How to Start Your Own Recruitment Business
Recruiting businesses are also called staffing agencies and headhunter firms. They all locate and place candidates with companies who have vacant positions to fill. Recruiting firms offer different types of placement services. Direct hire placement services or contingency search firms are the standard in the recruiting industry. Those companies collect a fee when a candidate accepts a position. Other firms engage in retained search services. With this type of service the firm is paid upfront for the candidate search. The firm retains the fee regardless of whether they fill the position.
- Difficulty:
- Moderately Challenging
Instructions
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Recruiting for Corporate America
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1
File an assumed business name with your county government. Obtain the business licenses that are required for your area. Most states do not require a business license to operate as a direct placement agency or headhunter firm. This is a relatively unregulated industry. This allows you to operate without much scrutiny. Visit your state's secretary of stateweb site for regulation information on staffing firms.
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2
Establish the basic shell of your business. With your assumed business name open two bank accounts. One account will act as a fee clearing account while the other will be your operating account. When you make a direct hire placement you will collect a fee. Since all headhunter firms offer a guarantee period the money will not be earned until the guarantee period has expired. Hold the collected fees in the fee clearing account just in case a partial refund needs to be made. Open two phone lines with different numbers. One phone line will be your main line and the other will be your fax line. The fax will be used often in this business.
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3
Determine what types of recruiting services your firm will offer. You can offer contract recruiting for large corporations. This is where you accept a large number of requisitions and fill them for a flat fee. The direct hire search is the most common. This is also the most lucrative. With a direct permanent placement you will charge a percentage of the candidate's first year's salary. The fees charged should be between 15 and 30 percent. The more difficult the skill set is to locate the higher percentage is charged on the fee. Never use a fixed fee percentage. Offer a sliding scale for repeat and volume business. Retained search requires a long-term industry reputation. If you are new to the business then stick to the direct hire contingency searches.
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4
Choose the technology that you will rely on to find candidates and reach potential clients. In the recruiting business the client is always the hiring company and the candidate is the job applicant. You will need resources for locating both parties. Services like Careerbuilder, Monster, Dice, Hot Jobs and several others specialize in resume databases. ZoomInfo and the American Business Disk compile research data on companies. These databases are helpful in your research. You will need a subscription to one of the major resume databases for sourcing candidates and posting open job adds. An annual subscription with a major job board will be between $3,000 and $10,000. You can use Indeed.com to locate open job orders. Indeed compiles all open jobs within a given area from all of the major job boards.
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Select a software package for tracking your candidate interviews, profiles and resumes. You will also need to track your job orders, client activity and billings. There are several packages. Sendouts Pro is a fully equipped package. It is scalable as your business grows. You can find this software package at www.sendouts.com.
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Tips & Warnings
Decide on whether you will start your business as a one-man operation or if you will hire agents. If you decide to hire agents make each new hire sign a noncompete agreement with your agency prior to starting work. Consult an attorney for the proper use of a noncompete agreements in your state. Since recruiting is a sales job you should consider paying your agents on a commission-only compensation plan.
