For technical support click here to submit a ticket

How To Start a Recruitment Agency Business

/ /

So you’re thinking how to start a recruitment agency? Well you’ve come to the right place for advice.  We’ve broken down all the steps you need to do to get the business up and running and starting a recruitment agency and earn money with no experience .  It really is an exciting time to get into recruitment and can be very lucrative if you get into a niche market.  However it can be long hours, unpredictable and can get very frustrating with candidates or clients letting you down.  If you can cope with the highs and lows the rewards can be very attractive with the commissions you can make.

how to start a recruitment agency

The UK recruitment industry is valued at £31.5bn, crazy right? With the industry expected to grow by 20% over the next two years, it’s clear that we’ve entered the ‘golden age’ of recruitment (exciting times!).

Find a niche market

The first thing you need to do is decide what market you’re going to target.  Working in a niche market will allow you to be an authority in that industry instead of targeting all markets then you’ll get lost in the crowd.  If you can position yourself as the number one recruiter to go to for a specialised industry, you’ll do very well.  For example if your background is working in IT, you can target parts of the IT industry, like IT Security Professionals, Java Programmers or Mobile App developers.  Or if your background is in health, you can target jobs related to the health industry for example nurses, doctors, GPs, consultants, clinic receptionists etc.  Pick a market you feel you have some familiarly with and would enjoy working in that industry.

Registering a company

The next step is to pick a name for your company you want to trade under.  You need to think what you want to do with the company in a few years. If your plan is to build the company and later sell, then you need to build a brand.  I would recommend picking a name that doesn’t have your name in the business name, as you want to give the impression the company is a brand and pick a name that’s easy to remember and related to your niche market.

Once you have decided on a company name head over to The Formations Company to register the business.  Prices start from £3.99 to register your new business

Setup a company bank account

If you used the formation company to register your new business they’ll setup a Barclays business bank account and you’ll receive £50 cashback, which is a pretty good offer. Who doesn’t like free money. Alternatively you can try any of the following banks:

HSBC Business Banking

RBS Business Banking

Santander Business Banking

Start a Recruitment BusinessBusiness Plans

Creating a business plan can be a completed process if you haven’t done one already.  There are some great free tutorials on the internet

Here are some of the basics you need to include in your business plan in our 5 step approach on how to start a recruitment agency:

  1. What is the purpose of your business plan? Who is the audience you are writing for? Why are you writing a business plan? What are you trying to achieve from your plan?
  2. Now you need to decide on the format of your business plan. You can do this in either word or powerpoint presentation to communicate your plans easily with others using graphs, clear text in bullet points.  Make your message clear.
  3. Now make a list of the main points you want to cover.  For example here are some high level topics you could start with:
    • Financial Objectives
    • Strategic Objectives
    • SWOT Analysis
    • Market Sector(s)
    • Value Proposition / Differentiators
    • Key Accounts (and Expected Value)
    • Sales Plan – Activity Targets and Ratios
    • Marketing Tactics
    • Marketing Calendar
    • Critical Success Factors (80/20 Rule)
    • Minimum Acceptable LevelsIf you’re a manager,you will also want to include:
      • Vision
      • Mission
      • Sales Forecast (broken down by team and/or individual)
      • Projected Headcount (by month for next 12 months)
      • Finally if you’re the owner/director, the financials are critically important.Your finance manager or accountant can help you with this part:
        • Profit & Loss Forecast
        • Cash Flow Forecast
        • Balance Sheet
  4. Review all the sections you’ve created and have them in logical order.  Group similar sections together and have some as sub headings if it makes sense.
  5. Now is the time to start filling in the details in your sections.  You can use bullet points to make it easy to read.

If you want a professional business plan, try out the following software. Palo Alto Business Plans

Start-up finance

If you are looking for money or startup cash, then i recommend the following companies, they come highly recommended and their approval process is very quick. They allow you to start a temp agency with no money and get up and running quickly

Startup Loans (Borrow upto £25,000)

Setup a Website

recruitment website designHaving a professional website is important to show potential clients your services and also as a way to advertise your vacancies on your website.  There’s a couple options you can do;

  1. Build a basic website to advertise your services using WIX, its free to use and will allow you to have a basic website up and running instantly with their easy to use online website builder
  2. Have a professional website designed, with built in database to allow candidates to upload their CV and apply for jobs directly on the website with loads of other recruitment based features.

If your interested in having a sophisticated website designed, check out our recruitment website design service.  We’ve got a built in candidate database to allow applicants to upload their cv and apply for jobs directly on your website. You can advertise your vacancies on your website with advanced search features, and many other features that will help your business grow

Get an Accountant

Once your business gets up and running its important to get yourself an accountant who will take care of:

  • Complete your annual accounts and tax return
  • Submit your accounts to Companies House
  • Calculate the company’s tax position
  • Prepare and submit the corporation tax return
  • Look for ways to ensure you are running your company in the most tax efficient manner
  • Submit your accounts to H M Revenue & Customs
  • Prepare and submit the company’s annual return, if required
  • Deal with all correspondence and answer your taxation queries
  • Submit VAT returns if you are VAT registered
  • Book keeping

Take a look at https://twdaccounts.co.uk who offer a very good service

Company insurance and protection

It is worth thinking about having some kind of protection like professional indemnity insurance once your starting a recruitment agency .  Other types of insurances you need to think about having are public and employers liability insurance, which covers you for claims of negligence made by the public or by employees.  You can also get office insurance to protect your work equipment and even cyber risk insurance to keep you protected from the online world

Do i need these insurances? i hear you say.  Well lets break down each scenario and you can assess whether you think you will need them:

Professional Indemnity Insurance

Any business providing a professional service is vulnerable to claims of negligence.  For example you may of failed to check a candidate’s references or made a damaging error on a job advert and the client is extremely unhappy and sues you for damages.  Having professional indemnity insurance will protect your business against the costs of settling or defending a clients claim.

Compare prices for professional indemnity insurance (webgains simply business)

Public Liability Insurance

You’ll need this insurance type if you have clients or candidates coming to visit your office or if your going out to meet clients.  It will protect you if a member of the public tries to sue you if they’ve suffered an injury whilst visiting your premises.  You are also protected if you visit a clients office and accidentally damage their property.  Imagine visiting a clients office and accidentally spilling coffee on a laptop that had important business documents and making the laptop irreparable, you could potentially be liable for not only damage to the laptop but loss of earnings from the loss of important documents that were stored on the laptop.  Having public liability insurance will cover the costs of any claims and legal costs.

Compare prices for Public Liability Insurance (webgains simply business)

Employers Liability Insurance

Employers liability insurance protects your recruitment agency from the cost of compensation claims arising from employee illness or injury, sustained as a result of their work for you.  If your recruitment business employs more than one person who works for you, then you will need this cover as its a legal requirement.  In-fact not having this cover you’ll be fined £2,500 each day whilst not being protected.  Lets take an example of one of your employees in your office trips over a cable and injures their leg as a result from the fall.  If they then try to make a compensation claim against your business, the employers liability insurance will cover all legal costs and will cover the compensation payment ordered by the courts.

Compare prices for Employers Liability Insurance (webgains simply business)

Recruitment Agency Agreement Contract Templates

Recruitment Agency Agreement Contract TemplatesContract agreements for a temp agency

Once you get the business up and running and have your first client you’ll want to make sure you have an employment contract between yourself and your client.  Typically this will set out the services you will provide and the range of fees you will charge.  For example if your agency provides temp staff / contractors (with you acting as the employer) this will include:

  • Reference to a registration form
  • Price and payment – your fees and payment terms
  • Obligations of both parties
  • Timesheets – client’s obligation to sign the workers timesheet and notify you of any disputed hours
  • Transfer and introduction fees
  • Refunds – if the client isn’t happy with the worker
  • Termination – how to end the agreement.

The details of the client will be set out in the registration form, the fees you will charge and the services you will provide to the end client.  Both you and the client should sign and date the schedule.

Free temp contract templates can be downloaded here

For professional employment contracts that cover every detail check out legal contracts

Contract agreements for a permanent agency

A recruitment agency agreement between you and a client looking to hire permanent staff, you can include some of the sections above apart from time sheets and other matters relating to the management of the candidate as an employee of your agency.

Recruitment agency agreement for applications

Once you’ve got a vacancy to fill with your end client and you’ve found a candidate who has been accepted a job offer, you’ll need to get an agreement in place between you and the applicant.  The agreement you make with them is an “offer of representation”.  You are offering to their representative in finding a job.

Design a logo

When handing out business cards, or sending out emails its a good idea to have a professional logo designed.  You can have your logo on your business cards, Website, Social media profiles, Letter heads and email signatures and it shows that you are a professional recruitment company with an established brand.

If your looking to have a logo designed check out the following companies who offer a pretty good service

Logo Garden – Free logo maker

99Designs – Professional logo design services

Recruitment software

Once you’ve got your recruitment business up and running its time to think about the day to day running with some back office systems like a CRM, database, ATS tools, integrations and much more.  Some great products out there are eBoss which comes with some great features which include:

  • GDPR Compliance tools
  • Applicant tracking
  • Distraction free writing
  • Business pulse reporting
  • LinkedIn search
  • Semantic search
  • Data import
  • SMS Text messaging

recruitment software

Check them out for more details

Register with recruitment portals


Payroll / Accounting software


Invoice management


Time sheet management


Back office software / CRM


Debt collection


Book keeping