How Do I Start a Recruiting Firm that will Attract Job Candidates?

new recruiting firmSo, you want to start a recruiting firm that has skin in the game from the start? You want to build a staffing agency that attracts top talent and clients across a variety of industries, or just hits it out of the park in one niche industry?  You want to hit the ground running, and take on the big staffing companies with your personal touch, right?

Well, you’ll first need the define your target market, settle on a strategic location for your sector determine start-up costs (which are higher than many other industries), create a marketing plan, and get to work finding job candidates for your own business.

The successful start of a recruiting firm – as well as any business – involves a solid business plan, a solid understanding of sound recruitment practices and techniques, and knowledge of laws about licensing, hiring and taxes. It also helps to have a marketing plan for client sourcing.

Here are several key steps you can take to make sure your recruiting firm has a sound foundation and a viable business model:

1. Determine a Business Goal

Recruiting firms (or staffing agencies) often have several interweaving business objectives. In order to create a viable recruiting service, it’s best to begin by defining your business goals within the current marketplace.

Recruiting firms are charged with obtaining qualified applicants for client job placement. Your recruiting firm might target candidates to fill temporary job openings, permanent vacancies or both. Get a good sense of the labor supply and demand in your region as you hammer out your business plan.

Your staffing firm can source candidates for a large sector, such as “professional and technical.” However, you will gain a business edge by focusing on a specific industry niche within a sector, such as mid-level advertising executives or technical writers and draftsmen for the engineering industry. If you have expertise in one field over another, this may help determine your niche market.
Dig into your business plan research to determine:

  • The precise industry niche you wish to target
  • The size of the business you propose
  • A suitable geographical location for your recruiting firm

2. Determine Economic Feasibility

According to, start-up costs for a recruiting firm can range from $58,000 to $127,000, and you should have a suggested operating capital of between $80,000 to $135,000 in the bank.

The costs for office space rentals, advertising, tax rates and employee pay rates all depend on the city or town in which your business will reside.

Some sectors are more expensive to operate in than others, as well. You can expect to spend more in order for your company to handle more highly-skilled job assignments. You may need to have an enhanced image, which requires a more expensive location, and greater investments in technology and training.

Keep in mind that start-up costs are usually double what you think they are.

3. Marketing

Know your industry advantages when you approach a marketing plan for your new recruiting firm. The more clearly you can present the benefits you provide above your competition, the more likely you are to attract clients.

Pretend to be a job seeker and check out competing recruiting agencies. Identify their strengths and weaknesses, determine where recruiting services are lacking, and create a user-friendly explanation of how your services will meet your clients’ needs more successfully.

You can include selling points such as:

  • Pre-screened, well vetted employees who are ready to work
  • Time and money savings on human resources tasks
  • Higher employee satisfaction and reduced employee turnover

The more you can differentiate yourself from the competition, the more your image will improve to prospective clients.

4. Attracting Top Talent

Referrals are the least costly and most effective way to build your candidate list. However, you can also add employee prospects by advertising in traditional media, or online via LinkedIn, and other digital channels.

Advertising will depend upon the industry niche you are targeting, and can vary widely. However, old school methods, such as having business cards handy and handing them to a potential candidate, is also quite effective.

Remember to keep your branding and messaging consistent across all advertising efforts.

At the end of the day, your company’s good reputation will improve candidate quality and attraction, so always maintain the highest professionalism and care when conducting business. And keep those high standards in the minds of your staff, as well.

5. Creating Markups

Recruiting firms make a profit in the markup they add to the price of an employee’s labor, and there’s a huge range for markups in the staffing industry. Although industry markups have slipped in recent years, markup can remain high even in a slumping economy because there aren’t that many qualified applicants to work with. In addition, today’s workplace requires more skills and therefore more training.

Wide markup ranges exist even within the same company. For example, the markup for PDQ Personnel Services in Los Angeles is anywhere from 25 to 75 percent.

To determine the amount of markup you can earn for a particular type of placement, you’ll need to consider all the following factors:

  • Amount of competition
  • Client relationship
  • Industry sector
  • Local standards

As you create a business plan, and develop your goals and strategies, it’s important to remember that even a small or mid-sized recruiting firm can in fact compete against the larger staffing companies and services. Namely, because recruiting requires a personal touch, and those larger companies are often slow to update their methods, impersonal, and unresponsive.

If you emphasize the benefits that your services will provide to your clients, and getting started with a healthy business model, your recruiting firm will be on its way to attracting great clients and top job candidates.

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