6 challenges faced by new startup recruitment agency

At least twice in a week, people are looking for opportunities to start their own recruitment agency but most of them do not have the required experience to run the recruitment agency. Some have tangible reasons why they want to venture in the business while some just want to start a new business. People should have adequate consideration or else their new recruitment agency are prone to fail. Therefore one should thoroughly analyze the challenges that one can face when trying to start their own recruitment agency. This should be one of the key considerations in your business plan before just jumping into the recruitment business. If recruitment is as easy as it is believed then no one would be unemployed and recruitment agencies would be there to offer myriads of opportunities. Recruitment is a hit and miss profession where making a placement is relying on many factors such as clients, candidates and the ability to match them together successfully. Finding new job vacancies, clients and prospective candidates is a daily grind of numerous phone calls, emails and going throughlong CVs all with a chance of disappointment and knock backs. Sometimes it prone to bribes and kickbacks. In most cases only the unscrupulous people survive in the recruitment business When a non-recruiter finds a new staff member for their employer by placing a job advert, reviewing CVs and conducting an interview to decide on which employee to hire is not the same process as being a recruitment consultant. Finding and building a relationship with a client, understanding the placement and candidate required, before finding a number of suitable CVs to put forward, manage the interview process and negotiate the remuneration between both parties is a true skill and art and something that cannot be learnt overnight. People who have started their own business will tell you it is not an easy task to do but to also add the fact that you are providing a service you have no experience in will make this twice as hard (if not impossible). Even experienced recruiters starting their own agency understand it may be 3-6 months before they will make adequate placements to cover their costs so by having to learn this skill at the same time as running the business will extend this even further. In our experience even the most talented recruiters do not necessarily make the best business owners. As a recruiter you need clients in order to make a placement and having experience of building relationships with clients and getting them to understand that you are the best person to fill their placements needs. Even if as a non-recruiter there are relationships with clients this is not necessarily in the recruitment field and they will take much more convincing that the recruitment will be successful. For instance, there is a situation where an engineer who had over 15 years of experience as an agency representative, wanted to set up a recruitment agency and managed to get 30 registered, compliant engineers on-board but the clients were not convinced he was a recruiter as they only saw him as an engineer so he had to close down his recruitment agency.
  • There are many competitors in the recruitment industry
Most banks when setting up a business bank account will ask for the previous history of the directors of the business to mitigate any risk to the bank should there be any lending required. If the director however has no experience in the business they are starting then this may make the bank nervous and require some additional information within the business plan on how they will achieve the sales they are expecting. This can restrict any potential lending and would make it harder should the agency decide to make temporary/contract placements that require invoice finance.
  • Slight change of plan might crash your agency
As all recruiters know, if you do not follow the process correctly when making a placement then the client can have the candidate for free so when you’re a non-recruiter this chance can be even greater. Ensuring contracts are understood, correct and properly signed by having the experience of making placements previously ensures that the client will pay their invoice and will not be able to take the candidate for nothing. Experienced recruiters have helped a number of non-recruiters over the years set up their own agency and we have seen them struggle and adapt into being a recruiter as well as starting and running their own business. The most successful agencies that have been helped to set up have been the ones run by experienced recruiters, who have a large knowledge base and client relationships in their industry with a thirst for growing their own business. However one cannot be never sure of an agency’s potential when picking up the phone for the first time so prospective clients are given the same time, help and advice on the same opportunity. If you can work your way past these major obstacles, you’ll be well on your way to establishing yourself as an entrepreneur. That isn’t to say they won’t continue to nag at you as the years go on, or that new and varied challenges won’t arise to take their place, but you’ll be prepared to handle yourself in those most volatile and impactful first few months — and that puts you far ahead of the competition. New entrepreneurs are forced to make hundreds of decisions a day, from big, company-impacting decisions, to tiny, hour-affecting ones. Decision fatigue is a real phenomenon, and most new entrepreneurs will experience it if they aren’t prepared for the new level of stress. Therefore, before starting a recruitment agency, factor in the challenges or else you will be in for a rude shock.