Essential Tips for Starting a Recruitment Agency

Is it difficult to start a recruitment agency?

The recruitment industry is in a golden age, and now is as good a time as ever to start a recruitment agency. According to REC's latest industry report, the recruitment industry currently contributes a whopping £44 billion to the UK economy, with the contribution increasing by 21.7% between 2020 and 2021. The recruitment industry is also one of the few industries to see significant growth at the start of a post-COVID-19 economy.

But even in this time of prosperity, starting a recruitment agency is challenging.

As you're aware, launching a successful recruitment agency demands substantial professional experience, deep industry insights, and a robust network, often cultivated over years. However, with these prerequisites and a strong entrepreneurial drive, leveraging advanced hiring software can significantly enhance your operational efficiency and client satisfaction. These tools streamline candidate sourcing, assessment, and management, pivotal for establishing and growing your agency effectively.

Do you need a license to run a recruitment agency?

You don't usually need a license to run a recruitment agency, but there are some exceptions. Recruitment agencies that supply workers for industries such as food processing and packaging and agriculture and horticulture must obtain a license from the Gangmaster and Labour Abuse Authority (GLAA). Recruitment agencies that supply workers for the healthcare sector, such as nursing, must register with the Care Quality Commission (CQC).

When thinking about how to start a recruitment agency, it's a good idea to familiarise yourself with the legal rules and requirements you must comply with, as the recruitment industry is highly regulated. For example, all agencies must comply with the Conduct of Employment Agencies and Employment Companies Regulations 2003.

Here are some other important legal points to be aware of:

Recruitment agencies cannot charge fees to people who find a job through a recruitment agency.
Contracts must be issued to temporary agency workers.
Contract workers cannot be denied their pay, and agencies cannot make illegal deductions.
Agencies must be open and honest about the jobs they advertise.

7 Tips for Starting a Recruitment Agency

1.Come up with a Great Company Name

Your company should show clients, candidates, and the industry you're recruiting into what you're about. Take your time when thinking about your company name, because it's the first thing prospective clients notice.

You may want to have a few brainstorming sessions to get it right the first time, because changing a company name later takes a lot of work and can lead to confusion and even distrust of your brand.

When thinking about what to name your company, think about the meaning behind the name. Most well-known company names weren't chosen at random.

Pizza Hut got its name because the company's first building resembled a shack, and the building only had enough room for an eight-character sign. Google was inspired by the mathematical term 'googol', which describes the number one followed by a hundred zeros. That's fitting, as the search engine processes over 8.5 billion searches a day. Before they launched the search engine we all know as Google, Larry Page and Sergey Brin developed a search engine called Backrub, a word you shouldn't say often in an office environment for obvious reasons.

2.Register your company with Companies House

After you've come up with a great name, it's time to register it with Companies House (if you're not based in the UK, you'll need to do this with your country's equivalent). This is a surprisingly simple process, and will probably take a fraction of the time you spent coming up with a name for your brand new recruitment agency. You can handle this yourself, or even hire a company to do it for you.

As long as registration is completed properly and there are no legal issues, you'll only need to wait around 24 hours for the whole thing to process.

3.Deal with HMRC

Your agency will automatically register for corporation tax with HMRC after your business is registered with Companies House and you will be given your UTR company number. In addition to ensuring you are registered to submit your intermediary reporting quarterly, you may also need to register for VAT, PAYE and (if you work in the construction sector) CIS.

4.Get online

A whopping 99% of consumers use the internet to find local businesses, so if you're not online, your business might as well be invisible. Thankfully, creating a website for your business is easy and will give you huge returns on your investment.

First, you'll need a domain name, ideally one that matches your business name. Once you've got your website up and running, it's time to start building brand awareness with the magic of written content like SEO-friendly articles, white papers, in-depth guides and more. You can also increase brand awareness with a LinkedIn content strategy.

5.Don't forget your finances

When starting a new business, it is very important to choose the right bank that suits your needs. Always keep in mind the system and process of internet banking so that you can easily send, view and receive payments through an online system. Don't worry too much about the fees as most bank fees for new start-up businesses are generally quite standard.

6.Get insurance coverage

the agency employs staff, employers' liability insurance is the only type of insurance required by law. However, if you have the means to do so, getting a combined insurance that also includes liability insurance is advisable. Generally speaking, the more insurance coverage you have, the better. Some clients may also require additional insurance, such as professional liability insurance. However, you can overcome this hurdle if you get around to it.

It is important to register your company with the ICO (Information Commissioner's Office) to obtain a data protection certificate. GDPR is an important part of business legislation and your agency will be handling applicants' personal data. Fortunately, the annual cost of this certificate is not too high for a small organization.

Launching a recruitment agency requires careful planning and adherence to legal regulations. Tools like IceHrm can streamline administrative tasks, ensuring a smooth start and growth.