How to Start a Recruitment Business: Step 2
Hello & welcome back to this mini-blog series courtesy of We Are SSG – today, we are going to breakdown Step 2 when it comes to starting your own recruitment business.
Now last time out we spoke in detail about how important it was to really understand your why when it comes to launching your own recruitment agency. Not only why recruitment, but why now & for what reason are you looking to venture out & become your own boss.
As we were talking about before, despite seeming like a relatively “simple” task, truly understanding why you are looking to start your own agency is sometimes a lot tougher than one would expect & therefore, the rewards of taking the time (whether it be an hour, a day or a week) to really hone in on your why are really important why you are then looking at progressing the business you are created.
Step 2: Getting yourself Financially Fit
Today though, we are going to explore Step 2: Getting yourself Financially Fit. In other words, step 2 is all about solving the Money Puzzle. How am I, an experienced motivated recruiter, going to gather up the capital needed to both support my family & I while my business gets off the ground.
SSG like to refer to this as your “Fighting Fund” – no matter how motivated, how fantastic & hwo driven a recruiter is to start their own agency, at some stage they are going to have to solve the Money Puzzle. They will have to establish a “fighting fund”. It’s my objective in this Step to explain just how to establish what you need & where you’re going to get it from.
But in order for this to work, I need you to be honest with me. To help me help you estimate what you need to set aside to cover yourself in the first few months while your business gets off the ground, you will need a pen. You will need a pad. & you will need a hot drink. & just in case you’re wondering, I’ve gone for a Black Americano from Starbucks – how about you?
Now on your pad, with your pen - list out the fixed costs you cannot avoid each month (mortgage, kids, heating, lights, Aston Martin costs...) & consider if you think that you will be an average Recruiter, an above average Recruiter or an unlucky Recruiter – in other words, will your Perm placements take 3 months to happen (i.e. the SSG average) or will your Temps be quicker than 3 weeks to generate GP?
Please don’t be optimistic or overly pessimistic, just brutally honest with yourself. Remember these figures are for you, no one else – so lets be honest.
Got a figure? Scarier than it seemed or more manageable than you’d feared?
Whatever that Fighting Fund figure is, we now need to solve that Money Puzzle!
Solve the Puzzle: 3 clear ways
Just save up the money you need, plan ahead, & you’ll have your Fighting Fund in no time. Just put away some money each month & after 6 months or so you’ll have the money & way you go!
Obvious? It might be. Easy? Not too sure.
After all, successful recruiters still have commitments – important ones that make saving money just not that simple. Sometimes self-funding is a logical step, but tricky to attain. & it’s alright thinking about just yourself, but what about your children? That security of the income each month, that’s not so much for you as it is for your kids & your loved one. Whatever your personal commitments, sometimes having the money already saved up, in the real world, is just not that practical sometimes.
Despite understandable concerns, this is a very practical route. Getting a small loan is a practical solution to the “Fighting Fund” of many recruiters that think about starting their own agency. Certainly, one to consider.
The devil has always been in how you approach the bank & how strong a stomach you have! SSG can help you if you want advice around how to present the request to your bank & what type of re-payment schedule is reasonable for the cash you need upfront. In my opinion, if someone is contemplating not self-funding, then the Bank is an understandable route. After all, it’s certainly cheaper than raising that same money via a credit card!
Never mix family & business. That’s what they always say… isn’t it? Why is it that so few recommend a route like this?
After all, your Mum & Dad adore you. Your sister thinks your fantastic & your Brother, well despite the countless arguments you used to have a kids, he would do anything to help you succeed. So if you think you’ll succeed in your own agency & you think it’ll be a success then why not leverage some spare “cash” from those that love you & pop it into your own business.
But be aware – you did just say you’d think you’d succeed, not that your 100% assured that you will. But who can be 100% assured that something will succeed. Starting a business is a risk, do you really want to risk your families’ money on something that might work? At the end of the day, what’s more important – are you willing to risk your families’ money on a business wager.
I’m not saying it won’t work, or it hasn’t in the past – it’s just, for understandable reasons, heavily advised against to mix family & business. Are you willing to take the risk?
There you have it…
Step 2 to starting your own business – making sure you are financially fit before stepping in the game of Business. I look forward to talking to you next week about Step 3.