Setting up a recruitment agency requires passion, planning and experience. Recruitment is an industry worth millions, but you’ll struggle to survive if you don’t do your research beforehand.
Recruitment companies are used by a wide range of businesses – from small businesses looking for staff to up-skill their workplace to large corporations seeking temps with reception skills.
What is it and who is it suited to?
Recruitment agencies operate across almost every sector of the economy. One of the main reasons clients use agencies is for efficiency; their ability to locate and deliver the right staff within a certain timeframe.
Even though there’s money to be made, it’s important to remember that you’re dealing with people’s lives. So if you’re passionate about people and you’re confident you can deliver results, you’re more likely to succeed.
The majority of people who start a recruitment business fall into one of two categories:
- Recruitment professionals.
- Industry professionals who specialise in recruitment in a certain area.
Rules and regulations
There is a Code of Conduct that recruitment agencies can choose to adhere to, which is governed by the Recruitment and Consulting Services Association.
The RCSA is the leading professional body for the on-hire recruitment and workforce solutions sector in Australia and New Zealand. An RCSA spokesperson says it’s not compulsory to be a member, but there are benefits for those who are.
“The RCSA sets the benchmark for the profession’s standards through representation, education, research, and business advisory support so the sector can concentrate on its core business,” the spokesperson says.
Sophie Macdonald, principal of Skye Recruitment, says the RCSA is a good place to gather industry advice.
“It also offers you a degree of credibility with your clients, which is essential for a start-up,” she says.
In addition to the RCSA, recruitment expert Vicki Crowe, founder of Cannon Recruitment, says start-ups should also make contact with their local chamber of commerce, which can also provide industry information.
Research and competition
According to Crowe, the main research you need to do is around your venue because this will be the deciding factor in determining the nature of your business.
“If you’re operating in the suburbs, for example, you can’t ‘niche up’. You’ll have to offer your services to a range of companies [across different sectors] in order to make money,” Crowe says.
“In the city, you can niche into IT, banking and finance, etc. But there’s more competition in the city and rents are more expensive.”
Crowe says the recruitment industry has developed into an incredibly competitive market because of its unprecedented growth.
“There was around 200 agencies when I started by business. Now there’s around 10,000 – this is why it’s important to establish your target market beforehand,” she says.
“However, it’s not an industry that you necessarily need to be qualified in. It’s much more open to people who don’t have a qualification but still want to start a business.”
“Having said that, I’ve never touched engineering or IT [as recruitment areas] because they’re very specialised areas and have a language of their own. Construction is the same.”
However, Macdonald focuses specifically on technical and engineering recruitment, despite having never worked in the industry.
“It’s important to bear in mind that our expertise is in recruitment. Once you have the necessary sales and recruitment skills, it’s possible to recruit in any sector,” she says.
Costs and earnings
It’s estimated you’ll need around $2,000 to set up a recruitment business from home, which should cover the cost of computers, phones, printing facilities and advertising.
Skye Recruitment’s Macdonald says advertising is the single largest cost for a recruitment agency, after wages.
“On a yearly basis, you’re looking at perhaps half a million [dollars] in advertising but it obviously depends on the agency and what it chooses to spend,” she says.
If you’re looking at renting a small office in the suburbs, you could be looking at anything from $15,000 to $25,000 per annum. Of course, this figure will be substantially higher if you’re operating in the city.
In terms of turnover, Macdonald says agencies can expect to bring in several million dollars or more within the first couple of years, providing they invest in sufficient advertising, office space and staff.
An average day
Crowe says she begins her workday by checking her emails, which could take the best part of a morning.
“If I’ve posted an ad up [the previous day], I go through all the resumes that have been sent through. I could get up to 100 applications for each job, so this is definitely the most time-consuming task,” she says.
“In the afternoon, I have to juggle responding to emails with starting to book people in for interviews… I could interview up to 15 people in one day.”
“Within my own start-up, I used to dedicate Thursday morning to marketing. Otherwise, I would get totally consumed with just dealing with candidates. You need to allocate a half day, which is non-negotiable, to attracting new business.”
Crowe says recruiting for a position is normally a one-month turnaround – from advertising the job to the successful candidate commencing work – but it can be done in three or four days if a client is desperate.
Despite the hectic nature of the work, Crowe loves the human element of the industry and the challenges it presents.
“You’re dealing with a resource that is incredibly unpredictable – people. You’re never going to get it 100% right,” she says.
Recruitment and Consulting Services Association
03 9663 0555
Australian Chamber of Commerce and Industry
02 6273 2311 (Canberra)
03 9668 9950 (Melbourne)
Australian Employment Guide
Australian Government Small Business Support Line
1800 777 275