The recruitment services business is also referred to as the staffing agency. It is a job placement agency that screens applicants for permanent, temporary or both types of jobs in any specific niche. It is a high return low investment business, but it requires a lot of planning and determination. If you wish to start your recruitment agency, then here’s a step by step guide to help you.
Pre-launch Process
The pre-launch process is the initial stage of your business. It involves planning and determining each and everything you need to start your business. The stronger your plan is, the higher are the end results. Here are pre-launch steps to begin your recruitment services business.
Qualification & skills
Recruitment business doesn’t require any high qualification. Anyone who is a graduate in any field can start the recruitment services business.
But before you start your agency, you should ask yourself if you have the skills to start a recruitment agency? Have you ever worked with any recruitment agency? If the answer is no, then train yourself. Work with any agency for a few months, read webinars, training materials and watch videos to strengthen your skills.
Decide your niche
It is always better to start a business in a niche that you understand or that is successful. So, if you are graduate in the field of mass communication or journalism, start a recruitment services business for the same. You already have a knowledge of this industry which will help you understand the requirement of candidates & companies deeply.
You may already have some contacts, and it will help you in setting up your business. Most successful recruiters are those who work on one niche instead of spreading their legs everywhere.
Types of Recruitment services business
There are different types of recruiting services business that your agency can provide. Here are four common types of agencies:
1. Temp or staffing services.
As the name suggests, these types of agencies place candidates to work for a temporary period in any company.
2. Traditional recruitment firms.
These are the most common recruitment agencies; they get paid by the recruiter only if they select their candidate.
They usually have three months contract with the candidate, and in case he drops out before that agencies will offer a free replacement or money-back guarantee.
3. Full-time staffing agencies.
Such agencies place candidates on a full-time basis only.
4. Temp & fulltime agencies.
Few agencies place candidates on both full time & contract basis.
Now, Understand the competition.
Before starting your business, you must understand the demand & competition in your niche. If there are too many firms in the market in your niche, then it will be difficult for you carve out a profit.
Selection of a Location
Selection of the location can be based on your reach, whether you are serving in just one city, state, across India or worldwide. If you are serving across India or the globe then having your office in metro cities is best. If you have a budget, then it is best to have multiple offices in major cities.
Basic inventory
Here’s all you need to start your recruitment firm:
1. A place to work
You will need a proper office to set up your agency. You can start a franchise or start it from home as well. Your set up will depend on your budget.
2. Accountant
Hiring accountant is must, he will be the one to file ITR, GST and keeping the record of incoming & outgoing income & expenses. You must hire only qualified CA for the purpose.
3. Other Staff
Again, the number and additional requirement of staff will depend on your budget. You can start with minimum 2-3 and a maximum of 20. If it is a big set up you can hire HR staff, receptionist, IT staff, marketing staff and so on.
4. Computers, phone & internet
Well, whether you have two employees or 20, you cannot run your agency without computers, telephone & internet. You’ll have to provide these facilities for all your staff members.
5. Insurance
Insurance is a prime requirement of any business. You must get your staff, office, and every asset insured.
6. Business banking account
To deal in any business, you need a business banking account. Nowadays, many banks have various offers. You can start your account with the bank that gives you maximum facilities
7. Website & social media pages
To make your business stand out, you must have a website & social media pages. Social media is an excellent marketing strategy that can take your business to another level if used wisely.
8. Recruitment software
It is indeed a valuable asset that will help you keep track of all your job orders, contracts, candidates etc. Select a simple, powerful and web-based tool that offers ample security of data as well.
9. Contract Staffing back office
It will maximize your efficiency and will take care of all the tedious work related to making contract placement.
10 Name, logo, & other marketing material
You will need a name for your firm & logo as well. It should be registered under the authorized local body. Signboard, Business cards, email, newsletters are also valuable marketing materials.
Calculate the amount of investment
The average cost to start a recruitment business with a minimum of 5 staff members is as less as 100,000 Rupees or $2000 monthly. It includes the cost of rent, salaries, database, phone & internet bills. If you want to recruit abroad as well, then you need a bank guarantee of 20 lakhs & 25000 Rupees demand draft in India, If you’re out of India then, contact your bank for guarantee fees.
Business structure
You must decide the structure of your business, for example, will it be a sole proprietorship firm, partnership firm, a limited liability, private limited company. Once you decide the type of structure get it registered accordingly. A limited liability is considered best for such firms.
Launch process
Once you have planned and determined every aspect of the business, you are ready to start your launch process. Launch process involves actual money to start the business.
Legal requirements
To begin your launch process, you will first require to complete the below mentioned legal formalities.
Tax registration
You should have service tax registration or GST registration depending on your yearly turnover.
The tax rate is 14% annually on recruitment business.
ESI/PF registration
You will need ESI registration only if your business employees more than ten persons.
PF registration is required only if you employ more than 20 people.
Recruiting agent RA licence
If you are in India, then, You will need an RA license if you recruit Indian citizens overseas.
The agencies that are registered under the Ministry of Overseas Indian Affairs to provide recruitment’s to Indian citizens abroad are called as ‘recruiting agents.’
The requirements for the same are as follows.
Apply with passport size photos of promoters along with 7 supporting documents.
1. Write a demand draft in favour of PAO, MAIO, new Delhi of 25000 rupees.
2. Past five years of business activities of promoters
3. Certified signature of developers
4. ITR of promoters
5. Assets & liabilities of promoters
6. Degree certificates of promoters
7. Bank guarantee of 20 lakh rupees
If you are from other countries then, you can directly contact your business administration office for getting more help for required documents and fees.
Office set up
It is now time to make a final deal and take the office premise in your possession. Once you have the office, fix the furniture, working space, computers, internet connection. Purchase and finalize all the essential amenities like website, brochures and other tools.
Hire your staff
After you have the office and all the legal paperwork in place start hiring your team.
Inauguration
Once everything is in place, you can inaugurate your business and start working.
Post-launch Process
After the launch, you will have to target the market rigorously, and for that, you will need to start the marketing plan.
Here is a three-step marketing plan that can help you kick start your recruitment business.
1. Make a list of companies you will market your business with and try to grab the exclusive contract.
2. Make a database of candidates and assemble it as per their experience qualification, position & salary expectation.
3. Decide how you will market your services, nowadays there are many ways to do so. You can start with cold calling snail mail and online advertisements.
How much does the recruitment agency business earn?
This is the final and most important question you might want to know.
Here’s your answer!
The fees of the recruitment agency depend on the type of services and position that you are looking to fill, factors that will affect your payment are:
1. The industry you are targeting
2. The area you are targeting
3. Number of people you are hiring for a single company
4. Salary of the particular situation.
The commission or fees of a recruitment agency may stand between 15% to 25%. It is charged from the total earning of the first year from the candidate. If the position is hard to fill, it may go up to 50%. In the case of permanent jobs, companies pay a fixed amount to agencies.
So, if you are hiring an assistant for the junior role whose yearly salary is 5 lakh or $25,000; then, agencies fee is 15% then the agency will earn around 75000 rupees or $3750.
Once your business is on the floor, it’s your knowledge, hard work, team effort & PR that will make it successful.
2 comments
Simply amazing points you share here.
I have been working as an HR, Planning to start a business as well. your blog has been a great help.