As recruitment consultants across the country return from their summer break revitalised and full of plans to set up their own venture, Bibby Financial Services is warning would be entrepreneurs to be prepared, with nearly three hundred UK recruitment companies already facing administration this year*.
The industry is highly competitive and while if you make it big and set up a successful agency, it is possible to reap the rewards. However, profitability goes hand in hand with a strong business plan and a healthy cash flow and to proceed in this competitive market you need to ensure you stay ahead of the competition.
The good news is that June showed the highest increase in demand for staff in 18 months, and the Recruitment and Employment Confederation reported the number of businesses now using agencies to find permanent posts grew from 565,000 in 2003/4 to 624,000 in 2004/5**, proving there is a gap in the market for ambitious consultants thinking of setting up on their own.
Steve Hollings, recruitment specialist at Bibby Financial Services said: ìIn our experience, we see the highest amount of recruitment consultants branching out on their own in autumn. Back from holiday, having scribbled their business ideas on a restaurant napkin and eager to make their first million, they are often unprepared for what needs to be done to make their business dream a reality.î
Bibby Financial Services has developed the following checklist to help would be entrepreneurs get their foot on the recruitment ladder and give themselves the maximum chance of surviving and thriving in this prosperous time.
Get real ñ give yourself a reality check. At the onset many business plans are wildly optimistic so spend time putting your business plan together. Will you realistically meet your sales and profit targets? If not, change them
Credit check potential clients ñ while it is tempting not to check a new clients credit history, to save time, it is vital to carry out these necessary checks to ensure your clients are able to pay you for your services
Invoice on time ñ send invoices immediately, if you donít you canít expect to be paid on time. As an agency you often have to pay your staff before you have been paid yourself so make sure you not only send your invoice promptly but to the right person
Keep an eye out ñ make sure you know what is going on in your industry, if things change, re-assess your plans
The flow of funding ñ cash is fundamental to any business and recruitment companies must recognise the importance of generating cash and keeping it coming in. In the event of a cash flow blockage, explore alternative funding methods such as Recruitment Finance which can release up to 85 per cent of the cash tied up in unpaid invoices, ensuring you arenít left short or unable to pay your wage bill
Honesty is the best policy ñ be realistic. If things are not working out how you thought they would, address the reasons why this is happening and find a new approach
Time is precious ñowners and managers often end up taking on too much in the early days, instead of focusing on new business and getting their agency off the ground they end up taking responsibility for administrative tasks such as payroll, when they should be bringing in experts to free up their vital management time
Roll with the punches ñ every business, at some stage or another, will experience a certain level of difficulty whether it is recruiting staff or securing clients. Be decisive by tackling any problems head on and dealing with them promptly to ensure your business does not become another statistic
Talk to the experts ñ there is a strong support network for entrepreneurs, such as the Recruitment and Employment Confederation, Business Links and Chambers of Commerce. Get in touch with them and take advantage of their experience and knowledge
ìSetting up a business is an exciting time, but all too often people get bogged down with the administration that comes with running a business and donít leave themselves the time to focus on developing the business. With the industry booming and opportunities rife now is the time to make the most of the situation,î said Hollings.
* ICC Credit
** Report on Jobs survey
Going it alone in the recruitment industry
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