Start a Recruitment Business the Right Way with These Tips

Recruitment is a growing industry with low barriers to entry. There are over 32 million employees in the UK, with an unemployment rate of less than 4%, which means that employers have to compete harder to get the right person for their vacancy.

Breaking into the industry as a new business is all about good contacts and great marketing. If you have professional experience in recruitment, even better.

If you aren’t sure where to get started, then the tips below should help you out.

Find your Niche

You can’t compete with the large generalists like Indeed or Hays without a massive amount of funding and experience. There are around 28,000 recruitment agencies alone in the UK so it’s important that you are able to stand out from the crowd. Where you can compete is by finding a niche – a specialism that you can become known for.

If you’ve worked in a sector, have a lot of contacts and know it well, then that could be a place to start. You should also look to set up in an industry that is expanding, rather than contracting. For example the top growth sectors in the UK last year were: IT and technology, engineering, manufacturing, healthcare and construction. Finding micro-niches within those expanding areas could be worth looking at.

Look carefully at any potential competitors in your target niche. Ask yourself what you can do differently or better than them?

Create a Business Model

How will your business make money and stand out? In recruitment that is generally from a % of the initial salary or increasingly a flat fee.

You need to be fully aware of the Employment Agency regulations that govern recruitment agency activities. They mean, in most cases, that you can’t charge the employee for finding them a job. You’ll also need to look into specialist insurance for recruitment agencies. Companies such as Hiscox should be able to advise you on the nature and scale of insurance that you will need.

Perhaps the most promising way to standout is in your relationships. Recruitment is after all a people business. So invest in building relationships within the industry and in making your agency the go to place for talent. How can you do that? Start by asking potential employers and employees what they would want in an ideal recruitment agency in their sector, then test deliver those elements where practical. Keep testing, measuring, learning and improving.


Recruitment is a service that you can set up with very low costs. All you need is a phone and a laptop. As a minimum you will need to budget for a website, CRM software and insurance. If you need to scale more quickly and take on staff and an office, then cash flow could become an issue. It’s advisable in that case to talk to your bank well in advance and ensure that you have the facility for a line or credit or loan.

Set goals

What does success look like? How will you know that your business is on the right track? It’s important that you develop a plan that is both simple and realistic. It also needs to be flexible; if things don’t go immediately to plan, be prepared to shift and make adjustments.

You will need to set goals that are clear and timely. Build in review periods and be prepared to change things until you get it right. While recruitment is about helping people to fulfil their dreams and ambitions, it is also about making sales and achieving targets. Get the balance right and your agency will be unstoppable.