There has been a huge rise in the number of recruitment agencies in the UK, but with fatal mistakes being made, more and more agencies are struggling to stay afloat. Here we look at the top four issues hindering growth.
- Fundamental Funding Issues
Funding and maintaining a healthy cash flow are critical factors to consider when running any business; however for a recruitment agency these factors are particularly important. Too often, directors do not evaluate their financial forecasts in enough depth and as a result will take more money out of the company than what is feasible, resulting in cash flow problems early on. This is a very quick way to lead your agency straight to failure, so ensure you seek professional advice to assess your dividend vs. salary ratio when deciding on the most tax efficient way to remunerate yourself. This has become even more essential this year now that the changes to dividends have been introduced. To find out more about these changes, see our article: The Tax Effect of the Changes to Dividends.
- Excuses, Excuses
The second of the four issues hindering growth is not to make excuses. Too many recruitment agencies are using ‘skills shortages’ as an excuse as to why they are not able to match candidates and employers as accurately as they would like. Sourcing the right candidate, although an undeniably difficult process is still possible and excuses should not be made before trying to fill a role. One way in which directors can improve on targeting the right candidates is through investing more time and money on training their recruiters. Landing the perfect candidate for the perfect job by a 100% match is just not possible; instead, training your recruiters to be able to match candidates by 70% to a role is more realistic and beneficial all round. Having a 70% match allows room for candidates to learn and grow within a company, often leading to them staying at a company for a longer period of time. Win. Win.
- Lengthy Recruitment Process
Your recruitment agency may have the best recruiters in the field, but if your hiring process is inadequate, then your agency will not get very far. The best way to ensure your recruitment process is user friendly and effective is by testing it yourself, and regularly reviewing it. Often, recruitment agencies will over complicate their hiring process, which can confuse applicants and put them off applying through you. In short, your hiring process should make it easy for candidates to apply for roles, have a clear and specific job description and realistic time scales.
- Poor Communication
Both you and your recruiters must not lose sight of the most important factor that keeps your recruitment agency going – your clients and your candidates. When a vacancy opens up, it is common for recruiters to become complacent and after receiving a large influx of CVs, fail to keep in contact with the potential candidates. Poor communication will drive candidates away. In addition, you need to be keeping your clients updated at every stage. Lack of communication can be extremely frustrating for your clients and candidates, having a negative impact on your brand and on any repeat business. Therefore, you need to establish a communication process and ensure it is adhered to.
Overlooking any of these four issues hindering growth is a recipe for disaster. We are an accountancy firm that specialises in the recruitment sector, and we are able to offer you the right help and support to keep your recruitment agency afloat. To find out more information, or to get in touch, visit our Recruitment page.