How much money do you need to start a recruitment agency?

The majority of new recruitment agencies are formed by people currently in situ with another agency but have passion for running their own business. They will have decided that forming their own agency is the route they want to take, but at some point they will ask themselves the inevitable question…. How much money do I need to start my recruitment agency?

The most simplistic answer to this question is: not a lot! And here is why…

Assuming you have a computer and a mobile phone you can start and run a successful freelance recruitment business with a relatively empty bank account.

 Think about the two most important costs of a freelance recruitment agency. These are:

  1. The payroll for the temps

  2. The software to be able to manage the back office of the business.

Whilst there are many additional costs that an agency will incur over time (such as a website, an office, a CRM, job boards, marketing etc.) none of these are integral in getting the business off the ground.

The most successful recruiters that we see at Quba Solutions are those that focus on the most important element of recruitment – placing temps into jobs.

Naturally placing temps into jobs brings about the cost of having to pay those temps whilst waiting for your invoices to be paid by your clients. This is the true cost of running a recruitment business and where large debts can occur, but this is also where companies such as Quba can offer exactly the support you require.

 Quba’s invoice finance solutions will not only pay your temps every week, up front, but will also pay you the margin on the timesheets providing an instant income into the business. In addition to this we provide full back office services that match those of any blue chip corporate agency, enabling your new business to compete at the highest level.

These solutions are charged based upon your weekly turnover, therefore there is no initial outlay and no charges in weeks where you have no temps out to work. As such there is no need for financial investment prior to starting your business.

 The only requirement for any cash reserves for a new agency is to cover personal costs (such as a mortgage) for the directors whilst the business is building over the first couple of months. There are funding options and VC services available that will offer a salary or funding injection at the start when forming your business to tie you over during this period, however they tend to be at the expense of either equity in the business or at a very high interest rate.

 Running a successful temp desk will quickly provide the cashflow needed to cover personal costs when supported by a funding partner like Quba. For example, placing 5 temps on a £10 pay/£15 charge placements would net the business in the region of £450 per week.  

If you would like to learn more about how our solution and whether it can provide all of the funding and services you need, please call one of our funding professionals any time on: 01305 233178 or contact us here.