It is estimated that around 80% of new recruitment agencies fail within the first two years, which seems such a high figure to contemplate but why is this? Here are some of the reasons that recruitment agencies can become unstuck...
1. Flawed vision
A focus on the right aspects of the business that will guarantee longevity, grow the agency appropriately and ultimately make money, is essential. A clear direction is needed to remain dedicated, while objectives and processes need to both align and drive the business, and at the same time be positively communicated to employees.
2. Lack of a realistic business plan
Thorough knowledge of the relevant industry is crucial, transparency of what is being offered and to who, plus distinctive business goals. A undefined target audience or failure to react to market conditions can provide opponents with a competitive edge.
3. Poor service
Relationship forming and preservation forms the basis of the business, meaning a lack of client relations or fitting contact, not listening to feedback and general poor candidate management can be markedly damaging. Effective on boarding and an extended quality service with both candidates and clients, ensures an experience worthy of repeat business. Simple measures such as detailed candidate interview preparation and client background groundwork can set agencies apart.
4. Brand strength
A strong brand and professional image is fundamental in making both an impact in the industry, and for attracting and maintaining talent. A memorable logo, good website, social media platform and relevant corresponding marketing collateral all help to formulate your business 'persona', while accurate communications generally are central to effective business dealings.
5. Insufficient financial acumen
Unprofitable placements and ill informed decisions can knock an agency's cash flow quite quickly, so regular reporting around this area can help improve financial management. Ensuring enough money is left within the business, plus separating available funds from those allocated to HMRC responsibilities for example, can also ensure this area remains a priority. Staff performance and their costs versus profitability should be reviewed routinely to maintain another level of control.
Lastly, some people can simply give up, recruitment can be a frustrating business, but maintaining both determination and a drive to succeed can go a long way!
Thinking about setting up your own recruitment agency? Would you like a rundown of the key things to consider?