One challenge facing most start-ups, recruitment agencies included, more than any other challenge is funding. Of course, there is no entrepreneur that expects not to spend money in setting up his agency. However, the enormity and scope of the funds required in setting up a recruitment agency have taken many entrepreneurs of balance. Many recruitment agencies have failed in their first year because of inadequate funding. How can you avoid falling into the same ditch?
Thorough financial planning. It is very important that all bases are covered –from the total cost involved in starting up, to payroll requirements, marketing and miscellaneous, everything needs to be considered. After considering all that may be required, the next step is to consider the options available for sourcing recruitment finances and funds for your agency. Consider them –
This is probably the most desirable type of recruitment financing as it leaves you indebted to no one but yourself. You are free from the worry often associated with borrowing and are solely focused on making your start-up succeed. If you have the necessary funding to start up, there is little or no use for alternative funding options. Unfortunately – and in reality, very few entrepreneurs find themselves in a position where self-financing is an option, or at the least, sufficient. In that case, alternative funding options become the solution.
Start-Up Loans and Grants
There are numerous grants and start-up loans- privately funded grants and government-backed- available for consideration when starting a business. The UK Business Funding Centre provides a detailed and current list of available finance options and conditions for eligibility. You can take advantage of this. However, getting this kind of funding is not easy. You have to be prepared to work for the money as there are often competition, complex bidding process, proving the viability of your business concept and so on. Nothing good, they say, comes easy. Therefore, if you believe in your business, you should be ready to work for it.
This is a traditional financing option. It simply means acquiring a loan from a commercial bank to fiancé your recruitment agency. While that is what it simply means, the process is anything but simple. You will be required to develop a strong business plan, deliver a master pitch and hope the bank is convinced your idea is worth investing in. The process can be challenging for small business owners, especially start-ups that do not already have a record of business lucrativeness. A start-up may be required to present comprehensive and accurate financial forecasts, a meticulously detailed business plan and in-depth contingency plans (collateral) in the event that your business fails. You may also need to have a strong credit rating and show evidence of your ability to succeed in your chosen field.
This option has become an increasingly popular option among entrepreneurs. Specialist agencies specialising in recruitment agency start-ups provide comprehensive funding packages – from initial establishment costs to invoice financing, payroll obligations and so on, they practically pay for everything while the recruitment company reimburses them, with add-ons, as and when revenue starts flowing in. Besides providing finance, specialist recruitment finance companies also offer professional support and guidance on how to successfully build a recruitment company.
With the requisite skills, knowledge, drive, strong network of contacts and financial strength, your recruitment agency is primed, not just to survive, but to thrive.