The construction industry within the UK employs 145,000 individuals, making up 5.7% of the whole total workforce. With our new government’s efforts to expand housing and tackle climate change, the demand for skilled labour will continue to grow. Here in the North West, the latest data from CITB shows that 23,850 extra construction workers are needed by 2028.
This demand presents a significant opportunity for recruitment agencies specialising in connecting candidates with these positions. If starting a construction recruitment agency seems the perfect path for you, we’ve put together some advice to help you with the initial stages. New Millennia has been lucky to have supported a number of construction recruiters with their finance and back office and, in the process, we’ve picked up a thing or two about what makes a successful agency.
If you’re new to recruitment entirely, it may be worth checking out The Recruitment and Employment Confederation two day course. But, in the meantime, have a read of what we’ve learned from hands-on experience supporting construction recruiters and their agencies. Whether an experienced recruiter, or a construction professional making a career change, this blog will be worthwhile for you.
Find your niche in the market
There are many construction recruitment agencies, so you need to be prepared to compete. It can be tempting when you first start out to simply go after any role, in the hope you’ll land one as a starting point. However it can be much more effective to find a niche.
For example, will you solely focus on blue collar workers, the white-collar market, or a combination of both? Will you build your business specialising in temporary placements? Or will you specialise in recruiting construction professionals into a certain sector?
Having a specialism helps you find your place in the market and enables you to build a profile of your target client. CITB’s latest report highlights private housing, infrastructure, and repair & maintenance as the sectors currently in major demand. But, factors like sustainability and energy efficiency are also playing a growing role.
Keep your overheads low
Launching a construction recruitment agency doesn’t need to break the bank. In fact, keeping your costs low in the early stages is crucial for sustainable growth. Look at different ways you can reduce costs, for example by working from home or outsourcing back office functions.
Consider a remote or hybrid work model as this will take away the need for a fixed office space, and the cost of rent. While occasional in-person meetings may be necessary, there’s no need for a dedicated conference room; utilise rented meeting rooms in shared workspaces or co-working facilities to reduce your outgoings. Dedicate your resources to key functions like candidate placement – tasks like bookkeeping and admin work can be effectively outsourced to save you time and money.
Stay up to date
Clients will expect you to be aware of the health and safety implications of employing individuals both on and off site. This ensures they’re placing qualified candidates, who understand safety protocols. For example, you’ll need a solid understanding of qualifications like the Site Management Safety Training Scheme (SMSTS).
Likewise, stay on top of changes to legislation; research conducted by Hays shows that 26% of large construction companies are not aware of the upcoming changes in legislation with IR35 in the private sector. By staying informed, you build trust as a new construction recruitment agency, and establish yourself as a valuable advisor for both your clients and candidates.
Insurance
It’s essential to get the relevant insurances in place for a construction recruitment agency, because, when placing staff into new roles, you’re exposed to a number of risks. An employee could be injured at work, or a client may claim you completed an improper reference check on a candidate.
The types of insurance considered important for construction recruitment agencies includes:
> Professional indemnity insurance: Protects your business if you need to defend any allegations of mistakes in the services you have provided to a client.
> Public liability insurance: Another common type taken out to protect agencies when dealing with clients and members of the public. This would also cover your business if property damage was caused by your business.
> Employees liability insurance: If you have one or more employees working for you on a full or part-time basis, holding employers’ liability insurance is a legal requirement under the Employers Liability Act.
As your business grows and acquires assets, you’ll also need to consider other insurance types like office and cyber insurance.
Take your message to market
In such a competitive industry, it’s essential to market yourself well. Whilst a construction background will connect you to lots of potential candidates, clients may be harder to come by. To stand out from the crowd, you’ll need to be able to clearly communicate why people should use your agency., and how you’re different from the rest.
This is where a strong marketing plan comes in. Showcase your deep understanding of construction recruitment challenges, and how your agency has solutions to address them. It’s also important to develop a clear message about your agency’s values and what sets you apart from competitors. Working with a marketing agency can be beneficial. They can help you develop a brand that resonates within the construction industry, but bear in mind though that this can be costly.
Demonstrate your expertise
The decision to start a construction recruitment agency often stems from experience in, and an understanding of that field. Perhaps you’ve worked within a senior construction role for many years, or have been successful at a major recruitment agency and now decided to go at it alone. Whatever your background, your expertise is your selling point.
This is because experience is real currency within the construction industry – clients and candidates value recruitment consultants who speak their language. When you understand the unique challenges of construction recruitment, whether that’s filling niche positions or navigating complex regulations, you can tailor your business to address them directly. This focus on industry-specific solutions will set you apart and really help you to succeed.
Funding
The nature of the construction recruitment industry means that often you’ll have to pay out for staff and services long before you’re paid by your client. Therefore you’ll need savings in place, to help you get started. Construction projects often involve clients with extended payment terms, like 30 or 60 days. But while you wait for client payments, your agency still has operational costs and your workers still need paying. This cash flow gap can be a hurdle, especially for new businesses.
Many construction recruitment agencies use funding options to bridge this gap; this allows you to pay your staff and cover expenses, even if clients haven’t settled their invoices yet. Some companies specialise in helping start-up recruiters; they’ll look after your back office requirements, as well as providing recruitment finance services.
Gross payment status
When thinking about the most suitable finance provider for your new construction agency, we’d recommend seeking out a provider with ‘gross status’. What this means is that your finance provider can pay your wages in full to you, without having to send tax to HMRC first.
Under the Construction Industry Scheme, contractors must make deductions of up to 30% from a subcontractors pay. As you can imagine, this deduction from every invoice can have a huge impact on your cash flow. The way to get around this, and keep your business operating smoothly, is to find a provider with ‘gross status’.
Businesses can qualify for ‘gross status’ by passing a compliance test, allowing them to pay invoices without having to make any CIS deductions or payments first.
New Millennia offers 100% recruitment financing with gross status, so you can keep your business moving until you’re paid by your client. We also offer services to streamline your back office system, taking the burden of admin tasks like payroll processing, off your plate.
To find out more call our team on 0161 337 9882 or email enq@nmgroup.co.uk.
