If you love helping people find a job that they are passionate about and providing them with the opportunities they desire, starting a recruitment company may be the perfect career move.
Whether your ambitions extend to freelancing or owning a full-blown agency with employees, the skill shortage challenges being felt by most employers ensure your services will be in high demand.
If you are wondering what setting up an agency and employment business involves, keep reading to discover the answers to some of the most common questions asked by our clients.
What is a recruitment agency?
A recruitment agency is a professional business that partners with organisations and helps them fill vacant positions with the best talent.
Recruitment agency professionals also work with people looking for a new position and match them with businesses with vacancies to fill.
Recruiters usually work on commission which the company pays if they employ a candidate they put forward.
Do I need a licence to start a recruitment agency?
Most recruitment agencies will not require a licence to operate, but if your business partners with businesses in the agriculture, horticulture or food processing/packaging sectors, then it will need a licence from the Gangmaster and Labour Abuse Authority (GLAA). A Care Quality Commission (CQC) licence may also be required if you plan to work in the healthcare sector.
Should I work on recruiting for a niche market?
There are almost 28,000 recruitment businesses in the UK. To separate yourself from the competition, specialising in a niche market, preferably in which you have prior knowledge and experience, is a sensible idea.
Although you may experience nervousness at first in terms of feeling like you have drastically narrowed your potential pool of customers, in the long run, concentrating on finding great people for specific employers increases your chances of becoming the ‘go-to’ recruitment agency in your chosen sector.
What do you need to start a recruitment agency in the UK?
In theory, all you need to get started is a laptop, a website, a mobile phone, and a wealth of recruitment industry contacts.
However, as you will see below, start-up requirements and costs can vary widely depending on how you choose to structure and operate your recruitment agency.
How much does it cost to start a recruitment agency?
The cost of starting an employment agency will depend on factors such as:
- Will you work from commercial premises?
- How many employees do you plan to have initially?
- How do you plan to market your business?
- Will you be outsourcing costs such as IT, human resources, and virtual assistants?
- What type of business insurance cover will you choose?
You will need capital to fund things such as creating and maintaining a website, networking, IT hardware and software, an accountant, and utilities (even if you work from home).
Deciding on the legal structure for your small business, for example, sole trader, partnership, limited liability partnership or limited liability company, is an important factor. If you register as a limited liability company, you must pay a fee to Companies House.
What insurance do I need to start a recruitment agency?
Although it may seem unrealistic that someone would want to take legal action against your business, you never know what the future will hold. Therefore, it is essential to protect your recruitment agency with an insurance offering the following cover:
- Public liability insurance
- Professional indemnity insurance
- Employer’s liability insurance (if you have staff)
Considering building and contents insurance is important if you are leasing a commercial property and business interruption insurance to protect your business.
What is required by law to start a recruitment agency?
To set up a recruitment agency, you must comply with the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003.
What are the different types of recruitment models?
The recruitment business model you chose will lay or break the foundations you need to reach your business goals.
- The contingency model – usually charging between 15%-30% of the placed candidates’ basic salary (this model is good for recruiters looking for a lifestyle business)
- Exclusive search – an exclusive agreement between the client and the recruiter
- Volume recruitment – used by large corporations or companies in a period of hyper-growth to scale quickly
- Retained or executive search – you get paid for the work you are doing rather than a percentage per candidate placed
- Recruitment process outsourcing – when your agency works for a client and manages the entire talent acquisition process (typically, the recruiters sit on-site within the client’s business)
- On-demand recruiting – based on charging on an hourly or project basis
Get legal assistance from LawBite
Starting a recruitment agency is an exciting step. However, like any new business venture, you will need the help of professional advisors, including solicitors and accountants, to ensure your best interests are protected and you comply with relevant legislative and regulatory rules.
LawBite has years of experience helping startups and small businesses achieve their commercial ambitions. To find out how we can support you and your new recruitment agency, book a free 15 minute consultation or call us on 020 3808 8314.
