Is self-employment in recruitment right for you?

Self-employment offers a chance to take control of your career and financial future, but can be a big step. This article offers food for thought to ensure you are making the right move into your own recruitment business.

Self-employment is often looked upon as the ultimate professional goal – a chance to follow a passion, be your own boss and make your own rules. It shows an adventurous spirit and requires grit and determination to make a success. It can also be a huge culture shock for those used to working for an employer, meaning not every dream is realised once reality bites.

To help you decide if self-employment is really for you, this article helps you to put the decision into perspective and consider the tough questions about your motivation, goals and suitability before taking action. 

Do you have a clear vision for your recruitment business?   

What kind of business do you want? It may sound odd, but before you start you need to consider where you want to end. What’s your end goal or exit strategy? 

Do you want to grow a business of scale which you could sell? If so, do you understand the journey needed to achieve it, and what kind of sale do you have in mind? Have you researched how many such successful exits there are in your market?  

Do you want growth to mean more headcount? How important is it to maintain a decent work-life balance? Do you hope to one day sell the company? If so, what will you need to achieve to reach this goal? 

Alternatively, do you want to be a solopreneur and/or have a lifestyle business? The key thing is to have some sort of end goal in mind as you set out.  

It’s also important to define your offer and decide your market. What roles will you recruit and in which industries and geographic regions? Who are your target clients? What services will you offer/ how relevant are they to your clients’ needs? How will you attract candidates? How passionate are you about your market? 

Does your personality fit the profile?

Do you have the personal qualities required for self-employment – are you sufficiently self-motivated and resilient? Can you prosper outside of your corporate environment? Be honest with yourself – get feedback from your friends and family. 

In a similar vein, assess your strengths and weaknesses. If you are not a great organiser and hate administration, how are you going to manage the financial and regulatory formalities and filings you have to do as a business owner? If you love the candidate side and recruitment process side of the business, but are a little weaker on business development – how are you going to win new business when you launch? 
Do you have a support network in place? That might be friends and family who can help and understand when things are tough, or a group of fellow entrepreneurs who you can turn to for help and advice, online or in person.  

How do you start a recruitment business?

• Money: Do you have enough start-up capital? Self-employment requires significant up-front investment. In addition to supplies and overhead costs, consider how long you could go without income before breaking even. Do you have enough resources or access to credit or loans to cover the gap?
• Risk: Are you comfortable with risk? Self-employment involves taking risks – financial, emotional, and psychological – that comes with uncertainty and a lack of guarantees. Are you prepared to deal with the reality that success is not guaranteed?
• Skills: Do you have the necessary skills and experience? Are you confident in your abilities to navigate the business world, manage finances, market yourself or your services, and stay ahead of industry trends and regulations? Consider taking a class, doing some research online, or talking to other entrepreneurs to brush up on these skills. 
• Hard work: Are you prepared for long hours? Being self-employed often requires putting in longer hours than a traditional job. Do you have the discipline to set your own schedule and stick to it?

Also consider the implications of any restrictive covenants you have with your current employer and the effect they may have on you launching your business and conducting business development.

Key principles

This will vary from country to country. Some things to consider are: 

• Do you need any kind of licence to set up a recruitment business? What kind of legal entity should my business be? Some countries offer various forms you can take to incorporate. Understand the statutory and reporting requirements for each. Consider that some of your prospective corporate clients will only work with certain kinds of corporate entities. Once you are clear on this, incorporate your business.
• Do your numbers. You’ll need a business plan for your own sanity and for the bank’s approval.   
• Next you will need to set up a company bank account and put some money in it. Are you putting in savings and/or getting a loan? Be clear on the bank’s charges (particularly if you go overdrawn). It’s worth considering some of the new challenger and online banks – their services are often aimed at startup businesses. 
• It may be a while before you need legal advice but sort out how you your accounting will run.  As a startup, go to a small firm of accountants who can provide you with the right service levels. Again, it’s worth considering digital options such as Quickbooks as you start out. 
• Explore grants and funding which may be available to you.
• Organise your branding and digital presence – website, LinkedIn, other social media. As a Reed franchise partner, you can enjoy considerable time and cost savings here and get a high-quality offer.   

What qualities do you need to be a successful business leader? 

Looking at recruitment business owners we have worked with, we’d identify three qualities that set the best apart from the rest. In our experience, those who grow businesses have three qualities or assets we call BBC – brains, bravery and capital.

• They can strategise and find solutions to problems. They understand technology, can navigate the regulatory and financial landscape, and are commercially savvy. They have the qualities required to build teams, manage people and communicate well. They can inspire people.
• They are prepared to take risks. They push for growth, rather than settle for safety. They invest in people and give them the tools and resources they need.  

Though not a quality, success is tethered to having the financial muscle to invest in the business. It is hard to generate real growth if you are managing the business month to month on cashflow. A successful business leader will save a reserve and invest wisely rather than spend on themselves. 

What are the challenges of being self-employed? 

It can be very hard to switch off. There can be a constant ticking in your mind about deals, bank balances, and employees. 

It can also be lonely. Your family may be supportive, but they may not really know how your business works. It can be hard to find that shoulder to cry on when things go wrong, and more importantly, you may just be missing that person with whom you can bounce off ideas.

Many books on entrepreneurialism are simple tales of guts and glory. A recommended read is ‘The e-myth revisited: why most small businesses don’t work and what to do about it’, by Michael E Gerber, which gives a good insight into the trials and tribulations of self-employment.  

How do you mitigate the negative aspects of self-employment? 

Find your own way to unwind. A first step is telling yourself it is okay to take time off – find something that absorbs your attention and allows you to switch off from work.   

Know when and where to seek help. Use your network, join local business groups. At Reed Franchise Partnerships, we are passionate about building a community of like-minded recruitment business owners with whom our partners can share ideas, problems and celebrate successes. We see this as providing a great halfway house between the corporate world and the potential loneliness of self-employment. 

To what extent do the pros outweigh the cons? 

Work hard, have a growth mindset, sharpen your skills and deploy your knowledge and you have every chance of success. As such, the financial rewards, freedom and pure satisfaction should far outweigh the cons.  

In conclusion

Self-employment can be a great option for those who want more control over their work, are comfortable with risk and uncertainty, and have an entrepreneurial mindset. It can also offer greater flexibility and the ability to work on projects that are more personally fulfilling.

On the flip side, it also comes with challenges, such as the need to manage all aspects of the business, including finances, marketing, and customer acquisition. It can also be difficult to generate a steady income and to balance work and personal life.

Ultimately, whether self-employment is right for someone depends on their individual circumstances, goals, and personality. Seek advice from experienced entrepreneurs or business coaches and make sure it is something you are willing to commit to for the long haul.

Want to be your own boss? If you’re a recruitment professional looking for your next step, find out how Reed Franchise Partnerships can help you set up your own business.