Raising money starting your own recruitment agency

By: JSB


If you have been successful as a recruitment consultant, there's no reason why this can't translate to success running your own recruitment agency, but funding your first year will be critical to your success.

Take, as an example, a recruitment consultant billing £10K per month in their company role. They know that given time, they will bill this again on their own, however, it will of course take time to build up a database of candidates and clients. For a one man agency, the running costs, including advertising need be no more than £2K, so a billing of £10K per month would produce a handsome profit. The key is to start with more than enough money to get through to the point of billing £10K per month.

Essentially, there are three broad routes to financing a new recruitment agency. Firstly, the least common way is to have the cash already saved. Not many people do it this way, but also, it really isn't necessary. The second way is a loan. On the grand scale of things the cost of a loan will not be huge in amongst the monthly costs of running a recruitment agency. Even a loan of around £45,000 may cost around £600 per month. Although this may be daunting, for a business that plans to turn £10K per month on costs of £2K, it's not devastating. Once again, the critical bit is making sure the loan is biggest enough to get you operating as fluently as you were when employed and therefore making money.

The final way to find the funds required is to seek out business angels. There are many agencies on the internet who can help here. Typically they will take a fee out of the investment and therefore you don;t have to have the fee available upfront. They can help you prepare your business plan with a clear vested interest in success. In addition they can attempt to match up investors with relevant skills and backgrounds who will be able to make a positive contribution to your business.

One point of caution. Investors will invest in your business for a share in your business. This means they will want management input to how you run, and will expect rewarding with dividends when you reward yourself. This can prove testing for many founder Directors as a business develops.

In summary, don't let lack of funds prevent you from launching a recruitment agency if, looking at everything else, you feel you would be successful. So long as you are successful, the medium term income will cancel out any funds you require to set up with. If you do decide to go for it, make sure you set up properly with the right amount of money. The biggest reason for the failure of new businesses is not setting up with enough money to do things properly.

John Bult runs a recruitment agency in the UK in addition to running internet job sites for recruitment agencies.