A NEW BEGINNING for Recruitment Entrepreneurs

We all know that recruitment is one of the most entrepreneurial sectors in the UK but when it comes to setting up and running a successful temporary and contracting operation, there are obviously a few things to think about.

What must leaders consider beforehand?

Any emerging business needs a robust business plan, one that is challenging and regularly reviewed. It needs to not only track successes, but also be a regularly evolving plan so that you can make fine tuning adjustments, especially in the early stages.

Obviously, finance is critical, particularly in the contract market and cashflow can – and often does – become a major issue in early stage businesses so ensure you are getting the right advice on funding. In a crowded marketplace, you also need to think about how you are going to stand out from the competition so be distinct, stand out and avoid being a ‘me-too’ business. There is no doubt that the fastest growing recruitment companies are niche or micro-niche specialists within specific sectors, disciplines or geographies.

What are the challenges?

While new businesses can often be nimbler and more fleet of foot, there are some obvious challenges both legislative and economic. We still don’t know what our eventual exit from the European Union will look like and with Theresa May stating in the Conservative manifesto that she intends to bring down net immigration to under 100,000, freedom of movement will be critical. Legislation – and keeping abreast of it – is a major challenge for recruitment firms of any size but particularly start-ups.

The new IR35 legislation has already impacted the public sector and who knows whether this will be expanded into the private sector at a later date. There are also the upcoming GDPR regulations to consider – and if you have never heard of them – look them up now as they could impact the way you engage with prospective clients and candidates!

Every business faces an ongoing challenge with funding with reports of active debtor days getting close to 60 days and so a robust and consistent credit control policy is vital. It’s also tempting to celebrate a good start by spending – and while it may seem obvious, owners should only draw down the essential costs, manage spending and ensure that cash is spent on the right areas.

A Porsche and a Rolex doesn’t count! Another major challenge that is looming for businesses of all sizes is the skills gap in the recruitment sector itself, alongside near full employment. More training and investment in apprentices and interns is one way recruitment firms can future proofing themselves against these skill gaps and APSCo has introduced schemes for both to help agencies get access to new talent and to promote recruitment as a viable entry level career choice.

What are the opportunities?

The flexible labour market is essential to the economy and so demand for contract and temporary professionals in skill scarce sectors is only going to grow. Additionally, in times of economic uncertainty, employers turn more to flexible solutions to avoid the commitment and costs of permanent hires.

The increasing growth in digital, technology and online sectors combined with a need for more talent in areas like healthcare, biotechnology and emerging sectors such as AI and cyber security means that there is a growing number of areas offering extensive future growth opportunities. In an international talent market the ability to track and source globally mobile talent is critical, more so than ever before.

Additionally, businesses of all sizes can now operate on a global stage and with the advent of more and more sophisticated technology to allow video-conferencing and Skype, a contract operation can literally be based anywhere.

New geographical markets are also opening up and APSCo undertakes trade delegations in conjunction with UKTi in order to give recruitment firms, whatever their size, access to intelligence and information on new markets.

How is Brexit likely to impact the contractor market?

Prior to the election Prime Minister Theresa May said that freedom of movement of labour will be affected by her net migration target. That, together with the fact that The House of Commons voted to reject the House of Lords’ amendment which sought to guarantee the rights of EU nationals resident in the UK before Brexit negotiations begin, means that Brexit has become very highly significant for the labour market.

There is no doubt that there is an absolute need for large numbers of highly skilled migrants to fulfil niche, specialist and hard to find skills in this country – often on a ‘just in time’ basis. At APSCo, we are advocating expedited visa processes for key skills and a relaxing of the rules on the highly skilled migrant visa (tier 2) in areas where there is a recognised severe skills shortage so that recruiters could sponsor work visas for professionals to deliver contract services on client sites.

While the eventual outcome of the Brexit is still to be defined and the full impact is consequently still unclear, neither the UK or the EU would want to slow down their respective economies as a result of skills shortages and access to talent.

What is a realistic timeline?

For companies looking to get to a sustainable trajectory the key is to re-invest in the business for growth.

Many large recruitment businesses are now looking at investing in smaller organisations as part of a ‘buy and build’ strategy and equally many owners are looking at growing a business with a view to exiting within four to five years rather than building significant businesses within shorter timescales.

With a shortage of acquisition targets in the mid to large space, firms are increasingly looking at taking stakes in the smaller recruitment businesses.

How do you build future growth strategy?

The key to sustainable growth is all about people. This starts from attracting the right people in the first place, ongoing training and development, investing in them, motivating them and retaining them. This is where smaller more agile businesses can differentiate themselves as an employer of choice.

Very few smaller businesses look at job sharing or flexible working for example or even developing real training curriculums for stepping into first line recruitment and for upskilling their existing team but it is so important if you are going to achieve real growth.

Organic growth can also be achieved within an existing discipline or an allied discipline to service the existing end client or sector. Other expansion can be seen by international growth with some regions offering better margins.

A good first step is to follow your clients – if you are dealing with multi-national organisations – where else could you be of service to them? It comes back to the business plan and the initial research in the early stages of the business. There is no right or wrong solution, it is design based on the market.

One piece of advice that all start-ups should follow

Keep focussed and be prepared to put the time in.

You need to lead by example by being the first person in and the last one out the office each day – be seen to be hungrier than your competition all the time.

You should also look seriously at joining a professional trade association so that you can share your knowledge and experience from people who have been through the same route as you.

Peer to peer networking can be invaluable. 

START-UP - Graeme Read is CEO of 3RInside.com who advises recruitment startups and SMEs and advises APSCo's New Enterprise initiative & International markets.

The article first appears in The Global Recruiter

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