Employer Branding Talent Acquisition

The 5 Key Reasons Some Start-Up Recruiters Fail

So many recruitment professionals dream of starting up on their own, and the fact is that so many of them fail. Not all of them, by any means, but many don’t survive after the first year.

It’s impossible, and wrong, to generalize but Paul Mizen, Managing Director of The Recruit Venture Group has the experience and insight to identify five of the reasons why the dream doesn’t come true for a significant percentage of would be recruitment entrepreneurs.

1. It’s not a thing to do as a career change

It sounds almost unbelievable but some recruitment start-ups are not launched by recruitment professionals. Having a craving to ‘try something different’ and telling yourself that ‘you’ve seen how recruitment works because you’ve done a lot of interviews’ is a sure-fire recipe for disaster. The fact is you need to know about the recruitment business. You need to know how it operates, you need contacts and you need real hands-on experience. Without those, you’ll fail.

2. Lack of finance – and all that goes with it

Who would start a business, any business, without sound finances? Starting a recruitment business needs financing at the outset, but it goes deeper than a need for a capital injection to rent an office, buy the hardware and sort a company car. The recruitment sector makes strenuous demands on cash flow, so having guidance and support is just as important as the upfront investment. Too many recruitment start-ups get up and running and then stretch themselves too far, too quickly. There are going to be a lot of outgoings before the income appears. Twelve months of getting that balance wrong usually tips the scales the wrong way.

3. Forgetting that it’s a two-way street

It’s another vital balancing act. Going all out to attract clients is commendable, but it’s really short sighted if you haven’t pulled in candidates too. There has to be an offer – and in the recruitment business what you offer is the right candidate for the role. It doesn’t matter if you’re delivering dozens of temps or that single CEO designate, you have to have a candidate pool as well as the clients who want them. Failing to acknowledge the two street is a one-way route to failing

4. Inappropriate infrastructure

Building the two-way street, like any street,  is about infrastructure. If the game plan is to be a bedroom recruiter then a minimum of hardware and software will get you by. But even in that scenario a second-hand laptop and an out of date spreadsheet won’t cut it. If the sights are set higher then there’s a need for full-on, industry standard, systems. Asking a mate to sort some software may seem cost-effective, but it will prove totally ineffective. Without the right, relevant, systems the administration of cv’s, applications, job specs, person specs and all the financial controls will spiral out of control.

5. Failing to plan for life

A start-up recruitment business is a demanding beast. The last thing a new boss needs is a pile of worry over domestic issues. A good business plan should embrace proper remuneration for the entrepreneur. It’s not about plundering the business for cash because now it’s ‘your show’  and ‘at last, you’re getting the rewards you deserve’. It’s about ensuring that the budget allows you to draw a sensible salary, to cover your expenses and maintain your lifestyle. Take out too much too soon, and you fail. Take out nothing until the big money comes in and you’ll drown in personal bills and mortgage arrears. Which means you’ll take your eye off the ball, and you’ll fail.

In short, recruitment start-ups often fail because of inexperience, poor financing, not having candidates as well as clients, having inadequate systems and not having a fully thought through plan.

It’s not a guarantee but implementing the opposites to all of those represents a very fair chance of success.

About the Author: Paul Mizen is Managing Director of the Recruit Venture Group, the largest venture partner of their kind in the UK. 

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