Cash is King– ‘Cash Is King’ is the usual cliché but very important; efficient cash flow is imperative for a successful recruitment company. Begin to understand your cash flow cycle; consider where the shortfalls are and whether you need to obtain any finance sooner rather than later. The earlier you establish this the more likely you will be able to overcome the shortfalls. No matter how tempting it is when you receive your first few placement fees, don’t spend earmarked money. Prioritise your outgoings and allocate the money received to more important creditors such as tax and important suppliers. Alternatively don’t spend money before it’s accounted for, this is where some start ups find themselves in a tricky situation where the cash flow is spiraling out of control.
Find an accountant – When starting up a business, finding an accountant is usually at the bottom of the ‘to do’ list, however there are important areas to consider and it’s better to be proactive rather than reactive. A good accountant will consider the structure of your business and provide tax advice from the start. Furthermore, being a business owner can be a lonely place and having a qualified adviser to guide you through the minefields of setting up on your own will set you on the road to success.
Software – There are cost effective software solutions available that will enhance your business and enable you to get off on the right foot. Xero is one of the leading cloud based software’s on the market that has some excellent features enabling you to save time and ensure accuracy when completing bookkeeping tasks such as raising sales invoices and preparing VAT returns. Bookkeeping is one task that isn’t a priority yet keeping track of what your customers owe you, what creditors are outstanding and company performance are essential in running a successful business.
Obtaining Finance – Financing is generally a key element in most recruitment businesses as there can be a gap between paying temporary staff and getting paid by the client. Consider your options and review what’s available before jumping into bed with the first offer you receive. There are different elements you need to contemplate such as flexibility of the provider, the finance charges and available limits.
Budget – Consider preparing a budget for the first few years of your business and build this around a business plan of where you would like to take your business and how. Budgets are a useful tool in helping to keep control of overheads and setting targets for placements. Try and be realistic and avoid replicating your old targets if you came from an established recruitment company. It will take time to build up your client base and being overconfident with your targets can lead to an unachievable budget which is demotivating and useless. A good tip in starting to prepare budgets for your business is to consider the best case scenario against the worst case scenario.
Marketing/Website – Marketing is a vital element in developing a recruitment business. Establish your current market strategy and consider your brand image. A marketing strategy should focus on lead generation as well as brand development. Social media plays an active role in most marketing strategies; Twitter, LinkedIn and Facebook are extremely popular tools in reaching candidates and clients alike. The company website is an extremely important tool and is the first port of call for clients and candidates. You need to ensure that your website is easy to navigate and portrays the right image for your company.
Unique Selling Point – The recruitment sector is highly competitive – you need to differentiate your business from your fellow competitors in order to succeed in this market. Identify what unique selling point you can offer your clients to attract them to you over your competitors, whether this is price or expertise or even ethos. This differentiator needs to be reflected in your marketing strategy to ensure the right message gets across.
Outsource, you cant do everything – When starting out on your own it is common as a business owner to spread your attention and try and do everything from accounts to admin. Take a step back and think about why you went into recruitment in the first place and I guarantee the answer will not be to do the bookkeeping and payroll! Work to your strengths and delegate or outsource the tasks that absorb your time. Spending time on winning new business and growing the company will far outweigh the cost of outsourcing the day to day tasks.
Contracts – Ensure your contracts with your clients and candidates are up-to-date and complete; do not use old contract templates that have not been fully reviewed by an expert. Your contracts with your clients and candidates need to be right first time so it’s worth making that initial investment to get it right. In the past year especially, the recruitment sector has seen some significant changes in regulations such as employment status of your temps and onshore intermediaries. Your contracts need to apply all the most up to date regulations to ensure that you are not left open to some difficult situations in the event of a dispute.
Understanding your margins and pricing – Understanding your pricing structure and margins is essential in ensuring your business is a success. You need to consider all costs included such as Employers NI if providing PAYE temps. Undercutting your competitors doesn’t always work and could lead to the company making losses before you’ve even started. Don’t underestimate the value of the work you are doing and the candidates you are providing; clients will pay for good quality candidates.