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10 Reasons Recruitment Start-Ups Fail

This article was published way back in 2013.

While you're welcome to read it, some of the information may have changed.

It’s difficult to get an exact figure of how many start-ups in the UK actually fail within the first two years but conservative estimates put the figure around 80%.  With at least half of that amount not making it to the end of year one, we are going to look at some of the reasons recruitment start-ups fail to make an impact. So in no particular order….

1.    Procrastination
We all know that starting a business is going to consume a lot of time. There are so many things to sort out from office space through to web sites and branding.  If you’re not careful you can spend more time doing the more enjoyable things (i.e. choosing a logo) and less time actually doing the things that make you money.

2.    No Business Plan
Before you start, you need a business plan. We’ve all heard the old adage ‘failing to plan is planning to fail’, but these words have never been truer.  Knowing exactly what you are offering and who you are offering it to is going to help immensely in the future. It will also show how realistic your business model is and can help when requesting finance from banks etc.

3.    Lack of day plan
Just because you’re the boss doesn’t mean you should ditch the day plan.  If you start off on your own it can be difficult to keep focus, having a day plan to fall back on will ensure you’re at least achieving the basics.

4.    No experience
Surprisingly, a number of start-up recruitment company owners focus on a market they have no experience of working in.  This may work for a few, but without the technical knowledge and contacts the task of succeeding is much harder.  To begin with focus on a market you know – the time will come when you can expand.

5.    Infrastructure? What infrastructure?
Failure to invest in a half decent infrastructure is a sure fire way to make sure your business doesn’t see its first birthday.  A simple CRM system is a must, an excel spreadsheet may be useful now but is not scalable. Likewise a proper email address rather that is going to carry much more weight with clients and candidates.

6.    Realistic budget
Being able to budget is a key skill when initially starting up as you will find that you have a lot more going out than coming in.  Keeping track of costs and knowing the costs that are coming up will allow you to manage your cash flow more efficiently.

7.    Failure to adapt
The beauty of starting your own business is that you can potentially react to changes in the market much more quickly than larger companies.  Failure to adapt and change quickly enough will mean you miss out on opportunities to make your business work.

8.    Lack of finance
If you setup on your own, there will be a time when your outgoings exceed your income by quite a margin.  When starting your recruitment company, nothing is cheap and needs to be paid for at roughly the same time.  Also if you want to start a contract business you’ll need to find the finance to support this.

9.    Looking like the little guy
In this day and age, just because you are recruitment from your bedroom, doesn’t mean you have to look like you are recruiting from your bedroom.  There are no excuses for your stationery, branding and online presence should looking like a 10 year old put them together in paint. Implementing tools such as online timesheets will also help to give the impression you are much larger than you are.

10. Failing to attract candidates
We all know that if you have access to good candidates it makes recruiting a lot easier.  Many start ups fail to appreciate the difficulty in developing an efficient candidate attraction strategy and the tools needed to execute this.  They also fail to track where the candidates apply from so continue to spend money on job board that aren’t working. A tool such as Broadbean will allow you to easily post to job boards, search CV databases and track your applicants.

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