Ready to start your own recruitment business? It’s a big decision to go solo, and it’s certainly costly – or is it?
In fact, setting up your recruitment agency doesn’t have to be very costly at all. The initial steps, like getting the agency registered and creating a website, are surprisingly affordable. And you’ll likely be starting out small, even if you’ve brought clients with you, so overheads will be low.
Whilst we can’t give you an exact figure for how much money you will need, we can give you a very good idea of what to anticipate, helping you create a more accurate financial forecast.
Why listen to us? Well, we’ve been working with recruitment start-ups and SME agencies for over 19 years, offering funding and back office support. This has given us first hand knowledge of the cash flow needs of agencies in their early stages. Read on to discover the key costs you should plan for.
Recruitment Start-Up Costs
In the beginning, it’s likely to be just you or you and a partner until you’re a bit further along, keeping staffing costs to a minimum. As for premises, you likely won’t need them for a good while either. There’s no need to invest in office space or welcome unnecessary overheads any earlier than you have to.
When it comes to equipment, in theory, you may not need anything you don’t already possess. Your mobile phone will enable you to make and take the necessary calls, while your laptop or PC will allow you to do pretty much everything else. However, if you’re serious about being a successful recruiter, you’ll want to hit the ground running with everything in place and looking professional.
Here are some essential costs to factor in:
Company registration
Make your new agency official by registering with Companies House. This should only cost £12 and to do so you need to:
- Choose an agency name
- Appoint a director
- Choose at least one shareholder
- Note any PSCs (“people with significant control”)
- Create articles of association
Website
A website is an absolute necessity; domain name purchase typically costs £5-15 a year, while hosting can range between £10-30 a month. You’ll also need to factor in the cost for hosting the website and paying for an SSL certificate (which verifies the identity of your site). Many hosting providers offer packages that include both hosting and an SSL certificate; individually, you can expect to pay £10-20 per month to host on a private server, and £10 a year for an SSL certificate.
However, creating the actual site doesn’t need to be complicated or costly. We often see start-ups over-investing in websites they don’t really need but a build-your-own website on a site like WordPress or Squarespace will more than do the job. This will cost you for a domain name, but it won’t break the bank. For example, Squarespace charges around £10 per month.
But here’s the important part – make it count! Your web presence matters and it’s an opportunity to brand and market yourself for a very low fee indeed. You’re paying to host your site, so make it easy on the eye, informative, user-friendly, and easy to navigate. It should be smooth and easy to navigate, with information that’s easy to find and click through.
Branding and logo
Branding and logo design are important for establishing your professional image and leaving a lasting impression on your clients and candidates. While you can create a logo for free on platforms like Canva, it’s worth investing in professionals to create something high-quality and entirely unique. Think roughly in the region of £300-500 for a logo and business cards.
Recruitment technology
This is a significant consideration, with CRM (Customer Relationship Management) and ATS (Applicant Tracking) systems being the two most essential tools to invest in. They’ll cost you around £30 each a month but are more than worth it – essential for tracking candidates, scheduling interviews and onboarding new hires. You may also need to purchase pay software and timesheet management systems. And don’t forget about a printer and Microsoft software packages if you don’t already have them. A company mobile phone will also be a necessary investment further along the line.
Insurance
Once you hire your first employee, it’s legally required to have Employers’ Liability insurance for up to £5m coverage. The exact figure will vary depending on the number of employees you have, the location of your business, and whether you have any office space. But as a ballpark estimate, you will need anywhere from £10,000 to £50,000 to start a basic recruitment agency.
Job board ads
You’ll of course need to get your job vacancies listed on job sites, which will come at a cost. These listings are charged in the same way as Google Ads would be, with the cost dependent on how highly you want your advert to rank in the search results. Indeed offers a free basic plan, with paid plans starting at around £5 per day. Glassdoor also offers a limited free plan, and its paid plan starts at £299 per month. With LinkedIn, the cost of a promoted job post is determined on a pay-per-click basis, and you can set your daily budget at as low or as high as you’d like. You also have the option of investing in an ATS that comes with its own job portals if you want to cut down costs here.
Back Office and Finance For Your Start-Up Recruitment Agency
While considering how much money you need to start your recruitment agency, it’s important to consider your back-office operations. Choosing digitally-run operations for your back office processes can significantly reduce your ongoing costs.
Payroll and invoicing services, for instance, can streamline your operations without requiring a large upfront investment. These services can handle invoicing clients and paying your temps and workers, assist with P45s, and process timesheets. This allows you to concentrate on growing your business rather than getting bogged down in administrative tasks or hiring additional staff to manage them.
Working with back-office specialists like New Millennia can also provide financial solutions that reduce the amount of capital you need to start your agency. One key offering is funding assistance for your start-up recruitment agency.
What does this mean for your initial capital requirements? In the early stages, your cash flow is likely to be tight. But, with the assistance of payroll and invoice financing, you can pay your temps before your clients have paid their invoices. This means you don’t need to have as much money on hand to cover these costs upfront, potentially reducing the initial investment needed to start your agency by thousands of pounds.
Plus, some back-office service providers, like us, don’t require proof of credit eligibility. This can be a significant advantage for new agencies that haven’t yet established a credit history.
So, how much money do you need to start a recruitment agency?
This blog has given you the basis for a solid costing plan; the exact costs will vary based on your individual business plan and growth strategy and it’s really up to you, so get planning and get budgeting!
Of course, this is only the foundation, and as you scale, your cost projection plan will need to include expenses such as salaries, travel, IT support, SEO, client entertainment, office space, and taxes.
The key takeaway is that, with careful planning and budgeting, you can tailor your start-up costs to align with your available resources – there are options available to suit all financial situations.
And remember that, while the initial investment is important, it’s equally important to consider ongoing operational costs. This is where partnering with a specialised back-office service provider can make a big difference.
Contact New Millennia today to discuss how our back-office services and funding can support you in the early stages of a recruitment business.
