Blueprint – How to Start a Recruiting Agency in 2021, Part One

This post is part one of a three-part series:

Part two – Your recruiting agency’s operations and financial plan

Part three – A list of everything you’ll need, or nearly everything you’ll need, to consider for your agency

Maybe you’ve been bitten by the entrepreneurial bug. Maybe you want to change the world. Or maybe, like too many people over the past year, you just got laid off.

“That’s really exciting!” is what I recently told a good friend, a recruiter who was recently “let go” from her agency employer.

As an entrepreneur myself, I saw this as an opportunity and an accelerant to her career. And she agreed! As a smart and relentlessly hardworking salesperson and recruiter, my friend was well positioned to do what so many others are doing after being laid off from their staffing and recruiting agencies… starting their own!

Though 2020 was a difficult year for many, parts of the recruiting and staffing industry are booming. Resilience is more important than ever. In recent months, we’ve seen an uptick in hiring, and – since the Summer of 2020 – a  real leap in the number of new staffing and recruiting businesses being started.

As a serial entrepreneur, I can tell you that being a small-business owner is fun, challenging and rewarding.

It’s also hard. Really hard.

Why A Lot of Startup Recruiting & Staffing Agencies Fail

Despite all the feel- good commercials and speeches from many large corporations and politicians regarding the importance of this essential engine of prosperity, just getting a small business’ doors open and keeping them open is no small feat. And  many founders underestimate just how hard getting your doors open – the right way – really is.

You’ve probably seen this chart before, and the truth is that valley can be far deeper and  wider than many expect. Hint: It takes on average about 7 months to make your first placement.

To make matters worse, despite the best intentions of politicians and large corporations, the reality on the ground is that small business is a game of survival. Not only do you have to find your niche, create your product, sell, deliver, rinse and repeat; but you have to comply with a litany of regulations, check all the boxes, do your own marketing, do you own selling, do you own delivering, get the contracts, find the candidates, and pay the taxes. Outside of the ivory towers, it’s not always roses.

Despite all of that, I can think of no better path to economic freedom and personal prosperity than starting your own business.

Staffing and recruiting agencies are a proven model, and – when done right – they work. Still, many fail. Someone once told me of the recruiting industry is that “there is no easier way to make a really good living and also no harder way to make very little money at all.”

If You Fail to Plan, You Plan to Fail

If you’ve gotten this far, that is great, but first let’s learn from the failures of others. There are other reasons you may fail, and failure itself is subjective. It’s very unlikely you won’t be able to make at least one placement, but that’s hardly a living… especially relative to the amount of effort involved and what you could make if you just got a job somewhere.

Businesses fail for many reasons. Common reasons for failure include:

  • Founder failure (burnout, partnership breakup, lack of perseverance)
  • Failure to plan / Not enough runway (You need 12 months of runway)
  • Misallocation of time and resources

On the last point, I want to stress the value of balancing frugality, hubris, and a focus on growth. Starting out, your resources are fixed: your time and your cash. If you under-invest or over-invest either of these and you fail to get a return on those investments, you are going to make life a lot harder than it needs to be.

Example: “I need the best marketing, the best new desk, the best new logo to ‘start my business out right,’ and every possible shiny new sourcing tool and widget out there.” That kind of thinking is surefire way to overspend time and treasure and not hit your goal.

Another example: “My time is so valuable, I’m going to outsource my sales, and this, that and the other thing are ‘beneath me.’”  Pro tip – as a founder, NOTHING is beneath you. The buck stops with you on everything. Your time IS valuable though, so make sure it is focused on the things that only YOU can do and are moving you towards your revenue goals, IE – selling and recruiting.

To mitigate these risks and increase the chances of your success, take the time to develop a business plan and – this part is critical – try to get someone else to invest in it.

The last part is key, even if you don’t actually need outside capital. The bar that you need to meet in order to raise outside capital – even a personal loan – is a lot higher than one you would set for yourself. Meeting this higher bar will force you to examine your assumptions and act as a major validator of your plan.

Keep Your agency business Plan simple

You’re going for breadth and only a nip of depth. If you go too deep, you’ll lose momentum and rapidly reach a point of diminishing returns.

(Note: This is an example business plan for you, friends, family and maybe potential business partners. It is not an Investor or Pitch Deck, which is a much larger topic.

1. Research & Understand Your Market and the Opportunity

While the agency model is a proven strategy, and the market for talent is massive, starting a new agency is no cakewalk. Take some time to define what makes you special relative to competitors in the market.

Answer the following:

What is your niche/industry/focus?

How large is that market? How many customers would value your service? And how many of them are in your location or vertical and buy from companies like yours? (This is known as your TAM or Total Addressable Market. Emphasis on “addressable.”)

Describe the problem that you solve for your customers and the solution you’re selling.

How many competitors do you have? Why are you better?

Tip: If you don’t think there are any competitors in your niche, you probably haven’t looked hard enough.

Bonus Tip: If you still can’t find any competitors, it might be because your niche is too small to sustain a viable business.

2. Sales and Marketing Plan for Recruiting Agencies

Rule #1 – Outbound is Your Friend

As a new agency, you are just that: new. Of course, you need an online presence. But remember to keep it simple as you get started. Inbound marketing efforts such as SEO, AdWords and your website are all part of a robust marketing plan; but they are the gravy to the steak and potatoes of outbound calling, emailing, and LinkedIn InMailing.

As a new Recruiting Agency Founder, you need to be prepared to generate your own demand. Be sure to budget your time and cash accordingly.

Rule #2 – Your Website Is Not  Your Marketing Plan

“I put up a website,” – hanging out your proverbial shingle – is not a marketing plan. Nobody cares. You need a plan to actually generate demand for your business; It will not happen on its own. This plan should include everything from Search Engine Optimization (SEO), AdWords, Content, Account Based Marketing (ABM). (If you don’t know what those words mean, you should include external help in your plan.)  Remember, you can change all of this later, after you’ve learned more about your market, message and have many placements under your belt.

Rule #3 – Your Logo Is Also Not Your Marketing Plan

Your company name and logo do not matter. So long as they’re professional enough, not offensive, and not already taken, do not waste a lot of time and money on this. I have seen far too many people waste far too much time on this, when that time would have been better spent on outbound marketing, sales, and quality delivery. Again, you can change much of this later, after you make your million in placements.

Rule #4 – Customer Alignment is Everything 

Be sure to think in terms of your customers’ values as you define your product offerings, rather than focusing on yourself. Pretend you are the buyer, and someone came calling with your pitch. What would you value enough, and what would have to be true in order for you to say “yes”?

What’s Next?

In the second part of this three-part series, we’ll dive into fleshing out your operation and delivery plan, financial planning, and more.

If you want to be sure you don’t miss it, sign up for Crelate’s email newsletter.

Meanwhile, here are a few resources you’ll want to consider as you begin to market your new agency (This list is by no means complete, and the resources are only suggestions!):

Website  –

A professionally built, custom website is practically a must-have for a big agency. But there are lots of easy DIY solutions out there for agencies that are just starting out. A few commonly used tools include:

Candidate portal/job widget –

SEO optimization/AdWords – 

Making sure people can find your recruiting agency online is vital, so it’s also vital to make sure your site and any content you publish on it is optimized for search engines (like Google or Bing). An important part of making your site search-engine friendly is using highly searched keywords in your content. There are a number of tools that can help you identify keywords with the highest search value:

LinkedIn profile (for your business) – 

A LinkedIn profile is almost requisite for any professional today, and that’s especially true for recruiters… and recruiting agencies. Learn more about how to harness the full power of LinkedIn for recruiters on the Crelate blog.

Logo  –

As I said, you don’t need to invest much time or money into this. But you will need something for letterhead, email signatures, etc. If you don’t have personal connections with any artists or graphic designers, there are lots of places where you can connect with one online, including:

Stay tuned for the second part of this series on the Crelate blog!

Filed under: Applicant Tracking Systems, Staffing Agency Management