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Launching a startup recruitment business is no easy feat. It will take commitment, hard work and determination to succeed. As a recruitment business founder, you will face many tough decisions about your new business from how you will fund it to the sectors you will focus on and the way the day-to-day operations will work.

To begin with it will feel like a mammoth task that is an uphill struggle, but with the right support and determination going solo can deliver a wide range of benefits. Not only will your earning potential reach new levels, but you will also be in control of your time. As a recruitment business owner, you will set your working hours which will help you achieve a better work/life balance.

The first two years of business will be the most critical and is often the period where mistakes can be made. Let’s take a look at 3 of the most common mistakes startup recruitment businesses make in their first two years.

1. Not getting a handle on cash flow

When you work for someone else, cash flow isn’t your problem but when you run your own recruitment business it is very much something that is on your mind constantly.

It can be easy to get overwhelmed by early successes and run away with the idea that all finances that come into the business are now your wage, but you must consider and save for things such as tax, operating expenses and a rainy day fund.

These things are all inevitable and should be accounted for before you begin taking a substantial wage from the business. Developing a cash flow projection can help you understand cash flow better and help you get a handle on it early on.

At which point will you break even? How long could your business survive without new cash coming in? How much tax will you have to pay? These are questions you will want to answer as a result of your cash flow projection.

2. Relying on initial wins

Working as a recruiter you will likely have a host of relationships that will help you make some good wins very early on. While it is encouraging to achieve success very early into your new venture, it can lead to a false sense of security.

If you have good relationships with a handful of clients that keep you fed when you first launch, it is important that you don’t become too reliant on them. For long-term success, it is crucial that you are continually attracting new clients and candidates to avoid putting all your eggs in one basket and ensure the growth of both your income and business.

In business things can change very quickly, a long-standing client can suddenly decide to leave or work with another recruitment company with little notice, which could have a significant impact on your business. But if you are always seeking new business and building new relationships it can help you weather some drop-off in retention.

3. Not using a database from the beginning

Many big billers think that they don’t need a database, but a well-organised and optimised database is a game changer when you are setting up on your own. We are often told by recruiters that they don’t use their current employer’s database because the data is unreliable therefore they don’t see the importance of having one for their business.

But a well-run database that is skill coded properly and makes use of all of the valuable and time-saving functions can make startup recruitment businesses more profitable and productive from day one. The beauty of running your own database is that you are in control of it, if it is not working for you that is down to how you are managing it.

While it can take some time to perfect your database, it will certainly be worth it in the long run especially as your client and candidate pools expand.

How SSG can support you

At SSG we have helped more than 500 recruitment businesses over the past 20 years, making our team well placed to assist you in launching your recruitment business. We have successfully traversed the industry’s changes over the last decade and can provide solutions that make it possible for our clients to outperform their competitors.

Allowing our clients to focus on recruiting and billing takes the stressful elements out of running a business. There is no need to worry about accounting, marketing or legal process – leave all that to us, it’s what we do.

Our number one goal is to make it as easy as possible for you to achieve your dream of launching and running a successful recruitment business.

Are you ready to go solo?

If you are ready to elevate your income, enhance your work/life balance and make a difference in the current labour shortage crisis by starting your own recruitment business, download The Ultimate Recruitment Business Startup Guide 2023 Edition to get you started.

It takes courage and resilience to start your own recruitment business. There is more responsibility with being a business owner than with just being a rockstar recruiter. However, you don’t have to take the journey alone, SSG is here to provide the support you need.

Next Steps

Ready to talk to us? Schedule a call today with a member of our team to see how we can help you launch your own successful recruitment business.

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