How to start a recruitment agency: 7 tips from the pros

Is it difficult to start a recruitment agency? 

The recruitment sector is in a golden age, and now is as good a time as ever to start a recruiting agency. According to the latest REC industry report, the recruitment industry currently adds a whopping ¬£44 billion to the UK economy, with a contribution increase of 21.7% between 2020 and 2021. The recruitment industry is also one of the few industries to see significant growth early in a post-COVID-19 economy.  

But, even in this time of prosperity, starting a recruitment agency is challenging. 

As you’ll already know, you can’t start a successful recruitment agency without a lot of experience working in the field, vast knowledge of the industry and plenty of contacts, which can take years to acquire. But, if you have all these things and the drive to open your own agency, read on for some expert tips that will help you along.

How to start a recruitment agency

Do you need a licence to run a recruitment agency?

You don’t usually need a licence to run a recruitment agency. However, there are some exceptions. Recruitment agencies that provide workers for sectors such as food processing and packaging and agriculture and horticulture must acquire a licence from the Gangmaster and Labour Abuse Authority (GLAA). Recruitment agencies that provide workers for the healthcare sector, such as nurses, must register with the Care Quality Commission (CQC).  

While thinking about how to start a recruiting agency, it’s a good idea to get your head around the legal rules and requirements you’ll need to follow, as the recruitment industry is highly regulated. For example, all agencies must comply with the Conduct of Employment Agencies and Employment Companies Regulations of 2003.

Here are some more important legal points to keep in mind: 

  • Recruiters are forbidden to charge anyone who finds a job through a recruitment agency.
  • Contracts must be given to agency workers. 
  • Agency workers cannot have their pay withheld, and agencies can make no illegal deductions.
  • Agencies must be open and honest about the positions they post.

7 tips for starting a recruitment agency

1) Think of an awesome company name 

Your company should show clients, applicants, and the industry you plan to recruit into what you’re all about. Take your time when thinking of your company name, as it’ll be the first thing potential clients notice. 

You might want to conduct a few brainstorming sessions to get it right the first time, as changing a company name later down the line requires a lot of work and can cause confusion and even mistrust in your brand.  

When thinking of what to call your company, consider the meaning behind the name. Most well-known company names weren’t chosen by accident. 

Pizza Hut got its name because the company’s first building resembled a hut, and the building only had enough room for an eight-letter sign. Google was inspired by the mathematical term “googol,” which describes the number one followed by one hundred zeros. This is fitting, as the search engine handles over 8.5 billion searches a day. Before starting the search engine we all know as Google, Larry Page and Sergey Brin created a search engine called Backrub, which is not a word you should say much in an office environment for obvious reasons. 

2) Register your company with Companies House

Now you’ve thought of a great name, it’s time to register it with Companies House (if you’re not based in the UK then you will need to do this with your country’s equivalent body) . This is a surprisingly simple process that will likely take you a fraction of the time you spent thinking of what to call your brand-new recruitment agency. You can get this sorted yourself or even pay a business to do it for you.

As long as the registration is properly completed and is free of any legal issues, you’ll only have to wait around 24 hours for the entire thing to be processed. 

3) Handle HMRC 

Your agency will automatically register for Corporation Tax with HMRC after your company is registered at Companies House, and you will receive your company UTR number. However, in addition to making sure you are registered to submit your intermediary reporting each quarter, you might also need to register for VAT, PAYE, and (if you work in the construction sector) CIS.

4) Get yourself online  

A whopping 99% of consumers use the internet to find local businesses. So, if you’re not online, your company may as well be invisible. Thankfully, building a website for your business is easy and offers you huge returns on your investments. 

First, you’ll need a domain name, ideally the same as the name of your business. Once you’ve got your website set up, it’s time to raise brand awareness with the magic of written content such as SEO-friendly articles, white papers, long-form guides and more. You can also grow brand awareness with a LinkedIn content strategy.

5) Don’t forget your finances

Choosing the right bank that suits your needs is very important when setting up a new business. Always consider the system and process for internet banking to make it easy to send, view, and receive payments through an online system. Don’t worry too much about fees, as the majority of bank fees for new start-up businesses will be quite standard across the board.

6) Keep yourself covered with insurance 

When the agency employs personnel, employers’ liability insurance is the only type of insurance that is legally required. But taking out a combined insurance plan that also includes public liability coverage is advisable if you’ve got the funds to do so. Generally speaking, the more insurance coverage you’ve got, the better. Some clients might also demand you to have supplemental insurance, such as professional indemnity insurance. However, you can cross that bridge if or when you come to it.

7) Get a grip of GDPR

It is crucial to register your company with the ICO (Information Commissioner’s Office) in order to obtain a data protection certificate. GDPR is a significant piece of business legislation, and your agency will be handling candidates’ personal data. Luckily, the annual cost for this certificate for a small organisation won’t break the bank.

The bottom line 

Once you’ve got the admin out of the way and your business up and running, it’s time to do what you do best: recruit the best candidate for the role. Using psychometric assessments, like the ones we provide at Clevry, can help to ensure that you’re sourcing and placing the best candidates possible, and that they will be a good fit with both the role and organisational culture – please do drop us a line if you want to find out more about how we can help in this regard.¬†

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