruiting agency is most profitable?

There is no definitive answer to this question as it depends on a variety of factors, such as the size and location of the agency, the type of recruitment services offered, and the level of competition in the area.

However, among the most profitable types of recruitment agencies are those that specialize in executive or high-level placement. Executive recruiters act as liaisons between hiring managers and talented professionals, helping to connect the right people with the right companies. Because they work higher up in the staffing process than other types of recruiters, their services are often more expensive. Their expertise can be invaluable when the stakes are high and a company is looking for a specific skill set.

How much does it cost to start a recruiting agency?

Starting a recruitment agency typically costs between $5,000 and $10,000. However, the exact cost will vary depending on the size and scope of your business. Some startup costs include:

  • Office space 
  • Advertising 
  • Computer equipment and software 
  • Training for staff members  
  • Licenses and permits 
  • Insurance policies    
  • A recruitment website

What are the ongoing expenses for a recruiting agency?

Some of the most common expenses for a recruiting agency include advertising and marketing, employee salaries and benefits, office supplies and equipment, and legal and accounting fees.

How does a recruiting agency make money?

Recruiting companies make money by charging their clients a fee for finding the right employee. Some recruiters charge by the hour, others set a monthly retainer fee, and others charge an annual fee. The company size, the amount of work that's required to fill the position, and the experience of the recruiter will affect what they charge for their services.

Recruiting agencies also make money by charging the employee a fee for finding them a job. A recruitment agency's fee includes a commission (percentage of the annual salary of the employee they place). Commission structures vary by company, but generally range between 6% to 20%. When a recruiting agency places a candidate in a job, the agency will conduct an interview and test that candidate, then pass them on to their client. The recruiter's fee is deducted from the employee's first paycheck.

Is owning a recruiting agency profitable?

Yes, owning a recruiting agency can be profitable. However, there are a few things to keep in mind when starting a recruiting agency. First, it is important to make sure you have a good marketing strategy. You'll also need to be able to attract and retain top talent, as well as build strong relationships with clients. Additionally, it is important to keep up with industry trends and changes so that you can continue to offer the best possible service to your clients and job candidates.

Why do recruiting agencies fail?

There could be a number of reasons recruiting firms fail, but one of the most common is a lack of focus on the client's needs. A good recruiting agency will take time to learn about their clients' business and what kind of candidates they are looking for before searching for candidates. They also need to be effective communicators, both with their clients and with potential candidates. If an agency can't keep their clients updated on the progress of their search or can't find the right candidates for their clients, they will likely lose to other recruiting businesses .

Other Helpful Business Plan Articles & Templates

Business Plan Template & Guide For Small Businesses

Sample Recruitment Business Plan

A sample recruitment business plan revolves around basically three words that describe your business philosophy. 3 min read updated on February 01, 2023

Updated November 2, 2020:

Sample Template for Starting a Recruitment Business

Business Niche

Creating a business plan involves making some decisions upfront. This means choosing a niche. By doing so, you'll be deciding the type of recruitment agency to start and the industry to serve.

Observing Competitors

Observe how your competitors' work provides an excellent opportunity and how its recruitment process works.

Gathering Experience

Starting a recruitment agency requires the experience that a recruiter uses to find the perfect match for a company's needs. Examples of what you need to know include:

  • Knowledge of recruiting
  • Recruitment strategies
  • Personal skills

To acquire the type of experience necessary to operate a recruitment agency, it's recommended that you register with a reputable recruitment agency to experience, firsthand, some basic training in how an agency operates.

Building Skills

Keep in mind that part of a recruiter's job is testing the skills of potential candidates for jobs. So, your own skill level must be up to the task. It's equally important that you're able to recognize someone with potential even though they may not possess a lot of experience. You also need the insight to place the right person in the right position.

Evaluating Start-Up Costs

A recruitment agency isn't a cheap business venture to initially get started. You'll need a checklist of all things needed and the cost of each item. Things to include are staff payroll, marketing, insurance, and basic business expenses.

Researching Recruitment Laws

Study and become familiar with the recruitment laws in your state to ensure you aren't in violation. Each has guidelines that may include requirements for specific industries.

Obtain a Business License

Check with your local city and county office as well as the state to find out if or what type of business license is required to operate a recruitment agency. Obtain the license prior to opening for business.

Research Employment Laws

Laws guiding the rules of employment in each state are also in effect and something you must become familiar with. Examples include laws against discrimination and equal opportunity employment .

Business Location

Select a business location that's visible and easily accessible for clients and job applicants.

Register With Recruiters

Register with other companies as a recruiter. This is a way to bring in business should a company need to fill a position and contact you to fill the position.

Create a Marketing Plan

Create a marketing plan that outlines your business and its services. Make a list of businesses to contact and send a letter of introduction letting owners/managers of these businesses know about your company and what it has to offer. Also, follow up on each letter. Take advantage of the internet and newspapers by placing ads to highlight your business.

Create a Business Website

In today's fast-paced world, having a website is the standard operating procedure. A website is a gateway to advertising job vacancies. It's also a way for potential job seekers to provide resumes and conduct online interviews.

Hire Support Staff

A recruitment agency requires lots of paperwork, and you'll need to hire qualified staff to help with the tasks. This means bringing staff on board who have previous recruitment experience.

Contact insurance companies about purchasing liability insurance for your business.

Business Bank Account

Open a business account that's separate from your personal account for accepting payments for services from clients.

Equipment Necessary for a Recruiting Agency

The office space should include a reception area for greeting applicants and receiving applications. There should also be a conference room where you can conduct interviews. Necessary equipment includes:

  • At least one computer.
  • Testing software (i.e., printer(s), a fax machine, and a photocopier).
  • Reliable internet service.
  • Business cards.

Potential Recruiter Salary

On average, a recruitment consultant has the potential to earn between $65,000 and $75,000 annually. Charges for placing a candidate can range between 14 and 20 percent. Charges for your services may be based on a percentage of the candidate's first annual salary. The other option is charging a flat fee to the company you're recruiting for.

If you need help with a sample recruitment business plan, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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Recruiting Agency

Back to All Business Ideas

How to Start a Recruiting Agency

Written by: Esther Strauss

Esther is a business strategist with over 20 years of experience as an entrepreneur, executive, educator, and management advisor.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on May 20, 2021 Updated on January 18, 2024

How to Start a Recruiting Agency

Investment range

$8,550 - $30,100

Revenue potential

$126,000 - $270,000 p.a.

Time to build

1 - 3 months

Profit potential

$75,000 - $108,000 p.a.

Industry trend

Recruiters provide a crucial bridge between candidates and businesses looking for top executives. They use their expertise to streamline the recruiting process, helping companies save money and candidates get placed faster. This helps explain why the industry is expected to expand by nearly two-thirds in the coming years, from $29 billion to $47 billion by 2028, according to market analyst Research and Markets. 

Of course, starting a recruiting business requires hard work. Thankfully, this step-by-step guide will walk you through the development and launch process. If you pay close attention, you should be well on the way to earning your share of the lucrative recruiting pie!

Let’s get started. 

Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.

Form your business immediately using ZenBusiness LLC formation service or hire one of the Best LLC Services .

Step 1: Decide if the Business Is Right for You

Whether you have recruiting experience or not, it’s a good idea to take a step back and view the industry as a whole before you dive into starting your recruitment business.

Pros and cons

Running a recruitment agency has some pros and cons that you should be aware of. Let’s dive into them below.

  • Businesses will always need employees and temporary workers
  • It’s possible to generate a steady income through the contract staffing model
  • There is the potential to earn large commissions if you’re placing skilled candidates
  • Recruitment demand is seasonal
  • Clients will likely prefer you to have recruiting experience
  • Placing candidates can be “hit and miss” since the process has many moving parts

Recruiting industry trends

It’s good to be aware of key trends in the recruitment industry so that you can start on the right path from the beginning. 

Industry size and growth

  • Industry size and past growth – Employment and recruiting agencies in the US are recovering from the pandemic slump. The market is estimated to be worth $23 billion.(( https://www.ibisworld.com/industry-statistics/market-size/employment-recruiting-agencies-united-states/ ))  
  • Growth forecast – Research and Markets foresees steady 7% annual growth in global online recruitment through 2028.(( https://www.researchandmarkets.com/reports/5394005/online-recruitment-market-forecast-to-2028 )) 
  • Number of businesses – Almost 11,000 employment and recruiting agencies operate in the US.(( https://www.ibisworld.com/industry-statistics/number-of-businesses/employment-recruiting-agencies-united-states/ )) 
  • Number of people employed – The industry employs more than 240,000 people.(( https://www.ibisworld.com/industry-statistics/employment/employment-recruiting-agencies-united-states/ ))

recruiting industry size and growth

Trends and challenges

Here are some key trends(( https://www.forbes.com/sites/forbescoachescouncil/2021/08/31/five-recruiting-trends-ive-observed-in-2021-and-what-they-mean-for-your-job-search/?sh=21180c9069de )) shaping the industry today:

  • Growing use of technology to automate recruiting processes instead of manually trawling through a massive database
  • Shift to digital platforms such as LinkedIn, Twitter, Facebook, and Instagram to find strong candidates; initial interviews conducted online via Zoom
  • Embracing diversity and inclusion to boost team performance

Challenges faced by recruiters include:

  • Attracting qualified candidates
  • Competing with bigger companies

recruiting industry Trends and Challenges

What kind of people work in recruiting?

  • Gender – 60% of recruiters are female, while 40% are male.(( https://www.zippia.com/recruiter-jobs/demographics/#gender-statistics ))
  • Average level of education – 70% of recruiters have a bachelor’s degree usually in psychology or human resources management.(( https://www.zippia.com/recruiter-jobs/education/ ))
  • Average age – The average age of a recruiter is 38, according to Zippia.(( https://www.zippia.com/recruiter-jobs/demographics/#age-statistics ))

recruiting industry demographics

How much does it cost to start a recruiting business?

A few specific expenses could inflate how much capital you need to start: your office, software, and equipment.

If you wanted to bootstrap your recruiting agency, you could invest as little as $3,000 to get started. But if you aim to go the whole nine yards, you’ll be looking at $250,000, which would include the best recruitment software, experienced staff and a sizable office space.

For most recruiting startups, though, you should be prepared to spend around $20,000. This estimate doesn’t include future operating expenses.

How much can you earn from a recruiting business?

The money you earn will depend on how many candidates you place and their salaries. Industry analyst Top Echelon puts the average recruiter placement fee at about $18,000 , and found that 28% of recruiters placed 11-15 candidates each year.

This means if you’re able to place 7 candidates in your first year, you’ll earn $126,000 in annual revenue. With a profit margin of 60%, you’d take in a tidy profit of $75,000. 

As your brand gains recognition, placements could climb to 15 candidates a year. At this stage, you’d hire staff, reducing your profit margin to around 40%. With annual revenue of $270,000, you’d make a tidy profit of $108,000.

recruiting business earnings forecast

What barriers to entry are there?

There are minimal barriers to entry to starting a recruiting business, but there are two to be aware of:

  • Fierce competition due to the lucrative nature of recruitment
  • Payroll to cover the wages of your candidates until your business gets paid under a contract staffing model

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Step 2: hone your idea.

It’s time to start crafting your future business. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Your competition will be anyone in the recruiting industry that focuses on the same niche. You may also have competition from internal recruiters working for the firm looking to make a hire. 

Now’s a good time to do some competitor research. Here are a few questions you can ask yourself:

  • How many recruiters are targeting the same candidates as me?
  • How long have they been in business?
  • Are they specialists, or do they recruit in other areas as well?
  • How much do they charge for their services?

What? Determine your products or services

In the recruiting game, your niche is the professions you recruit for. While you may consider a larger category such as technology a niche, this is too broad as there are almost endless positions in IT.

A better niche within tech would be software engineering. You may even decide to niche further by focusing on front-end, back-end, or full-stack development. After doing well in your chosen niche, you may consider branching out to other roles related to that niche. 

When it comes to starting a recruitment agency, there are two main types to look out for.

A direct hire recruitment business specializes in placing candidates on a full-time basis only. These recruiting firms may get paid after a candidate is placed or receive a retainer from the company they recruit for. Once the candidate is placed, there will be nothing left to do for that particular person.

A contract hire staffing agency will usually manage their candidates by themselves since they’re not guaranteed a long-term position. These recruiting agencies will typically be paid a percentage of their candidates’ wages based on the amount of time they work. These agencies may also need to place the same candidate multiple times per year.

Running a recruitment business can be quite varied. Here are some of the common activities:

  • Assess resumes: You’ll need to evaluate resumes constantly to find the right candidates
  • Interview candidates: Shorter calls and longer face-to-face or video chat interviews
  • Prepare candidates: Formal interview to prepare candidate for interview with the hiring company
  • Source leads: Many candidates you’ll need to find yourself, on social media and beyond 

How much should you charge for recruitment?

For direct hires, recruiters usually charge a fee of about 20% of the placed candidate’s annual salary. This number varies depending on industry, but if you place a candidate with a yearly salary of $100,000, you can expect a fee of around $20,000.

For contract hires, you’ll be taking a set fee from your candidate’s wages. You can set a similar percentage (20%), but instead of having it paid upfront, you’ll get it weekly or monthly, depending on when the company pays you.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Once you’ve got your niche, you’ll need to figure out who your target market is. In other words, who wants the candidates that you’ll be providing?

If you’re recruiting software engineers, for instance, your target market will be tech firms. You might also use your own career experience to show that you understand the companies you plan on doing business with.

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices .

When choosing a commercial space, you may want to follow these rules of thumb:

  • Central location accessible via public transport
  • Ventilated and spacious, with good natural light
  • Flexible lease that can be extended as your business grows
  • Ready-to-use space with no major renovations or repairs needed

As a recruiter, it’s a good idea to have an office close to the industry that you recruit for. For example, Silicon Valley for tech recruiting. This proximity will help you connect with the right businesses and build professional relationships through face-to-face contact.

With today’s technologies, however, proximity is not necessary. You can recruit for any firm in the country, or beyond. Keep in mind, while Skype calls and Zoom meetings get the job done, nothing beats an in-person meeting for building relationships.

recruiting industry business rating

Step 3: Brainstorm a Recruiting Agency Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • The name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “recruiters” or “executive hire”, boosts SEO
  • Choose a name that allows for expansion: “NextGen Talent Solutions” over “TechHire Agency”
  • Avoid location-based names that might hinder future expansion
  • Use online tools like the Step by Step business name generator . Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Find a Domain

Powered by GoDaddy.com

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Recruiting Agency Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

  • Executive Summary: Summarize your recruiting agency’s mission, the specific sectors you’ll serve, and how you’ll connect businesses with top talent.
  • Business Overview: Define the scope of recruitment services your agency will provide, such as executive search, temporary staffing, or specialized industry placements.
  • Product and Services: Detail the full suite of services, including candidate sourcing, screening, interviewing, and placement.
  • Market Analysis: Assess the demand for recruitment services within the industries you’re targeting and the availability of potential candidates.
  • Competitive Analysis: Identify your main competitors and articulate your agency’s unique approach to recruitment and client service.
  • Sales and Marketing: Outline your strategy for attracting both companies in need of employees and qualified job seekers, through methods like online marketing and networking events.
  • Management Team: Highlight the experience and qualifications of your team members who will lead and grow the business.
  • Operations Plan: Describe the process for matching candidates with employers, from initial consultation to final placement.
  • Financial Plan: Provide financial projections, including revenue streams from placement fees and operational costs.
  • Appendix: Include supplementary information such as detailed market research, client contracts, or candidate assessment procedures that underpin your business plan.

what to include in a business plan

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to recruitment. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your recruiting firm will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

types of business structures

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have. 

Form Your LLC

Choose Your State

We recommend ZenBusiness as the Best LLC Service for 2023

recruitment startup business plan

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

recruitment startup business plan

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

  • Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a recruiting business.

types of business funding

Step 8: Apply for Recruiting Business Licenses and Permits

Starting a recruitment business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your recruiting business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

types of business insurance

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

Recruiting software tools like Zoho Recruit , PCRecruiter , and JobAdder can help you search databases, track candidates and manage your client relationships. 

  • Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero . 
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like WordPress, Wix, or Squarespace . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Launching a recruiting agency is an exciting venture, and to ensure your success, it’s crucial to implement effective marketing strategies. Here are concise and practical tips to boost your agency’s visibility and attract clients and candidates.

  • Specialized Content Marketing: Develop and share informative content tailored to specific industries or job markets on platforms like LinkedIn, showcasing your expertise and positioning your agency as a thought leader.
  • Client Testimonials and Success Stories: Collect and promote compelling testimonials from satisfied clients, emphasizing successful placements and the impact your agency has had on their businesses.
  • Strategic Social Media Engagement: Actively engage with your audience on social media by participating in relevant discussions, sharing industry insights, and promoting job opportunities to build a strong online presence.
  • Referral Programs: Implement a referral program that incentivizes both clients and candidates to refer potential businesses or job seekers, creating a network effect to expand your reach.
  • Partnerships with Educational Institutions: Collaborate with universities, colleges, and vocational schools to establish connections with potential candidates, offering workshops, seminars, or internships to build a pipeline of qualified talent.
  • Local Community Involvement: Attend local events, job fairs, and business forums to establish a physical presence in your community, fostering relationships with businesses and job seekers.
  • Online Advertising: Utilize targeted online advertising on platforms like Google Ads or social media to reach specific demographics or industries, ensuring your agency is visible to the right audience.
  • Email Marketing Campaigns: Develop targeted email campaigns to nurture relationships with clients and candidates, providing regular updates on industry trends, job opportunities, and the services your agency offers.
  • Mobile-Friendly Approach: Optimize your website and marketing materials for mobile devices, recognizing that many job seekers and clients use smartphones for their job search and business interactions.
  • Continuous Professional Development: Stay updated on the latest trends and technologies in recruitment through continuous learning, demonstrating your commitment to providing cutting-edge services to clients and candidates alike.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your service meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your recruiting business could be:

  •  Find long-term hires or your money back! 
  • The best candidates for software engineering
  • Reduced fees for first-time clients

unique selling proposition

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a recruiting business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in recruitment for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in recruitment. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a recruitment business would include:

  • Experienced Recruiters
  • General Manager
  • Marking Lead

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Run a Recruiting Agency – Start Making Money!

You’re now ready to start recruiting! What better place to find job seekers than where they hang out? Recruiters are increasingly focusing not just on Linkedin, but also on Twitter, Facebook, Instagram, and other platforms to find strong candidates. 

It’s also a good idea to embrace technology to improve recruiting processes. There’s natural language processing (NLP), which makes resume screening much faster. There’s also predictive analytics, which helps recruiters identify the best talent based on chosen parameters. So instead of manually trawling through a massive database, you’ll receive a curated list of the best candidates. Happy headhunting!

  • Recruiting Business FAQs

Recruiters make money through two different payment models. They can be paid per placement-for direct hires-which is a set percentage of the candidate’s annual salary.

The other way is through contract staffing. Contract staffing is where your agency acts as an external H.R. department and manages the candidates. This model involves taking a set percentage of the fee your clients pay for your candidate’s work.

There aren’t any specific qualifications that you need to become a recruiter. While it’s a good idea to get some recruiting experience before you start a fully-fledged recruiting business, you’ll be able to learn everything you need from online resources and trial-and-error.

To attract clients and employers to work with your recruiting agency, build a strong online presence through a professional website and active social media profiles. Showcase your expertise, success stories, and client testimonials. Network with industry professionals, attend relevant events, and join business associations.

Review resumes, cover letters, and portfolios to evaluate qualifications and experience. Conduct structured interviews to assess candidates’ skills, knowledge, and cultural fit. Implement behavioral or situational interview techniques to gauge their ability to handle real-life scenarios.

Develop a comprehensive marketing strategy that includes online and offline tactics. Create valuable content, such as blog articles or industry insights, to establish yourself as an expert in the field. Utilize targeted online advertising campaigns and search engine optimization (SEO) techniques to improve your agency’s visibility in search results. 

Handle reference checks and background screenings for candidates by developing a standardized and thorough process. Obtain candidate consent and contact provided references to gather insights about their performance, work ethic, and interpersonal skills. onduct comprehensive background screenings, including criminal records, employment history verification, education verification, and professional license checks.

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  • Decide if the Business Is Right for You
  • Hone Your Idea
  • Brainstorm a Recruiting Agency Name
  • Create a Recruiting Agency Business Plan
  • Register Your Business
  • Register for Taxes
  • Fund your Business
  • Apply for Recruiting Business Licenses and Permits
  • Open a Business Bank Account
  • Get Business Insurance
  • Prepare to Launch
  • Build Your Team
  • Run a Recruiting Agency - Start Making Money!

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recruitment startup business plan

Small Business Trends

How to start a recruiting business.

The world of recruitment has rarely been more lucrative, dynamic and needed. There are job openings as yet unmatched with the proper employee. Small businesses often cite “difficulty in finding the right candidate” as the key challenge in hiring.

You can help solve that problem by starting a recruitment business.

recruitment startup business plan

Setting the Groundwork for Your Own Recruitment Business

Market research is your most important step. It’s crucial that you understand the demand for recruitment services in your target industry and location. Identify your niche and target clients. Start by developing a comprehensive business plan , which will be foundational to your success.

Here are more steps:

  • Business Plan: Develop a comprehensive business plan outlining your business goals, target market, services offered, and financial projections.
  • Legal Structure: Choose a legal structure for your business, such as a sole proprietorship, LLC, or corporation. Familiarize yourself with common business structures to make an informed decision.
  • Licensing: Check the licensing requirements for operating a recruiting business in your state or locality. You may need specific permits or licenses.
  • Finances: Secure the necessary funding for your business, including capital for operations, marketing, and potential overhead. A business startup checklist can be a valuable tool in this process.
  • Technology: Invest in recruiting software and tools to manage candidate databases, job postings, and client interactions efficiently. Refer to a website startup guide for tips on setting up your online presence.
  • Network: Build a professional network within your chosen industry to establish connections with potential clients and candidates.
  • Branding and Marketing: Develop a strong brand identity and marketing strategy to attract clients and candidates. For those looking into how to start a business , particularly a recruitment agency, understanding the market needs and aligning your services is critical.

recruitment startup business plan

The Recruitment Industry

There are two general types of recruiting: general and niche.

Small Business Deals

General recruiting:.

  • Remote Work: With the rise of remote work, recruiting businesses are increasingly focused on sourcing and placing candidates for remote positions.
  • Diversity and Inclusion: There is a growing emphasis on diversity and inclusion in the workplace, leading to increased demand for recruiters who specialize in diversity hiring.
  • Artificial Intelligence (AI): AI-powered tools are being used for candidate screening, matching, and automation of routine tasks.
  • Candidate Experience: Providing a positive candidate experience is a key trend as it affects a company’s reputation and its ability to attract top talent.

Niche Recruiting:

  • Tech Talent: The technology sector continues to experience a high demand for specialized recruiters who can source IT professionals.
  • Healthcare: The healthcare industry faces a shortage of healthcare professionals, leading to a demand for healthcare recruiters.
  • Green and Sustainability Jobs: The focus on sustainability has created opportunities for recruiters in the renewable energy and green sectors.

recruitment startup business plan

Choosing Your Recruitment Agency Niche

Your market research should help you determine which type of recruiting agency is needed in your area. That is the niche to choose as you start your own recruiting business.

Crafting Your Recruitment Business Plan

Clearly define your business’s mission, vision, and values:

  • Identify your target market and niche within the recruiting industry.
  • Outline your services, pricing structure, and competitive advantage.
  • Include a sales and marketing plan to attract clients and candidates.
  • Create a financial plan with revenue projections, expenses, and break-even analysis.

recruitment startup business plan

Setting Up a Business Banking Account

When you start a recruitment agency, you need to set up a separate bank account. You also need a credit card which is only used for the business. This will help you track and record business expenses.

Getting Business Insurance

As a basic need, you’ll need Professional Liability Insurance (Errors and Omissions Insurance). This protects your business in case a client alleges negligence or errors in your recruitment services.

There are additional insurances you may need:

  • General Liability Insurance: This covers potential accidents or injuries that occur on your business premises.
  • Worker’s Compensation Insurance: Required if you hire employees to cover medical expenses and lost wages in case of work-related injuries or illnesses.
  • Cyber Liability Insurance: If you store sensitive client or candidate data electronically, this can protect against data breaches.
  • Commercial Property Insurance: If you have a physical office, it covers property damage and theft.

It’s important to consult with an insurance professional to determine the specific insurance needs for your recruiting business, as requirements may vary based on your location and business activities.

recruitment startup business plan

Building a Strong Foundation for a Successful Recruitment Agency

As they get started, recruiting agencies need to do their own recruiting first as they set up the business.

Assembling Your Team

As a recruiting business owner, the first step is to recruit experienced and skilled professionals who understand the industry and can effectively source and place candidates.

To find the best team members, you can leverage your professional network to identify potential team members; you can also attend industry events to connect with individuals who have a strong track record in recruitment agencies.

recruitment startup business plan

Selecting the Right Tools and Technology

For basic software, you’ll need an Applicant Tracking System (ATS). An ATS helps manage candidate databases, track applications, and streamline the hiring process.

Here’s a list of additional software to help streamline your recruiting process:

  • Customer Relationship Management (CRM) Software: CRM tools help you manage client relationships, track interactions, and monitor your sales pipeline.
  • Job Boards and Job Posting Software: Use job boards and posting software to advertise job openings to a wider audience.
  • Resume Parsing Software: This technology helps automate the extraction of relevant information from resumes, saving time and improving accuracy.
  • Video Interviewing Platforms: These platforms enable remote interviews, which is especially important if you’re dealing with clients and candidates from different locations.
  • Social Media and Online Presence: Establish a strong online presence through a professional website and active social media profiles.

recruitment startup business plan

Establishing a Clear Brand and Value Proposition

Part of building your brand as a recruiting business involves identifying your Unique Selling Proposition (USP). For a detailed guide on this crucial step, consider exploring effective social media marketing strategies.

The USP identifies your unique strengths and what sets your recruiting business apart from competitors. Your USP could be specialization in a niche, exceptional customer service, or a unique approach to candidate sourcing.

As part of the USP, you’ll create a compelling brand identity. That should include a memorable logo, consistent branding elements and a clear brand message.

Developing a Sales and Marketing Plan

In addition to establishing your brand identity, build your online reputation through client testimonials, case studies and reviews on platforms such as LinkedIn and Google My Business.

You can also use content marketing by sharing valuable content related to recruitment and industry trends. Share blog posts and webinars

Attend industry events, join professional associations, and participate in online forums to connect with potential clients and candidates.

Tailor your marketing efforts to your specific niche or industry to attract the right clients and candidates:

  • Client Relationship Building: Focus on building strong relationships with clients by understanding their needs and delivering exceptional service.
  • Candidate Engagement: Engage with candidates professionally and provide them with valuable career guidance, even if they’re not an immediate match for a job.
  • Referral Programs: Implement referral programs to encourage your existing clients and candidates to refer others to your services.
  • Measurable Goals: Set specific, measurable, achievable, relevant, and time-bound (SMART) goals for your sales and marketing efforts, and track your progress regularly.
  • Feedback: Solicit feedback from clients and candidates to continually improve your services.

Remember that building a successful recruiting business takes time and persistence. It’s important to stay adaptable and continuously evaluate and adjust your strategies as the market and industry evolve.

recruitment startup business plan

Operational Aspects of Running a Recruitment Agency

Client acquisition and retention in a recruiting agency.

A recruitment agency should attend industry events, join relevant associations, and leverage your professional network to connect with potential clients.

To acquire and retain clients, you can also:

  • Cold Calling and Email Outreach: Reach out to businesses in your target niche to introduce your services and explore potential partnerships.
  • Content Marketing: Create informative content (e.g., whitepapers, webinars) that showcases your expertise and attracts potential clients to your website.
  • Referrals: Encourage satisfied clients to refer your services to other businesses in need of recruiting assistance.
  • Exceptional Service: Continually provide high-quality service to build trust and maintain long-term client relationships.
  • Regular Communication: Keep clients informed about the progress of their job openings and respond promptly to their inquiries.
  • Feedback: Request feedback from clients and use it to improve your services.
  • Tailored Solutions: Offer customized recruitment solutions that meet each client’s specific needs.
  • Value-Added Services: Provide additional value through industry insights, market trends, and salary benchmarking data.

recruitment startup business plan

Candidate Sourcing, Screening, and Placement

To find candidates, you can post job openings on various online platforms and job boards to reach a wider candidate pool.

You can also use social media platforms to connect with potential candidates and industry professionals. Industry professionals can help you tap into your network to source candidates.

Don’t overlook getting referrals from your existing candidates.

Candidate Screening and Placement:

  • Resume Review: Carefully review resumes and applications to shortlist qualified candidates.
  • Interviews: Conduct in-depth interviews to assess a candidate’s skills, qualifications, and cultural fit.
  • Reference Checks: Verify candidate references to ensure their qualifications and experience align with their claims.
  • Skills Testing: Depending on the position, administer skills tests to evaluate a candidate’s capabilities.
  • Client Interviews: Arrange interviews between clients and shortlisted candidates, facilitating the hiring process.

Navigating Legal and Compliance Issues

Ensure compliance with federal and state anti-discrimination laws when selecting candidates to avoid discrimination based on factors like race, gender, age, or disability.

Safeguard candidate and client data in compliance with privacy regulations like the General Data Protection Regulation (GDPR).

Comply with relevant laws when conducting background checks on candidates, including criminal and credit checks.

Use legally sound contracts when engaging with clients and candidates to define terms, responsibilities, and fees.

Stay informed about employment laws affecting your clients and candidates, including minimum wage, overtime, and employee classification.

To find the best team members, you can leverage your professional network to identify potential team members. Additionally, use recruiting email templates to reach out to them effectively. Furthermore, understanding the recruiter job description is crucial in identifying the right talent and crafting your agency’s unique services.

recruitment startup business plan

Scaling and Growing Your Recruitment Business

Diversifying recruitment services.

Consider diversification when you have established a strong presence in your current niche and have the capacity to take on additional business. Assess market demand for new niches or industries.

Reinvesting into the Business for Growth

Reinvesting profits in marketing and geographical expansion can be beneficial for growth. It allows you to reach new clients and candidates and increase brand awareness.

Collaborations and Partnerships

Identify businesses or organizations that complement your services, such as HR consulting firms, career coaches, or industry-specific associations. Here are some specific examples of that:

  • Value Proposition: Clearly articulate the value of collaboration to potential partners, highlighting how it can benefit both parties and their clients or members.
  • Agreements: Formalize partnership agreements that outline roles, responsibilities, and expectations.
  • Promotion: Jointly promote the collaboration through marketing efforts, such as co-hosted webinars, events, or shared content.
  • Mutual Support: Provide support and resources to help partners achieve their goals and expect the same in return.

Building and maintaining successful collaboration partnerships can expand your network, enhance your service offerings, and contribute to business growth.

recruitment startup business plan

FAQs: how to start a recruiting business

How profitable is a recruitment agency.

The profitability of a recruiting business can vary widely depending on several factors, including the niche, location, the expertise of the recruiters, and the level of competition. Some recruiting firms can be highly profitable, while others may take time to build a steady client base and generate significant revenue.

Key factors that can impact profitability include:

  • Niche Specialization: Specializing in a high-demand niche can lead to higher fees and increased profitability.
  • Client Relationships: Building strong, long-term client relationships can result in repeat business and referrals.
  • Effective Cost Management: Efficiently managing operational costs and overhead is crucial to maximize profits.
  • Market Conditions: Economic conditions, industry trends, and regional factors can influence demand for recruitment services.
  • Scale: As the business grows and takes on more clients and placements, profitability can increase.

How much money is needed to start a recruitment agency?

There are legal and setup costs associated with registering the business, obtaining necessary permits, and complying with legal requirements.

In addition, there are costs associated with the actual set up of the recruitment business:

  • Office Space and Equipment: Costs for office rent, furniture, computers, and other equipment.
  • Technology and Software: Expenses for applicant tracking systems (ATS), CRM software, and other tools.
  • Marketing and Advertising: Budget for branding, website development, and initial marketing efforts.
  • Salaries and Benefits: If you plan to hire recruiters or support staff, consider their salaries and benefits.
  • Insurance: Costs for insurance coverage, including professional liability, general liability, and worker’s compensation.
  • Networking and Professional Memberships: Fees for joining industry associations and attending networking events.
  • Training and Development: Budget for ongoing training and development for your team.
  • Miscellaneous Expenses: Other costs such as utilities, phone lines, and office supplies.

Startup costs can range from a few thousand dollars for a home-based operation to tens of thousands or more for a full-fledged office with multiple employees.

How do recruitment agencies build their client base?

The primary way a recruitment business builds its client base is to attend industry events, join professional associations, and connect with potential clients through LinkedIn and other platforms.

There are other techniques to employ:

  • Cold Outreach: Identify businesses in your niche and reach out to them via phone, email, or social media to introduce your services.
  • Content Marketing: Share valuable content on your website and social media to showcase your expertise and attract potential clients.
  • Referrals: Encourage satisfied clients to refer your services to other businesses in need of recruitment assistance.
  • Client Relationship Building: Provide exceptional service and maintain regular communication with clients to foster long-term relationships.

How do independent recruiters make money?

The most common way a recruiter is paid is through a contingency fee.The recruiter is paid a percentage of the candidate’s first-year salary once the candidate is successfully placed. Payment is contingent on the hire.

There are other payment options:

  • Retained Search Fee: Clients pay an upfront fee to retain the recruiting firm exclusively for a specific search. This fee is often paid in installments.
  • Hourly or Flat Fee: Some recruiters charge clients based on the number of hours worked or a fixed fee for specific services, such as resume screening or interview coaching.
  • Hybrid Model: Some firms combine contingency and retained fee structures depending on the complexity of the search.

What are the key stages in the recruitment process?

A key part of the process is the client interview. It’s crucial that the recruiter understands the client’s hiring needs, culture, and job requirements.

Other key stages are:

  • Candidate Sourcing: Identifying potential candidates through job boards, social media, networking, and other methods.
  • Candidate Screening: Reviewing resumes, conducting interviews, and assessing candidates’ qualifications and fit for the role.
  • Client Interviews: Coordinating and facilitating interviews between the client and shortlisted candidates.
  • Reference Checks: Verifying candidate references to ensure their qualifications and suitability for the position.
  • Offer Negotiation: Assisting with salary negotiations and presenting job offers to candidates.
  • Onboarding: Supporting the candidate during the transition to their new role and ensuring a smooth integration.

Image: Envato Elements, Depositphotos

recruitment startup business plan

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How to Build a Recruitment Plan, Step-by-Step

Tom Hacquoil

  • Recruitment Strategy

Job reqs are boom or bust, so you’re either scrambling to cover everything or worried about proving your team’s value. Every hiring manager has different expectations on compensation and time to hire, and when they change their mind, you always feel like the last to know.

To break the cycle, what you need is a robust recruitment planning process. A full recruitment plan should include an agreed-upon workforce plan, hiring approach, and marketing strategy. If you don’t have time for the full process, you can also do a quick-and-lite version if needed, though we recommend going through all the steps eventually.

A proactive recruitment plan is the first step to becoming a true strategic partner in the organization. You can get ahead of hiring manager requests, set clear expectations, and demonstrate how critical talent is for achieving the broader goals of the business.

We’ve asked our own recruitment team, as well as experienced recruiters from a range of industries, how they do recruitment planning. Here’s their step-by-step guide, along with the real templates they use every day as part of their recruitment strategy. 

Get your free recruitment planning template

Step 1: assess the situation, collect the headcount plan.

Ask each team to share the roles they plan to open this year, and how each role supports their team’s annual goals. For example, this can help you understand which roles must be hired by a certain date, and which roles are more flexible.

You need to understand what the company is trying to accomplish, how that rolls down to [each] department, and then how they see all these hires contributing to that. Mike Bradshaw, PHR Head of Talent Acquisition, Pinpoint

Review internal and external materials

Start by auditing your core metrics. Check internal reports and your ATS’s reporting for core hiring metrics, including:

  • Time to hire
  • Time to fill
  • Average time in each interview stage

Candidate attraction

  • Hires by source
  • Candidates by source
  • Offer acceptance rates
  • Cost per hire
  • Actual vs. budget
  • Net Promoter Score
  • Performance after hire
  • Retention rates
  • Candidates by demographic groups (race, gender, age, disability, veteran status, etc.)
  • Hires by demographic groups
  • Conversion rates on specific jobs by demographic groups

Then move on to qualitative materials, such as:

  • Feedback from candidates (surveys, Glassdoor reviews, coffees with new hires)
  • Feedback from hiring managers and leaders (surveys, performance reviews)
  • Internal notes on what has and hasn’t worked before

And take a look at your current candidate experience, including:

  • Careers site
  • Job descriptions
  • Communications sent to candidates

Ask for feedback

Have an open-ended conversation with your stakeholders about how they think hiring is going. Consider requesting feedback from:

  • Recent hires
  • Hiring managers
  • Department leaders
  • HR and recruiters 

Where do they see untapped potential? Where do they want to see improvements? What attracted them to the company and what was their candidate experience like?

Identify opportunities

As you review all this information, look for signs of issues and potential opportunities. It’s also helpful to write down your baseline in each area so you can track improvements over time. 

Typically, the opportunities you find will fall across three areas: Talent sourcing, employer brand, or new hire onboarding.

Finding talent: Are there untapped opportunities?

  • Channels that work and don’t work, untested networks or tactics
  • Channels that are delivering volume but aren’t delivering quality
  • Channels that have delivered quality, but aren’t getting the attention they deserve

Branding: Are you selling your company?

  • Is your employee value proposition (EVP) strong? How can it be improved?
  • Is your messaging and branding cohesive across your careers site , branded emails , and job postings? 
  • Is your EVP included in each job post?
  • What are candidates saying about you in candidate surveys and review sites like Glassdoor?

Onboarding: What happens after a candidate accepts your offer?

  • Are systems in place to give HR what they need to set up new hires for success?
  • Is your onboarding process streamlined? 
  • What’s the feedback from new hires and hiring managers about the onboarding process?

Step 2: Develop the headcount plan

Now that you have context, data, and feedback on previous hires, you can start planning for the future. The more an organization invests time into these exercises, the easier and more likely it will be to meet recruiting goals on time and within budget. 

Understand team goals and priorities at a high level

Organizational goals are driven by your employees. Meet with senior leadership and department heads to discuss company goals for the year. Is this a year of growth, or efficiency? Are there certain departments or regions we want to develop? Answering these questions will help your team to be aligned with leadership on the hiring mission and messaging. 

Design dream staff plans—then prioritize

Give department heads the opportunity to design their ideal team to reach that year’s goals, budget notwithstanding. This will grant you greater visibility into their vision for the department, and what skills they want on the team. 

Then, help department heads refine each job description and prioritize each role, based on actual needs and realistic expectations. Some roles may be less vital this year, or could be solved without a full-time hire. In these conversations, you can help shape the plan for each department, manage expectations around hiring, and avoid frustration later on. 

Get on the same page about levels

Internal alignment on levels ensures your hiring plan is both competitive and equitable. In a competitive labor market where remote work opens up more opportunities for employees, it is even more important to offer the right rate to hire the right person at the right level. 

At the same time, you want to avoid overpaying or overpromising. Not only will this impact your budget, but it could contribute to internal equity issues, which disproportionately affect women and people of color . 

Outline what is required at each level and define salary bands to mitigate the risk of some employees being unfairly valued. If it becomes harder to hire people at the right level because of pay, then it may be time to reassess trends in the market and adjust compensation levels accordingly.

Tip: Salary transparency attracts quality candidates. On Pinpoint, companies that include salaries in their job descriptions move 15% more applicants to the interview stage

Depending on the size of your organization, there are two ways to approach leveling: 

  • Uniform leveling: Everyone across the company follows the same track (associate, manager, director, etc.)
  • Functional leveling: Each department has a specialized and unique track. For example, the marketing team may have associates, managers, directors, etc., while the engineering team has engineer Is, engineer IIs, staff engineers, senior staff engineers, etc. 

Determine what makes sense for your organization based on your size and complexity. If developing levels from scratch, the process may take upwards of 9 months, but it will give your whole organization greater clarity.

Plan for backfills and promotions

In addition to new hires, you’ll also need to plan for people who are leaving their roles to minimize the impact of losing skills or capacity on the team. To anticipate backfills, consider past year attrition and industry benchmarks along with current economic factors (growth in the sector, recession, etc.). 

Then, look at your current team to understand who is at risk of leaving their role due to performance, attrition, or promotion. Meet with managers to understand who is on track to be promoted and when so you can plan for their backfill. Be conservative with your budget and resourcing plans so you aren’t surprised when the needs arise. 

Set realistic and fair budgets

With defined level expectations and a conservative hiring plan, it will be easier to set budgets for new hire compensation. To stay on top of industry trends and remain competitive, we recommend these resources:

  • Comprehensive.io

Include a budget for the resourcing you will need to reach hiring goals. It can be difficult to anticipate how challenging it will be to hire certain roles, and your talent team may be impacted by attrition as well. It’s possible you will need to increase the capacity of your talent team with new hires or external support from contract recruiters, recruitment agencies, or recruitment process outsourcing provider (RPO).

Any budget proposal will inevitably result in pushback. By working through these steps, your plan should already be aligned with company priorities, but you can make your case even stronger by:

  • Demonstrating past recruitment cost per hire and recruiting budgets as a reference, and reiterating how the organization wants to improve this year
  • Leveraging leaders who are most invested in making good, fast hires to advocate for the budget
  • Using research (benchmarks and models) to illustrate estimated return on investment of those hires for the company 

An iterative approach

A workforce plan will set you up for success, but won’t be set in stone. Shifting priorities, feedback from hiring managers and candidates, and macroeconomic factors will alter your plan over time. Regularly report on data, solicit feedback from stakeholders, and realign on goals to stay on top of these changes. How often you should check in on this plan will depend on your team size and existing processes, but here is an ideal cadence: 

  • Weekly: Meet with hiring managers while you have active roles open
  • Monthly: Meet with department heads if you are hiring for their teams
  • Quarterly: Meet with all department heads to review goals, along with potential backfills and promotions

Step 3: Set realistic timelines

Manage expectations for your team and increase the likelihood of hiring people on schedule by setting estimated timelines. Outline the process for hiring managers and any other stakeholders to ensure they know what is required of them, like submitting requisitions in a timely fashion and allocating time in their schedules for interviews. When recruiters and hiring managers know what actions they need to take and when, your team will be able to respond quickly when strong applications come in. 

To set timelines, refer to historical hiring data along with industry benchmarks . Keep in mind that other economic factors may impact timelines. For example, post COVID-19 and the Great Resignation, more people have reevaluated their priorities and found that they could find better options that fit their values , meaning employers have had to act fast to land top talent. 

For hiring managers, the wait always feels long. Be upfront and provide a detailed timeline so they can see what is involved in the hiring process and feel assured that work is being done.

Example timeline from the Pinpoint Recruiting Team:

  • Day 1: Job is posted
  • Gather initial results from job posts and adjust accordingly (title, salary, location, etc.)
  • Fine tune alignment on required skills and background with real world profiles
  • Ramp up sourcing and screening
  • Initial screening conversations with 5-10 candidates per week
  • Hiring manager interviews with 3-5 qualified candidates per week
  • Continue to fine tune alignment on job post and target profile
  • Continue to source as needed to meet benchmarks for qualified candidates
  • At Pinpoint, most roles can be filled in 60 days or less (time to accepted offer). Executive (Director and above), technical, or highly specialized roles could take up to 90 days to get to an accepted offer.

At Pinpoint, we dedicate a section of our internal communication tool to share documentation on the recruitment strategy and approach so the whole team has visibility. We also share reports from our ATS to keep hiring managers and senior leaders up-to-date on the status of open roles. 

If you still receive pushback, explain the value of having recruiters conduct a thorough, high-quality screen. With more time to vet applications, recruiters can protect hiring managers’ time and only forward the best candidates. If hiring managers become the bottlenecks, here are tips for staying on pace without adding more work to their plates:

  • Ask hiring managers to share a sample of CVs or LinkedIn profiles that reflect the ideal candidate and align on what “great” looks like 
  • Reserve interview blocks on interviewer calendars in advance 
  • Bring in additional interviewers for various parts of the recruitment process
  • Utilize automatic scheduling in your ATS to allow for one-click booking
  • Align on the priority of roles to expedite those that are most immediately needed

Step 4: Launch the search

Search kickoffs are about identifying what kind of candidate you would like to hire, how you’ll get their attention, and how you’ll keep the search on track. 

Start by getting detailed information about what the hiring manager actually wants and needs via a Requisition form. It’s most helpful if they share this in advance so you can review it before the first conversation with them. You can then verify and expand upon this information when you meet.

While it can be tempting to publish open roles as quickly as possible, it’s worth investing time to customize job postings so they communicate your Employee Value Proposition and attract the right talent . This will allow you to bring in qualified, interested candidates more quickly. 

This also applies to marketing the role—collaborate with the hiring manager to think beyond your typical go-to job boards and identify if there’s anything new or different you can try for this particular search. 

Schedule an initial kickoff meeting with the hiring manager to establish your processes for working together. Identify a day and time to meet each week to check in on the search. Confirm the interview process early on so that everyone knows what to expect and this information can be shared with candidates, ideally in the job posting. 

Step 5: Coordinate the recruitment process

Once the search has started, recruiters will be overseeing a lot, including hiring managers. For them, hiring is essential, but it amounts to just a small percentage of their day. An ATS should make it easier for recruiters to keep the process moving without adding excessive work for hiring managers. Here’s advice from some of our customers on how they’ve been able to increase efficiency up to 70%, in part by collaborating better with hiring managers:

Hiring manager portals

The New York Public Library has about 400 managers who are involved with hiring, in addition to their many other responsibilities. The NYPL team set up a streamlined hiring manager view that made it easy for their team to comment, tag, rate, and share feedback on candidates all within Pinpoint. 

Hiring managers now have greater visibility and a more active role in the process, resulting in greater outcomes for everyone.

It’s really allowed us to coach our hiring managers to be better at creating a great experience for candidates. Craig Senecal Senior Director of Employee Experience, NYPL

Interview scheduling

Franklin Electric hires across a complex and international organization. Balancing people’s schedules and time zones can be a huge challenge. For them, the best solution was to find an ATS with automated interview scheduling . Hiring managers are thrilled to have the access and functionality to fill roles faster, without having to wait on HR.

It’s been a game-changer in terms of the impact and how easy it is. Amanda Hecht Corporate HR Manager, Franklin Electric

Icario is always looking for more data behind their hiring decisions, especially to keep track of their diversity and inclusion goals. After implementing Pinpoint, they began using candidate scorecards to standardize the feedback process and make more informed decisions. If your ATS doesn’t have built-in scorecard functionality, you can use this manual score sheet template .

It’s been really cool to see the type of metrics that we get, or that we can even get metrics in the first place! Rachel Todd Senior Talent Acquisition Specialist, Icario

Step 6: Report on progress

To track team goals, you’ll want to get a quick snapshot every week (or more likely everyday) of whether your search is on or off track. Your ATS should be your go-to source for data, with reports and dashboards that allow you to calculate key metrics. 

In some systems, you may need to create or download a report to get this information. If all else fails, you can also manually track this data outside your ATS (e.g. Google Sheets). 

Top 5 metrics to track during a search:

  • # Days Open
  • Average Number of Daily Applications
  • # Candidates in Each Stage
  • # Candidates Who Reached Each Stage (aka Historical Activity)
  • Conversion Rates (aka Ratios)

These daily or weekly numbers are most useful when compared against benchmarks. You can establish benchmarks based on your own organization’s historical data or public information about the performance of organizations similar to yours. These benchmarks will vary based on industry, company brand recognition, company size, location, level of specialization, management level, and recruiter experience. 

Example: Benchmarks for Days Open

  • By 21 days open, should be hitting goals for weekly candidates sourced, screened, and interviewed
  • By 45 days open (for non-technical roles), should have 2-4 strong candidates in final stages
  • By 60 days open (for technical roles), should have 2-4 strong candidates in final stages

Example: Benchmarks for Candidates in Each Stage

  • 25-50 candidates receiving messages from sourcing outreach per week
  • 5-10 candidates interviewing with the recruiter per week
  • 3-5 candidates interviewing with the hiring manager per week

If you find yourself struggling to meet benchmarks as the search goes along, continue to revisit and ask questions about your sourcing and marketing plans. 

  • Do you need to try new channels or new strategies to reach more candidates with the target profile?
  • Has the target profile evolved?
  • Are there enough people who fit your target profile to realistically fill the job in a reasonable amount of time? (E.g. if you’re looking for someone with niche technical skills within close proximity to a physical office, there may simply not be enough people in that target profile to find someone without providing relocation.)
  • Should you try different messaging in outreach to candidates or in the job posting?
  • Are you and the hiring manager both clear and aligned on what good and great candidates look like? 

Step 7: Improve year-over-year

The only constant in recruiting is change. Once you’ve devised your plan, be prepared to return to it repeatedly, iterating and improving on your recruitment strategy as you learn. 

With a hiring tracker and reports showing key metrics, your team will be more aware of what is working and can pivot quickly if needed. When you embed reporting into recruitment, your team will be able to see the forest through the trees and have more control over the process. 

And it’s never too late to start. Even if you are beginning this process mid-year, by the time you are planning for the next fiscal year, you will have more documented information to drive decision-making. 

By working directly with senior leadership, department heads, and hiring managers, you will also have greater visibility of the organization and more advocates on your side. With each subsequent year, you will be able to improve efficiency, collaboration, and the candidate experience. 

A final word of advice

As you’re going through the process, “ask a ton of questions and be selfish with your time,” says our own Head of Talent, Mike Bradshaw. When he took over the role—as the company’s first dedicated talent leader—he used a recruitment plan similar to the one outlined here to understand and prepare for upcoming hiring needs. 

Every one of us that's involved in recruitment—from leadership all the way down to individualized hiring managers—has improved the way that we think about talent as a result. Tom Hacquoil CEO Pinpoint

To get that kind of trust from the leadership team, don’t worry about asking a silly question; just focus on making sure you get all the information you need.

“Some people are sort of timid about asking questions, or asking them again, or asking for more time,” says Mike. It’s natural to want to look confident and autonomous, especially if you’re taking over a new role. 

“But then you end up making a lot of assumptions, and you might start running with something and find it doesn’t work out, and then you have to take a step back,” warns Mike. “Ask all the tough questions. Really try to understand what’s going on, good or bad.”

Further reading

Inbound recruiting vs. outbound recruiting, programmatic recruitment advertising: a recruiter’s guide.

Jess Stanier

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Building a Recruitment Plan for Your Small Business

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For Start-Ups Seeking Talent, a Lofty Purpose Can Backfire

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People fear it will limit career opportunities and financial gain.

Announcing that your firm has set out to make the world a better place can help you recruit employees— if your company is large and established. For new ventures, a social mission may actually be a drawback, making job candidates perceive that they offer fewer opportunities for success.

The guidance for established companies is clear and backed by research: Having and communicating a social vision will help you attract employees. Erasmus University’s Murat Tarakci and a colleague—Timo van Balen of Utrecht University—wondered if young firms should follow the same advice. So they tracked responses to the job postings of 795 new U.S. and Canadian ventures. Those highlighting a social mission received 46% fewer applications than others. The conclusion: For start-ups seeking talent, a lofty purpose can backfire.

  • Amy Meeker is a senior editor at Harvard Business Review.

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    1. Choose the Name for Your Recruiting Agency. The first step to starting a recruiting agency is to choose your business' name. This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable.

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    On average, a recruitment consultant has the potential to earn between $65,000 and $75,000 annually. Charges for placing a candidate can range between 14 and 20 percent. Charges for your services may be based on a percentage of the candidate's first annual salary. The other option is charging a flat fee to the company you're recruiting for.

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    Step 5: Register Your Business. Registering your business is an absolutely crucial step — it's the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running. Plus, registration is exciting because it makes the entire process official.

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