Starting a recruitment business is an experience like no other. However, there are many challenges, and you need the right support behind you.

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Common Obstacles When Starting a Recruitment Business

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Starting a recruitment business is an experience like no other. However, there are many challenges, and you need the right support behind you.

Fewer than half of UK-formed start-ups last five years. 20% of new businesses have to close their doors before they celebrate their first year. But with the right preparation, you can be the one that succeeds.

If you’re starting a recruitment business, you need to know that the size of your challenge. The rewards can be vast, personally and monetarily, but you need to put in the work to overcome the obstacles. 

This article outlines some of the obstacles new recruitment business owners face as they scale their idea. It also emphasises the importance of having the right support behind you. Recruitment Entrepreneur is a business incubator – and we want to be your trusted mentor on your journey. 

Here are five common obstacles you will face when you start your recruitment business – and how you might overcome them.

 

1. Is it the right time?

Timing is essential when starting a business. However, it’s not as crucial as some aspiring business owners may think. Some use timing as an excuse not to make the leap; after all, there’s always a reason not to launch; poor economy, lockdown or a lucrative promotion in their current job.

Accept that there is no sure-fire time to start a business. Instead, be confident in your business plan. If you have a robust plan to bring in revenue, and enough money in the bank to live on until you do, the time to launch is now.

 

2. Start up capital

As well as money to support yourself, you may also need money to get your business up and running. 

You have several options to choose from when it comes to funding your start-up. You could look for outside investment from a VC or angel investor. If you want to create a market-leading business and achieve a fast and profitable exit, the investor route could be the best path to take. 

Your investor will have the expertise to start and scale a business - that kind of knowledge is invaluable. They won’t run the business for you, but they’ll be able to coach you, provide resources and facilitate your success.

You could also get a loan from your bank or apply for a grant from one of the many funding bodies out there.

Often, the best course of action is to start small and grow your business organically, bypassing the need for upfront investment. You may think that you need a team, an office and marketing materials from day one. But in recruitment, 90% of start-ups are founder-led. 

If you have the right skills and get your branding right, you can start with just a phone and a laptop. Once you have a website, a CRM system and a terms of business sheet, you’re ready to go out there and win clients.

 

3. Admin

The admin that comes with running a business can be overwhelming, even if you are the only employee. The consequences of making a mistake on matters such as taxes can be worrying – at least in the founder's mind.

As well as taxes, there’s the legal process of setting up a company, bookkeeping and more.

While these tasks are essential, most entrepreneurs discover skills they never knew they had as they navigate their way through growing a business. With discipline and application, as well as making use of the vast number of resources available, admin becomes much more straightforward.

If you get an investor on board, they may be able to provide the administrative expertise you need, so you can focus on what you’re good at. The important thing is that you don’t let running your business get in the way of growing your business. 

 

4. Many hats

Starting a business means you have to wear many hats. You may call yourself the founder, the MD or the CEO, but you’re much more than that. You’re not a recruiter anymore; you’re Head of Sales and Marketing, Chief Financial Officer and IT Support, with an open brief to do anything else that needs to be done. 

This can be overwhelming, especially at the start. But, relying on yourself in this way can also be exhilarating. When you manage your time well and keep your discipline, you can accomplish things you never thought possible.

 

5. Winning clients

Bring clients onboard is what will make or break your business. It’s the most significant challenge when you start a business – and where many aspiring entrepreneurs fall down.

While there’s no golden rule to landing clients, the easiest way is to focus on what your clients need and deliver it. Keep your ear to the ground on changes in your chosen industry and network with as many decision-makers as you can. Ask the right questions and listen to what they say. Focus on the challenges they are facing right now. 

As you grow, you should aim to reach the ideal state, when your clients and candidates become your ambassadors. When you provide an excellent service, people cannot help but tell their networks. Referrals are the most efficient way to win clients – an entrepreneurs dream. When you get a happy client, make sure you ask for a testimonial that you can display on your website and socials.