“I found it pretty easy to get funding,” “I have worked for someone else for a long time; I wanted to try it myself,” and “I wanted to work my own hours” are often the answers I get when I speak with a startup recruitment firm.
In recent years, the trend of recruiters starting their own firms has gained momentum. With over a decade of experience in the staffing industry, split between the UK and the US, I’ve seen many success stories unfold. If you’re contemplating striking out on your own, here’s why US contract recruitment could be your ticket to success.
Ease of funding and support
Many entrepreneurs hesitate to start their own recruitment firm due to financial concerns. Personally, I had never considered setting it up on my own. I thought the cash needed to fund weekly payments to contractors while potentially waiting 30-60 days for a client to pay me would simply be too high. However, invoice factoring companies like Lead & Gain’s partner, 3R, have revolutionized the landscape. These firms cover the bill rate, handle client interactions, and support you during payment delays, making the financial aspect more manageable. Unlike traditional financing, which can withdraw support if clients delay payments, these companies work with you to ensure your startup’s survival.
Technological Advantages
Modern technology has significantly reduced the barriers to entry. Tools like ZoomInfo can quickly build up your CRM system, and AI-driven business development tools can automate LinkedIn messages, emails, and texts to candidates and clients. This automation allows you to focus on high-value tasks, accelerating your path to billing and profitability.
Market Potential
As mentioned in my previous blog, the US recruitment market offers substantial opportunities due to its size and growth prospects. With fewer competitors and higher perm fees of 20-30% (averaging $25,000 compared to less than £10,000 in the UK), the potential for profitability is high. While it can be more challenging to win US clients initially, once you establish a strong relationship, they are likely to remain loyal.
Key Considerations
Starting your own firm involves significant decisions, such as walking away from a base salary and guaranteed commissions. However, the benefits of autonomy, flexible working hours, and the potential for higher earnings can outweigh these risks. Key steps to consider include:
- Incorporation
- Securing legal services and terms of business
- Purchasing business insurance
- Investing in CRM and other tech tools
If you’re set on giving it a go, we previously covered some unspoken rules that can lead to securing more business for your company. The opportunity is big, and Lead & Gain will support you along the way!
What to look out for when starting US contract recruitment
- The size of the market is so mouthwatering, I understand why agencies want to try to take it all on. However, it’s the businesses that start small and become a “big fish in a small pond”, then expand, that have the most success.
- Capturing a Fortune 100/500 client would be a game changer. However, the logistics of signing these types of companies are incredibly difficult. You see these companies hiring all the time, so you might think it is low-hanging fruit, but it is quite the opposite. You need to understand the terms of business and what you will agree to if you try to work with these companies—deliverables, employing the workers, taking full liability, and some of the worst commercials you have ever seen, just to name a few. You will rarely be able to make red lines, and even speaking to the right person can be a very long process. Be prepared before you start to BD these companies.
- Ever found a fake candidate or fake resume? They exist. Make sure you know and trust your contractors as the reputation will fall back on you. Collecting references can help safeguard yourself from these concerns.
- Make sure you know and trust your contractors as the reputation will fall back on you.
- Successful agencies typically focus on small to medium sized companies where they can easily interact with the hiring managers and get terms signed. It isn’t about pulling a job; it is about pulling a placeable job.
Conclusion
Will the potential new rules, scrapping non-compete clauses allow for more people to give it a go on their own? Time will tell on this, and there are several obstacles to overcome before it becomes a nationwide mandate in the US.
Either way, venturing into US contract recruitment as an independent recruiter offers significant rewards. With the right support, technology, and market understanding, you can build a successful recruitment firm that stands out in the competitive US market.
If you’re considering going solo in the US market, or want to understand more, book a call with Lead and Gain.