ëA Formula For Growthí for SMEs in the Recruitment Industry revealed at an RBS and REC conference

Yesterday, The Royal Bank of Scotland Invoice Finance (RBS Invoice Finance) and The Recruitment & Employment Confederation (REC) presented new research on the Recruitment Industry at RBS premises in Bishopsgate, London.

The research – ëA Formula for Growthí – was commissioned by RBS Invoice Finance and the REC to help explore the challenges and opportunities facing small and medium-sized enterprises (SMEs) in the Recruitment industry.

The report highlights that the recruitment industry is worth 26.5 billion to the UK economy. Itís an incredibly important sector that provides and attracts real entrepreneurial spirit and energy. Characterised by committed, optimistic individuals, the sector contains a significant number of SMEs.

SMEs provide over a third of UK GDP and over half of UK employment. In many ways they are the driving force behind the economy. However, at the infancy stage, business success is by no means guaranteed. By the end of the third year approximately one in three new ventures has failed.

New start-ups are typically set up by recruitment consultants with at least four years' experience or entrepreneurial individuals with a background in a specific sector (not necessarily in recruitment). Achieving business growth is the top-of-mind goal for most of these agencies. This is measured in terms of: Turnover (47%), Customer Base (42%) Profit (32%) Employee Size (23%) and Number of Branches (23%).

Given the focus on growth, finding and retaining clients is considered one of the most important challenges (14%). Other challenges include Human Resources and Staff Retention (15%), Cash Flow (14%), Budgeting and Administration (13%) and Late/Non-Payment (12%).

The research reveals the common characteristics that drive growth for most successful recruitment businesses. These factors include having a strong unique selling point and brand, appropriate diversification, a consistent focus on customer service and being able to develop rounded business skills.

The report suggests that these winning attributes will become even more important as the market goes through a period of significant change. Clients will increasingly look at their recruitment industry partners for added-value services and new technology will redefine recruitment processes.

Ross McFarlane, Director, UK Sales & Client Relations at RBS Invoice Finance, said:

ìWithin this report, we explore the challenges and opportunities facing SMEs in the recruitment industry and assess the importance of disciplines such as financial management and business planning in a changing market place.

Weíre very proud to sponsor this research, along with the leading trade body in the recruitment industry, The Recruitment & Employment Confederation (REC), and look forward supporting a new ëformula for growthí in the sector.î

Kevin Green, Chief Executive of the REC added:
ìSetting up in recruitment is no easy task; the market is very competitive and increasingly professional. Added to this, the current economic uncertainty means that recruitment is no easy sell. However this report reveals that with the right support and advice founding a recruitment agency can be a rewarding investment. REC has its own in-house start up service, RITE, which can provide the recruitment agency owners of tomorrow with the information and advice they need to start their business today.î

Copies of the report are available from the REC's online bookshop: