How to Start a Recruiting Agency & Make Money – The Ultimate Success Guide

How to start a recruiting agency? Are you intending to stat a recruiting agency soon? 

This article I am pretty sure will trigger a lot of attention as there are 2 groups of people that will be very interested, on one side, we have the existing recruiters who most likely wanted to become their own boss and on the other side, the existing recruiting agencies bosses who will want to know what I would be writing.

Anyhow if you are a current recruiting agency recruiter and you are planning or intending to start your own recruiting firm, perhaps reading the insight of this article may bring you some interesting lights.

Alright, this is what had happened, you had generated plenty of sales for your current recruiting company and you could be earning good money (Most of them don’t!) and commissions and you have the financial resources to start your own firm! Isn’t that great!!!! Oh yes, it is…starting your own firm could be the best thing that could happen in your life, imagining having a company named after you and you have a great logo in front of the office…

That FEELS wonderful…..

What You Really Need Before You Start a New Recruiting Agency (If you are currently a recruiter)

If you are not a recruiter currently, you skip this section. 😉 

But hey….before we continue with this amazing dream……I need to let you know what you need to become a great boss of a recruiting company…..

1) Great Sales Records

This is pretty obvious, you ought to have already achieved some interesting sales figures consistently every month so that you will have the confidence and resources to use them to move it to another firm.

If you are not achieving great sales revenue now as a recruiter for other company, how would you be able to generate more clients and sales with your new company which has ZERO brands, no identity, and NOTHING to showcase….

Get the clients and sales in first, network with more people, join a BNI or business networking group, once you have more contacts and connections, then we move on to the next step….

2) Defining Your Role

Are you a good sales person or a good operational person as a recruiter?

The first role needs someone who is more outgoing and the other could be someone who can sit on the computer for 12 hours every day. What are you? What are you good at doing? Here is the problem, most people are good in one role and if you were to ask a salesperson to do an operational role, then he or she will not be efficient.

On the other hand, if you ask an operational person to do sales, very likely he or she will not generate even one client! Once you define your role, it will be best that you do the role that you are better in so that you can cover more and generate a better ROI compared if you were to do a role that you are not good at.

3) Willingness to Delegate

Do you dare to delegate the task to new staff? Many will have this problem because they will afraid that their staff might take away their clients or candidates if they know too much information. Here’s the problem, if you do not delegate, you only can cover THAT much….if you delegate, both of you can cover more…which one is a better choice? You decide…. SECURITY or MORE SALES?

4) Delegating Skills

Well, this part is very important and you can relate them to point 2. If you delegate the selling part to an operational person, then the possibility of getting a good number of clients will be pretty tough.

First, you need to identify what category are the staffs better in so that you can ask them to focus on the area where they are good in.

Many bosses would like to ask the consultants to do a 360 recruitment process so that by paying them a fixed salary, they are able to do 2 tasks. Ideally, this is the best scenarios however in real life, it seldom can work very effective that way. Hence you will need to be bold and effective in delegating the right task to the right person and not all chuck all the task to the very few people…

Regardless whether you are running a recruiting agency, staffing agency, recruitment agency, executive search agency or a headhunting agency, basically the 360 recruitment functions are more or less about the same, in different countries, such as the USA, the Americans are using the term “staffing agencies”, and for example in Singapore, United Kingdom or Australia, many people use the term “recruitment agency”, “recruiting agency” or “Executive search agencies”.

Do take note that all of them are basically ABOUT the same. Sometimes, I may use the term recruiting agency, and sometimes, I will use a staffing agency, basically, it means the same thing.

Anyway, you get my point on this, let us move on to the basics..

What is the Recruiting Agency? 

A recruiting agency (Business) is a company operated by the owner (You) that assist the clients (The company that is recruiting) to source for suitable candidates for their recruitment process.

Most of the reasons why a client would like to outsource are that they find the process very cumbersome or not effective, they would prefer to outsource the entire process to a third party (Recruitment agency).

Sometimes, they do find that the cost of outsourcing the recruitment process is actually more economically in terms of financial.

There are other reasons like they are new in the industry and would like an expert to help them in the entire recruitment process. Yes, there are also other special reasons too, well, we leave that to another topic to discuss.

The Starting Point…..

Deciding where to rent an office or work at home. If you have sufficient capital, it will be good to have a small office as you will look more professional and it will be easier to use them to interview candidates. A basic rule of thumb, you must have sufficient capital for your operating expense for the next 6 months without any sales! If you do not have the required ratio, I will strongly advise you to work at home.

You can still use “virtual office” and work at home if your finance is just “starting out”, many successful recruitment agency started off working from home too.

Register a business or company with your local authority, please ensure that you have register a legal entity so that you will not get into trouble, in certain countries, if you were to carry out a business without a legal business entity, it will be considered illegal.

Hence, please check with your local business authority before you start any business activities.

Register with your other authority involving in manpower and recruitment agency, do check with your local authority whether you will need any special license to carry out your own recruitment agency as it is a professional business where requires you to have a certain level of “conditions.” For example, in Singapore, you will need to get approval from the Ministry of Manpower and apply for a Employment Agency (EA License) before you operate a recruitment agency, businesses are not able to run a recruitment agency without the license.

If you are in London or Los Angeles or in other city, if you are unsure, please check with your local government and authority, a corporate secretary, accountant or business consultant will likely be able to assist you in this aspect 

Starting a Recruiting Agency Business.

Building a recruiting agency business is not very tough, however, making money consistently every year in the recruiting business will not be too easy.

If someone were to tell you it is VERY EASY to make money in recruiting agency business, be very careful, no business is 100% guaranteed.

Gone were the days whereas a recruiting agency business owner, you are able to make over $30,000 – $50,000 per month from your recruiting business billing per person.

In Singapore there are around 50 new recruiting agencies formed every month, in the UK, there are about 700 new recruiting agencies formed every month too. 

So as you can see, the numbers are increasing and it is getting much more every month.

Well, anyways, here are the steps on how to start a recruiting agency business that will be successful.

Phase 1: Setting the Framework (Mindset)

a) 95% of the people will say to you that it is not possible to make money in the recruitment business, they are correct. That is why they are mostly a job seeker or are nowhere near success. To be in the zone of real profitability, you need to think out of the normal zone.

b) Having an extremely high Teachiblity index. This is so important that anyone who wanted to be a millionaire, regardless of whether they are into recruitment business, in short, they must have to have a high index. in short, need to be able to learn and willing to learn new things and take massive action on knowledge. Click on the link to understand what is Teachability Index.

c) Continuously learning – We need to understand the information, strategies, and especially technology changes very fast, what you learn today may likely be not applicable or workable the next day, so it is important to constantly be updated on the technology and what is happening in the recruitment industry.

d) Taking small steps every day – Sometimes the goals can be too huge to take, however, you can break them down into small pieces to digest. Hence, you can break your goals into bite-size things and accomplish them easily.

e) The potential of the recruitment business – The recruitment business itself it is a BILLION dollar industry, hence even if you are only getting a 0.1% of the share, it is still very interesting market to be in.

f) Be Different – You will need to understand that most of the recruitment agencies or staffing agencies will be doing the same thing like what everyone is doing, hence, most of them will never be earning millions of dollars every year. You will need to be quite different in what the normal recruitment agencies owners are doing, then you will have a chance to be a millionaire in the recruitment business.

Phase 2: Creating the Recruiting Business

Step 1: Creating Your Identity

a) Create your brand

Think of a great name for your business: something iconic, easy to remember, and not too long. When you have decided on the name of your business, register the name in your local business authority to make it a legal entity. Depending on your country regulations, you might be required to get a license for it. In Singapore, you will need to have an EA license.

b) Website Domain & Hosting

Get your website domain name, such as namecheap.com or godaddy.com, you can register a hosting provider (A2hosting or siteground.com) and link them to your website domain name that you have registered.  Make sure that the domain name that you choose is as close to your business name as possible. Get a web designer to build the site for you professionally. Also, determine whether you want to set up a general recruitment business or a specialized recruitment business.

c) Business Address

Please ensure your business address is registered as a corporate address. A home address will reveal what “level” you are, even if your office is registered as a virtual office, which is perfectly fine. People do understand, but if you want to save money on these things, you will send out the wrong impression to other people and your business may not work out.

d) Business Card

Get your business cards printed. I believe your web designer will have also made your business logo. Please ensure you get it done professionally; your clients and candidates will know whether your logo is a DIY logo. A less-than-professional logo does not make a good impression.

Creating a memorable identity:

Be it your logo, theme, tagline or the “clothes” you are wearing to be projected out to the public, which is the client, candidates and potential recruitment consultants that may join you later, you need to create a consistent brand and image, get a professional graphic designer and a good website designer to help you with this.

Do not attempt to save money on this, if you pay peanuts you will get monkeys, and also I do not recommend to DIY and create your own unless you are a designer by profession.

Get a good website designer to help you too, your website is the KEY to tell people who you really are. These are the clothes of your recruiting business.

Step 2: Marking your presence felt in the digital world 

More recruiting business activities will be done online whether you like it or not.

Be it Facebook, Linkedin, Twitter and other social media platform which you think is essential. Invest heavily on SEO also, in long run, you will yield better returns and leads from clients and candidates will POUR to your websites. Facebook marketing, Linkedin marketing, and even Instagram will be a good platform to start if you are just a starter….

Step 3: Focus on your CORE 

What industry are you good in, what specialized product or industry knowledge you do have for one or more particular industry, I would strongly urge you to focus major of the activities on these areas so that you will save plenty of time than learning an industry you do not know at all as the learning curve can be quite steep.

Step 4: Keeping a good and updated database

Along the way, you will acquire may clients and candidates, keep and consolidate the database as accurate as possible, 80% of your sales will usually come from there, use a free CRM system available in the market (Search under free recruitment software in Google), managed them properly, get a part-time or freelance person to help you when needed. Be careful on getting paid recruitment software, if you do not managed it properly, it may become a liability than an asset as it takes up time to learn and use the software. 

Step 5: 80% sales

As a recruiting agency business owner, remember that when you started off, you will be very much ALONE, it is fine, I have gone through that before and it is a process that you need to go through.

Focus at least 80% of your time to generate new clients, servicing existing clients and sales, sales and more sales. Your recruiting staff can help you but remember that eventually, you will still be the person that going to bring in THE sales figure to your company.

Step 6: Watch your Cashflow

If your cash flow is not good, cut all expenses when needed, avoid any unnecessary expenditures and put your money only on processes and activities that are able to help you to increase sales. Controlling the cost – In every business, especially for a recruitment agency, you will need to ensure your cost is to the minimum, ensure that every dollar you spend is worth it.  

Step 7: Maintaining a good reputation 

It takes a while before you are POPULAR in the market and make very good money, make sure you address to all complains and potentially tricky issues. Always remember that at this junction, it is the digital world, one wrong move and your company or your reputation will be gone in a heartbeat!

Step 8: Building your communications skills 

Whether the company is going to be successful will very much depend on how you communicate with others and yourselves.

It is a MUST you must be able to communicate well with other people and able to listen to what other peoples need are, on top of that you much always communicate with yourself that this is going to work and you have to tell yourself that you will continue to work hard and smart for your very own recruitment business.

Step 9: Building a great relationship 

Your clients, your candidates, and your recruitment consultants will be your greatest assets, make sure you have a fantastic relationship with them or you will be financial ruin if you never take good care of it. Anyway, your business is in human, so be great on human relationship!

Phase 3: Generate Client Orders (Sales)

Generate clients and job orders; ensure you have 20-30 job orders to work on per person (monthly) so that your ability to close more cases will be higher.  

Here are 7 methods to generate recruitment agencies clients:

1) Cold Calling – obvious this is what everyone knows but to do this effectively you will need to identify a weakness in the clients profile and company so that you know what do they really need. If you were to call them without being well prepared, you will definitely get a NO for an answer. Do not ask whether they have any recruitment need, do not tell them you will send them your profile, it just does not work that way. When I posted an advertisement, I received at least 10 calls every day from recruitment agencies, all of them do not last more than 30 seconds and I said NO to them. Question is, what makes you so special that the other party is willing to talk to you for over 2 minutes? Find the answer and you will solve the puzzle.

2) Use Twitter – If you have yet to venture into Twitter, it is a totally untapped market and you will be surprised how you can add friends and communicate with potential clients using twitter itself. I get to know many friends and in turn, many of them become my clients because we have something similar (We used Twitter) somehow there is a certain bond when 2 twitter friends send direct message to each other.

You can always use the free Twitter software Tweetdeck and manage your twitter account from your desktop without logging in and out of Twitter. 

3) Use Linkedin – Well the concept is the same as above when you get connected with people, the difference is that it gets one level higher because most BIG clients will come from Linkedin as it is a social network where the BIG boys LINK together. Join Linkedin today and build your profile and join as many groups as possible where you think you want to penetrate. You will not go wrong from joining Linkedin.

4) Using Email Marketing – Ha!! This is my favorite because I have used this over 20 years and it is still working, many people in the internet said it is dead….yes it is true, because they use it the wrong way, they keep promoting their products and services and bombard the list with offers after offers….the email user will feel offended and turn nasty. There is a way where you can use email marketing to your advantage.

Below are more elaborate information for email marketing.

Email Marketing is to INFORM. PERIOD.

Email marketing is a tool to help you to reach out to potential clients and lead them to view your websites. When they are interested, they will make further inquiries with you, and there will be a salesperson or customer service to follow up with the potential clients. That will be the actual way of doing business.

Setting Your Expectations Right

Do not expect immediate responses from your email list. Under normal market average, it may take five to eight emails to the individual list before you see some responses. Of course, if your services and products are not what they are looking for, you can expect no response.

Target Marketing

It is better to send an email to 10,000 people who might be interested, than to 1,000,000 people who have no need or interest in your products or services.

Your Title Is Very Important

Always create an interesting TITLE so that it will entice the reader. Focus on THEM rather than YOURSELF. For example, if you are selling a service that can help to create new clients for them, do not talk about how cheap or how good your service is going to be; focus on how THEY can get new clients and sales from their point of view, not YOUR point of view.

Your Content

Remember point 3 about targeting the other party and their needs? Yes, the same principle applies here too. Don’t brag about how good your service or product is going to be, focus on what BENEFITS they can get from using your product and service.

Customers are NOT interested in your product or service at all; they are ONLY interested in their OWN benefits! Hence, talk about THEM, THEM and THEM only…. 

Should You Use HTML For Email Marketing?

If you have the technical knowledge, do use HTML, as it will look more interesting with graphics and animations. However, be aware that some companies’ email servers have an auto-filter system that automatically deletes emails with .jpg or graphics files.

Avoid Using a Web-Based Email Provider

There are many of these providers, such as Constant Contact, Icontact, etc. These are monthly subscription services that allow you to manage your own email lists. It is good in certain aspects, but you can always use your own non-web-based software that can stand alone and not depend on other parties.

When you are depending on other parties, there are always plenty of restrictions, and most of the time it is very expensive if you have a huge list in your database. I have been using stand-alone software for over 25 years, and it has never had any problem.

Email marketing is one of the best ways to reach out to potential clients fast, using the fewest resources. Using email marketing to convert potential clients into sales is one of the easiest and most effective methods of marketing. Imagine that, instead of using email marketing, you are using telemarketing to call 100 people every day compared to reaching out to 500,000 people in one day? I have been using email marketing for over 20 years and it is still going very strong (if you really know what you are doing). If you are still not into email marketing, you should be looking into it!

5) Trade shows and exhibitions – Yes, it will be a great place to build your network because these are where all the companies that are willing to pay tens of thousands of dollars to exhibits their products and services. Go to any trade show that have more than 100 exhibitors and spend the time to throw in your business card in every booth, collect all the business cards in EVERY booth and talk to the people in the exhibition. It may be tiring to do it but it is worth the while.

6) PPR which stands for Pay-Per-Referral, it is a method that I have taught the new recruitment agency owner to use when they are low in budget and does not have much manpower to do the marketing. What it does it that you connect to those people who like to do freelance or part-timer who would like to work at their own pace and offer them a deal like if they were to refer a client, you will reward them with a certain introduction fee. Also, you can also pay them a commission if there is a deal close to their referral. You can have either one of it or combined them as a package. Trust me, there are thousands of people out there would LOVE to be your referral, as long as you pay well and on time. I have built thousands of such freelancers and they have helped my recruitment business leaping from ZERO to Quarter Million sales in less than 3-6 months.

 

7) Join some local organizations or associations, I would recommend you to join associations such as trade organizations, local membership where you will be able to access to business people who are like-minded like you that are keen to do business networking. One such organization will be Business Network International – BNI, in BNI, I do have great success using that platform to do business network and get to know more good profile businessmen. 

Phase 4 – Getting Candidates

Getting candidates for your recruitment agency – This will be the key factor in deciding on the quality of your “product” to your client, hence you need to get the best quality at the right salary to your clients. For a start, you can also use social media such as Linkedin, Facebook or Twitter to reach out to potential candidates.

You can also advertise in newspapers, magazines or online portal if you have sufficient budgets. Getting candidates for your recruitment agency – Use the following techniques to get new candidates, the list is not exhaustive though:

  • Using telemarketing to call potential candidates, try Linkedin, Facebook to connect to them first when possible. 
  • Use emailing to reach out to potential candidates.
  • Business Networking
  • Attend training course, seminars so that you can get to know more people 
  • Talk to your previous clients and suppliers from other industries.

Here you are, the steps to starting a recruitment company, hope that this helps in your journey.

By Dougles Chan

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