Recruitment Agency Business Plan
Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their recruitment agencies.
If you’re unfamiliar with creating a recruitment agency business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.
In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a recruitment agency business plan step-by-step so you can create your plan today.
What is a Recruitment Agency Business Plan?
A business plan provides a snapshot of your recruitment agency as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research data to support your plans.
Why You Need a Business Plan for a Recruiting Agency
If you’re looking to start a recruiting company business or grow your existing recruitment business, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your recruiting company to improve your chances of success. Your recruiting company business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Recruiting Agencies
With regard to funding, the main sources of funding for a recruiting company are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for recruitment agencies.
How to Write a Business Plan for a Recruitment Business
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your executive summary is to quickly engage the reader. Explain to them the kind of recruitment business you are running and the status. For example, are you a startup, do you have a recruiting business that you would like to grow, or are you operating a chain of recruitment agencies?
Next, provide an overview of each of the subsequent sections of your plan.
- Give a brief overview of the recruitment industry.
- Discuss the type of recruiting business you are operating.
- Detail your direct competitors. Give an overview of your target customers.
- Provide a snapshot of your marketing strategies. Identify the key members of your team.
- Offer an overview of your financial plan.
Company Overview
In your company overview, you will detail the type of recruitment business you are operating.
For example, you might specialize in one of the following types of recruiting businesses:
- Job Candidate Sourcing Company: This type of recruiting company actively searches for potential job candidates via a variety of mediums in order to present candidates to companies actively seeking job candidates. Social media channels, such as professional networks, are often the platforms used as databases.
- Employment Agency: This type of recruitment business is responsible for sourcing and presenting potential job candidates to companies seeking to fill various positions. They often work with a wide range of clients across different industries and can specialize in specific job roles or fields.
- Executive Search Firm: This type of recruitment business focuses on finding and placing high-level executives and professionals for top-tier companies and organizations. They often have a deep understanding of specific industries and use their extensive networks to identify and attract top talent.
- New Hire Negotiations Company: This type of recruitment business negotiates on both sides of the table to arrive at a fully equitable hiring contract or agreement that both parties, the job candidate and the company executives, are willing to sign. This company often makes the difference between negotiations that cause a break in hiring and those that seamlessly and successfully hire for multiple positions every year.
- Specialized Industry Recruitment Busienss: A specialized recruiting company offers recruitment services for a particular industry sector, such as aerospace contractors. Within the sector, certain positions must be filled to meet exacting needs, therefore, the specialized recruiting company can search for and assist in filling those needs.
In addition to explaining the type of recruiting business you will operate, the company overview needs to provide background on the business.
Include answers to questions such as:
- When and why did you start the business?
- What is your mission statement?
- What milestones have you achieved to date? Milestones could include the number of industry clients served, the amount of revenue received during the past six months, opening a second location, etc.
- Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
Industry Analysis
In your industry or market analysis, you need to provide an overview of the recruitment industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the recruitment industry educates you. It helps you understand the job market in which you are operating.
Secondly, market research can improve your marketing strategies, particularly if your analysis identifies market trends.
The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your recruiting company business plan:
- How big is the recruitment industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the local market?
- Who are the key suppliers in the market?
- What industry trends are affecting your business?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential target market for your recruitment agency? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
Customer Analysis
The customer analysis section of your recruitment agency business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: job seekers, recruiters representing companies, human resources executives, and government entities.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of recruitment business you operate. Clearly, individuals would respond to different marketing promotions than government leadership, for example.
Try to break out your target market in terms of their demographic and psychographic profiles. With regard to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.
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Competitive Analysis
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other recruitment agencies.
Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes introduction-by-acquaintance, conference coordinators, citywide associations or networking groups. You need to mention such competition, as well.
For each direct competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ local businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- What type of recruitment business are they?
- What is their pricing (premium, low, etc.)?
- What sets their business apart from others?
- What are their weaknesses?
With regard to the last two questions, think about your answers from the customers’ perspective. And, don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide a bonus for skilled workers?
- Will you offer products or services that your competition doesn’t?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Marketing Plan
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a recruitment agency business plan, your marketing strategy should include the following:
Product: In the product section, you should reiterate the type of recruitment business that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide part-time employees specially trained to work with senior citizens in physical therapy?
Price: Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the services you offer and their prices.
Place: Place refers to the site of your recruitment agency. Document where your company is situated and mention how the site will impact your success. For example, is your recruiting company located in a busy retail district, a business district, a standalone building, or purely online? Discuss how your site might be the office space for your customers.
Promotions: The final part of your marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:
- Advertise in local papers, radio stations and/or magazines
- Reach out to human resources executives
- Distribute direct mail pieces to your target audience
- Engage in email marketing
- Advertise on social media platforms
- Improve the SEO (search engine optimization) with target keywords on your website
Operations Plan
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your recruitment agency, including answering calls, planning and scheduling new hire introductions, paying invoices, contacting customers, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to place your 100th candidate, or when you hope to reach $X in revenue. It could also be when you expect to expand your recruitment business to a second or third location.
Management Team
To demonstrate your recruitment agency’s potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in managing recruitment businesses. If so, highlight this experience and expertise. But, also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a recruiting business or successfully serving in human resource management.
Financial Plan
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.
Income Statement
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your operational costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you serve 25 candidates and 10 client executives per day, and/or offer special recruiting company sales online? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your recruiting business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement
Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and agency owners don’t realize is that you can turn a profit, but run out of money and go bankrupt.
When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a recruiting company business:
- Cost of office equipment and technology
- Customer relationship management software
- Cost of furnishings or accessories
- Payroll or salaries paid to staff
- Marketing expenses
- Business insurance
- Taxes
- Other startup costs and business expenses such as legal services, permits, licensing, etc.
Appendix
Attach your full financial projections in the appendix of your plan, along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or a list of friends and associates who are already lined up to contract for recruiting services from your business.
Summary
Writing a comprehensive business plan for your recruiting company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the recruiting company industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful recruitment business.
Recruitment Agency Business Plan PDF
You can download our recruitment agency business plan PDF to help you get started on your own business plan.
If you are looking for the quickest and easiest way to complete your business plan, Growthink’s Ultimate Business Plan Template has numerous features not available in the free template including its financial projections template which automatically calculates your complete five-year financial projections including income statements, balance sheets, and cash flow statements.
Finish Your Recruiting Company Business Plan in 1 Day!
Don’t you wish there was a faster, easier way to finish your Recruiting Company business plan?
With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!
OR, Let Us Develop Your Plan For You
Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.
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