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What is the real cost to starting a recruitment agency?

As a recruiter, starting your own agency is the beginning of an exciting journey – but it comes with a few basic setup costs.

Although you only need your phone and laptop to get going, it’s worth putting down some extra cash in the beginning to maximise your chances of success.

To help you get started, we’ve broken down the baseline costs to starting an agency into two parts:

(£12 up front, £30/month)

  1. Register your company
  2. Get a good phone contract
  3. Set up a business bank account
  4. Design a compelling brand identity
  5. Create your website
  6. Build a LinkedIn company page
  7. Start posting jobs

Part two: The add ons (an extra £10 – £120 up front, plus around £75-150/month

  1. Invest in a CRM
  2. Get LinkedIn Premium
  3. Explore invoice factoring options

Ready to go? Let’s get started.

Part one: The essentials

If you want to hit the ground running, these are your absolute necessities. While they don’t all carry a cost, it’s important to put the time in up front and lay a foundation for the future.

1. Register your company (£12, one time)

Often considered a daunting task for new business owners, registering your company is actually one of the easiest steps in setting up a new recruitment agency.

Here’s what you need:

  • Company name and UK office address
  • New director name, address, nationality, date of birth and business occupation
  • Share capital details
  • Subscriber details and address
  • Currency and number of stocks/shares held
  • A preferred form of payment
  • Pay a one-time fee of £12

2. Get a good phone contract(£15 – £30/month)

As a recruiter, your phone is your lifeblood. Although it’s basically a given that you’ll have a phone contract set up already, make sure you find a plan that includes unlimited minutes and a solid amount of data.

You should be able to cover this for around £15 – £30 a month.

3. Set up a business bank account (FREE)

It’s basic practice to get yourself set up with a business bank account. You’ll be able to tie your business account to your registered company and keep things in one place when you do your tax returns.

Luckily, the market for flexible business accounts is booming, with fintechs like StarlingTide and Revolut offering free business accounts with various perks. It’s worth shopping around to find something that suits you (and remember not to pay for any extras you won’t need).

4. Create a compelling brand identity (£15-£120+, one time)

Brand identity is an absolutely critical part of setting up your recruitment agency.

Even something as simple as a well-crafted logo and set of brand colours helps you stand out to your potential customers.

Business cards are also a simple but important part of your brand, costing £5 per 100 as a general rate.

Once you’ve put together a brand identity, you can use your logo and colours on your social media channels and official letterheads. Websites like 99designs, Looka, and many DIY web providers (including Squarespace) offer logo maker and brand packages, for as little as £10.

If you want something a little more custom then you’ll need to pay a designer. (Expect rates upward of £30/hour). And for bespoke, full-scale brand IDs, you’ll be talking to a communications agency. This work should be of an exceptional quality, narrative-driven, and will cost you much more (£2000 minimum).

5. Create your website (£6.99 – £30/month DIY, or £25-£75/hour for a web designer)

A legitimate recruitment operation needs a website. Plain and simple. Cold calling prospects or candidates without a website erodes trust from the outset and will undermine your brand.

Once you start posting jobs, your website will become an invaluable part of your lead funnel. You’ll also be able to automate the hard work of finding clients by letting them find you through inbound marketing, in the form of blogs, ebooks, and white papers.

Remember, If you can view your website as a conversion point, rather than just an online brochure, you’re already a step ahead of the curve.

You won’t necessarily need to hire a designer if you’re comfortable building your own site. There are a tonne of great DIY providers out there, so it won’t cost you an arm and a leg to get set up, and many come with functionality that will allow you to create your own job postings.

Squarespace (starting at £10/month)

  • A popular all-rounder with dynamic templates and a fantastic selection of designs. While it might seem intimidating at first, the site builder unfolds beautifully and their customer support is fantastic. Squarespace also has a huge catalog of support guides, user forum content, and FAQs to help you solve almost any problem you might come across.
  • Tip: you can also create job postings on your website using Squarespace’s ‘form’ features.
  • Plans start at £10/month for personal websites, but you might want to go for the £15 business plan (complete with email addresses, analytics, and better integration options).

Create.net (starting at £6.99/month)

  • Create are a UK-based provider, renowned for their exceptional customer service. With plans as low as £6.99 a month, this is a perfect fit for lean operations looking for a little more personal support./li>

Webflow (starting at £10/month)

  • Webflow is slightly more complicated to use but comes jam-packed with fantastic templates, dynamic scroll elements, and pre-made custom layouts made by professional designers. /li>
  • With a huge selection of free templates, you can get started for nothing on building your website, but hosting plans start at $12 (US) a month.

Hire a web designer (£25-£75/hour or per-project fee)

  • If you’re strapped for time, rates for a web designer generally fall within £25-75 per hour, depending on experience. Be mindful that with changes and updates, your hourly cost can start to creep up. This is why some companies choose to hire on a per-project basis instead./li>
  • It’s also possible to find a web designer on sites like fiverr.com – but make sure you don’t sacrifice quality for price (check the designer’s reviews and previous projects just to be sure).

6. Build a LinkedIn company page (FREE)

An absolute must if you’re starting up a recruitment company; LinkedIn is the primary hunting ground for recruiters and candidates alike. Setting up your company page takes five minutes, and it’s an essential part of creating your online presence.

When setting up your page, be sure to include enough information to inform and resonate with users searching for your services.

As a minimum, LinkedIn recommend the following:

Company overview:

  • Lead with relevant search terms that describe who you are and what you do.
  • See if you can describe in just a sentence or two what it is that makes you special, whether it’s serving a specific niche, or offering a unique pricing model.
  • Include information about your vision, mission, and values. Make sure you stay consistent with your website messaging.

Key info

  • Company size and location
  • Industry
  • Website URL

Logo

  • Many businesses use a smaller logo icon for their social logos. As a rule of thumb, your logo should be clear and legible (if it includes text) when viewing your page in a company search.

Customise your CTA

  • A custom call to action lets you choose how visitors interact with your pages. Currently, you can choose from the following CTAs:
    • Contact us
    • Learn more
    • Register
    • Sign up
    • Visit website

7. Start posting jobs (FREE)

Besides calling prospects, posting jobs on your website and across your social channels, there are a huge number of free job boards that will help you spread the word on your current postings, with major providers like Google for jobs, Glassdoor, and Indeed offering both free and sponsored options.

Obviously, paying for sponsored job postings maximises their exposure, and it’s worth exploring sponsored job pricing option for the larger sites like Glassdoor and LinkedIn. Indeed offer a fantastic tiered pricing model where budget is set daily according to what you can afford, for as little as £1.00 per day. The higher your budget, the more candidates you’ll reach.

 

Everything you need to know to setup your recruitment agency

 

Part two: the add ons

Think of these costs as ‘highly recommended’ extras. These are important operational and marketing factors that will help you establish your work-flow and prove your presence to clients.

Keep in mind:

If you can make just one placement, your commission alone will cover most of your initial overheads.

8. Invest in a CRM (£18 – £75 a user/month)

To keep track of your candidates, conversations, and placements, you’ll need a customer relationship management (CRM) platform. While your CRM is not an essential piece to starting a recruitment company, engagement with our network confirmed that you really can’t grow without one.

There are a few things to consider when choosing a CRM, like functionality, licenses and – of course – price.

With hundreds of CRMs to choose from, it’s worth doing your research to find what will suit you best.

Fundamentally, you need a CRM to be able to scale.

Joseph Nabarro (Associate Director, Annapurna Recruitment)

Since you’re just starting out, you should only pay for the users you need. Pricing varies between plans and providers, but expect to pay a minimum of £10 a head each month. Some of the most popular CRM providers for recruiters include:

Zoho Recruit (£18, £36, or £54 a user/month, billed annually)

Zoho offer three pricing levels (standard, professional, and enterprise) for each user, on a monthly basis.

On the standard plan, Zoho offer a fantastic set of core features like CV parsing, hiring pipelines, mass emails and job postings.

At the professional level you really start to see value for money, with features like advanced candidate matching and portals, plus social integrations that can help you cast a wider net when finding candidates.

At the enterprise level, you’ll get access to Zoho’s white label style services, including a portal that allows clients to manage every stage of their recruitment process.

Bullhorn (Plans starting at $99 a user/month)

Bullhorn is perhaps the best standalone applicant tracking system out there, however their full CRM ecosystem can be cost-prohibitive to smaller operations. With that being said, Bullhorn’s product is renowned for the level of granularity and control it gives users throughout the entire journey, from initial brief to placement.

Pricing begins at $99 a user/month for the Team edition (up to 10 users), while the full CRM is priced depending on company size and requirements.

Workable (Plans starting at $99 per job/month)

Workable offer a unique pricing model based on number of jobs posted, rather than number of users. Users can sign up for either the ‘Hire as needed’ plan ($99/job/month) or the ‘Hire at scale’ plan (price dependent on company size).

Workable offer a huge selection of premium job board postings, templates, mobile-friendly application pages and excellent customer support. With their advanced plan, users get access to AI-driven candidate sourcing, similar to Bullhorn and Zoho’s advanced offerings.

9. Get LinkedIn Premium (£66.66/month – billed yearly)

LinkedIn Premium allows far greater oversight as a recruiter, allowing you more flexibility, scale, and granularity in how you source candidates. With a LinkedIn Hiring plan, you can contact any potential candidate with InMail, save time with advanced search filters to find exactly the right candidates to match your requirements, and enjoy a whole range of other recruiter-oriented features.

10. Explore invoice factoring options (varies)

If you plan to make temporary/contract placements, there will naturally be a shortfall between paying your contractors and getting paid by your clients, which can be tricky for your cash flow.

There are a number of invoice financing options available to bridge the gap and receive your profit up front, giving you the capital you need to grow.

Factoring with back-office is a preferred method for UK recruitment agencies. Here’s how it works:

  1. The financier funds the placement and manages all the back office for you, including contracts, timesheets, invoices and payments.
  2. They pay your contractor and send you the invoice profit (after deducting a fee).
  3. They’ll collect payment from your client, so you can focus on growing your business.

And that’s it.

Keep in mind that most providers charge multiple standard fees including service charges, interest against your debtor days, set-up costs, and a host of other hidden fees.

With Sonovate, you pay one simple fee, deducted per invoice. No setup costs, no hidden fees, and we take care of your admin to help you focus on delivery.

Summary

How much money do you need to start a recruitment agency? Not as much as you think.

Overall, your total minimum cost to start a recruitment agency is:

  • Essentials: £30 up front, £30/month
  • Add ons: £85-150/month

Ultimately, recruitment is about building relationships and understanding people. While your startup costs are probably lower than you’d expect, investing a little extra time and money in the beginning will help you lay a solid foundation for future growth.

Good luck!

 

This article was originally published on May 13, 2014 and updated Jan 01, 2020

Guide to setting up your recruitment agency

As the UK job market continues to go from strength to strength now is the perfect time to start your own recruitment agency.

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