It has been a phenomenally start of the year at 3R. Clearly the long awaited optimism throughout the economy has given extra confidence to experienced recruiters to seriously think about setting up their own business.
Throughout January we have worked with dozens of recruiters to produce detailed business plans as the first step of setting up their own recruitment businesses.
The high volume of activity has helped create some meaningful trends and statistics which also bear a close resemblance to the actual progress of early adopters of 3R systems in previous years.
Some of our findings are explained below.
As you may already know, 3R only charge a £50 registration fee and no further start-up costs. So most significant costs are taken care of for you - your company is registered, domains purchased, branding designed and website built. Our CRM, Broadbean subscription and integrated Microsoft Office365 are all included.
It is still sensible to plan some investment into your business. Our associates have set aside cash to pay for job board advertising to help with early vacancies and the first couple of months of advertising before you start to bill. Others with more ambitious business plans are costing in offices, phones & IT equipment.
As most 3R start-ups decide to work from home initially, additional investment is quite low. The average spend is £1100. Some consultants are setting up from home and making the most our free use of Jobsite CV search to minimise initial advertising spend – these recruiters are putting as little as £200 into their business to start with.
We help to make this initial investment a little easier to swallow with discounts on items such as job boards, phones, meeting facilities and professional subscriptions.
Making your first placement and getting paid for the first time are actually the same things at 3R. If it is a perm fee or contract margin; as soon as the invoice goes to your client, the margin is paid to you. This is a real help when starting up and bridging the gap between regular employed work and getting paid by your own business.
January business plans suggest your first earnings will come on average between the 2nd and 3rd month after going live. This figure is fairly consistent with the actual performance of earlier adopters.
These ‘first starter’ estimates are still a little cautious. Setting up your recruitment business with 3R means that everything is ready on day 1. You can literally pick up the phone and start work straight away! It is therefore realistic to assume that an experienced, well-connected recruiter could start picking up vacancies within a fortnight and take at least one vacancy through to offer stage by week six? It would be fair to expect your first perm invoice to be billed after 10 weeks. Consultants in faster moving contract markets could expect first timesheets back early in the second month and margin in your bank the same week.
From all business plans that we have helped produce, the average time it will take one of our associates to receive monthly income the same or better than their usual net pay is less than 5 months!
Many people think it will take years to earn the same income that they are being paid as an employee of an agency. But when you consider that an agency only pays about 25% of what a senior consultant bills and then tax and NI is likely to account for a third of that income. Then take off rail fares, petrol & parking……….. If you are working for yourself and keeping most of the revenue, the task doesn’t seem that daunting!
Recruiters leaving the monthly paid comfort of working for an agency usually have personal financial commitments and need to be confident that they can return to their current earning levels quickly! The 3R model can help realise this in three ways.
Once you have reached the same level of income that you have been used to you can start to plot your growth onwards and upwards – maximise your personal earnings or start thinking about investing further in an office and more staff.
When we help consultants build their business plans we discuss realistic targets to help them plan their short term earnings so that they can plan properly for running a business.
A few people are a little optimistic and need reigning in, but generally established recruiters are able to put together sensible plans.
The average ‘run rate’ in our January business plans is 60% of that being achieved in an agency environment – for example £200k perm billers are forecasting £120k in year 1.
Contract recruiters will be placing contractors at a rate of 24 a year compared to employed levels of 40 a year. Of course their contract plan will start from scratch again, but it can be seen how rapidly earnings can be generated from sensible growth forecasts.
If you are an experienced recruiter and if you have ever thought of setting up your own recruitment business, have a look at our website to see exactly what we offer. For a confidential discussion and a personal proposal/ business plan please get in touch, our contact details are on the website!