So you think you want to start your own recruitment business… now what?
Last week I asked if you had ever thought of starting your own recruitment business. The most significant hurdle is whether it is actually something you really want â€“ some people are not cut out for it and that is ok! Over the next couple of weeks I’d like to explore the next 2 crucial steps – Things to Consider about Self-Employment, and What it Takes.
Part 1: Things to Consider
There are so many factors to consider before taking the plunge completely on your own. A lot of times, particularly in small start-up businesses, people will take on a lot of the business administrative tasks themselves in the attempt to save money. What they arenâ€™t taking into consideration though is:
minute you spend on these tasks is a minute you arenâ€™t working on recruitment
or business development â€“ the tasks that make money.
b) Chances are the business admin tasks arenâ€™t your area of expertise, so this is potentially costing you extra time as it would take you longer to complete the tasks than someone else and you may not have the knowledge to do it effectively.
c) Are you complying with all codes and legislations?
Letâ€™s split this into 3 (of the basic) sections: Financial, Operational and Administration/Accounting. Keep in mind though that most of your operational and administrative aspects will have a financial element â€“ ie. They will cost you!
Financial (personal expenses):
There are really 2 elements that come into Financial consideration, both are vitally important if your start-up is to succeed. Firstly, do you have enough money behind you to cover your personal expenses (personal funding) whilst the business gets off the ground, this could be months. This is such a crucial factor as when the chips are down if things arenâ€™t going well as quickly as you had expected this is the consideration that will cause people to throw the towel in. It is important to factor in all aspects of your basic lifestyle â€“ mortgage/rent, cars, insurance, petrol, food, utilities etc. Remember though that this is a time of sacrifice in order to create something grand so whilst I would always suggest budgeting for incidentals and emergencies such as unplanned medical bills, extravagant lifestyle perks need to go on hold!
Financial (start up costs):
The second is your start-up costs and recruitment business overheads (business funding). At the very least you will need the funds to register and set up a company to begin with, pay for phones and internet, and you might need to purchase computer hardware. Now is not the time to be renting High Rise CBD office space either, home offices, coffee shops and shared workspaces are ideal when you are getting off the ground. Other start-up costs to consider include branding (not just a logo design), are you building a website, will you have business cards, setting up an email system.
Donâ€™t despairâ€¦. The list might seem endless and costly but with the right support and a relationship with a good debtors funder in place this is very manageable. Did you know debtors funding exists for perm placements as well as temp/contractors? This can take a huge burden off your cashflow in the early days!
Plan, plan, plan, plan, plan. There was one more thingâ€¦ oh wait. PLAN! I know it is a clichÃ© but the old â€œfail to plan, plan to failâ€ is true. I promise. To Sales type people this can be the biggest drag in the world, but if you want to have your own recruitment business, and, make your life easier plans are your new best friends.
Hereâ€™s 3 off the top of my head you need to have â€“ a business plan, a cash flow plan, a marketing plan. Chances are Iâ€™m speaking another language, and thatâ€™s ok, having a good business mentor can be a game changer here. In fact, over 60% of new businesses fail due to lack of planning so this is an area of support not worth missing out on.
Other operational considerations â€“ do you need any marketing material, what sort of contracts and Terms of Business are you going to use, are you going to need registration forms or any other standard documentation? Are you going to use a database? Advertising?
Administration & Accounting:
AThis is where the fun part starts!! The elements involved here are extensive and if you are spending a lot of your time trying to get this work done, as I said above you are taking away from your potential revenue generating hours.
As a starting point your business needs to be registered, you need to be set up for ABN, TFN, GST, in some states you actually require specific licenses (another cost!), in an ongoing capacity having someone to do your accounts and manage your obligations can be invaluable. On a day to day basis though â€“ raising sales invoices, temp payroll and invoicing, debt collection, accounts payable â€“ these are just some of the tasks that need to be maintained (and recorded) and if you donâ€™t know what you are doing this can be time consuming and can get out of control if you try and put things off until there is â€˜more timeâ€™.
Donâ€™t be lured in by software that claims it is accounting for the non-accountantâ€¦ there is a reason Accountantâ€™s rarely like to use these programs, it is very easy to come unstuck and the ATO is not who you want beef with!
Quality of life:
A final factor to consider when embarking on this journey and attempting to â€˜do it allâ€™ is quality of life. I dare say that part of the consideration of going it on your own would be a better quality of life, perhaps less hours or more control over when you work, maybe itâ€™s the ability to attend your childâ€™s sporting events. Whilst there needs to be sacrifices to make the new venture work, running yourself into the ground in order to get there wonâ€™t help you achieve anything, and certainly wonâ€™t please the people around you! Spending a considerable amount of time trying to complete backend business tasks that you are unfamiliar with isnâ€™t going to make the dollars come in any quicker even if you do adapt to the new job descriptions quickly! That is exactly why we created our business model, it gives another avenue of opportunity to people who have the desire to be self-employed but all of the things above (and likely many more!) deter them from exploring it further – there are definitely options out there!
If you’d like to find out how we can support your Recruitment start-up view our services here.