1. Why Start a Recruitment Agency?
Recruitment is a growing sector in the UK, with businesses always needing skilled staff. Starting your own agency offers:
- High earning potential
- Flexibility to specialise in industries you know
- Low startup costs compared to other businesses
- Scalable opportunities (freelance, small team, or large agency)
2. Decide on Your Niche
Recruitment agencies that specialise often perform better. Choose an area where you have knowledge or contacts, such as:
- Healthcare
- IT and tech
- Construction
- Finance
- Hospitality
- Temporary vs permanent staffing
3. Legal Structure and Registration
Step 1: Choose Business Structure
- Sole trader
- Partnership
- Limited company (most common for agencies, registered with Companies House)
Step 2: Register with HMRC
- For taxes and PAYE (if employing staff).
Step 3: Licences and Compliance
- Employment Agencies Act 1973 – You must follow regulations.
- GLAA Licence – Required for labour supply in agriculture, food, and certain trades.
- Data Protection (ICO Registration) – Mandatory if handling candidate data.
4. Startup Costs for a Recruitment Agency
- Business registration: £12 (Companies House online)
- Website and branding: £500–£2,000
- Recruitment software (CRM/ATS): £50–£300/month
- Insurance (public liability, professional indemnity): £300–£1,000 annually
- Office costs: £200–£1,000/month (can start from home)
- Marketing and job board fees: £200–£1,500/month
Estimated total: £3,000–£10,000 depending on setup.
5. Essential Tools and Systems
- Recruitment CRM/ATS (Bullhorn, Vincere, Zoho Recruit)
- Job board subscriptions (Indeed, Reed, CV-Library)
- Payroll system (if handling temporary workers)
- Business email and phone system
6. Finding Clients and Candidates
Attracting Clients
- Cold calling and emailing businesses
- Networking and LinkedIn outreach
- Offering competitive fees and trial placements
Attracting Candidates
- Advertising on job boards and social media
- Building a professional website with job listings
- Networking at events and online communities
7. Setting Your Fees
Recruitment agencies usually charge:
- Permanent placements: 15–25% of candidate’s annual salary
- Temporary placements: Hourly/daily rates with agency markup (e.g., 20–40%)
8. Compliance and Responsibilities
- Right to Work Checks – Ensure all candidates can legally work in the UK.
- GDPR Compliance – Protect candidate data.
- Contracts – Have clear agreements with both clients and candidates.
- Tax and PAYE – If paying temporary staff, ensure compliance with HMRC rules.
9. Tips for Success in Recruitment
- Build strong relationships with both clients and candidates
- Specialise in a niche market to stand out
- Keep databases up to date
- Offer great candidate experience for positive word-of-mouth
- Monitor industry trends to stay ahead
Frequently Asked Questions
1. How much money do I need to start a recruitment agency?
Around £3,000–£10,000, depending on setup and marketing spend.
2. Do I need qualifications to start a recruitment agency?
No formal qualifications, but sales, HR, or recruitment experience is useful.
3. Can I run a recruitment agency from home?
Yes, many agencies start as home-based businesses before scaling.
4. How do recruitment agencies get paid?
Through placement fees (percentage of salary) or temporary worker markups.
5. Do I need a licence to run a recruitment agency?
Not always, but some industries (like agriculture and food supply) require a GLAA licence.
6. How quickly can a recruitment agency become profitable?
Some agencies make placements within 3–6 months, depending on client acquisition.
Conclusion
Learning how to start your own recruitment agency involves choosing a niche, registering legally, setting up systems, and building strong networks with clients and candidates. With relatively low startup costs and high earning potential, recruitment is a promising business opportunity in the UK for entrepreneurs with determination and industry knowledge.