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I would say two-thirds of our client network want to expand their recruitment start-up at some stage or another.
This ambition can be fuelled by so many things but, in our experience, most recruitment start-ups desire to grow their agencies are rooted in both the personal pride attached to building a recruitment agency in the way they desire coupled with the professional benefits that often come with expanding your team & offering as a recruitment start-up.
In this blog we aim to examine some of the practicalities around hiring top talent into your recruitment start-up. From what the actual cost of employees are, to the necessary advice around the importance of cash flow when expanding your business.
So why not spend some time exploring some of the practical advice we encourage all our clients to consider before starting on the very exciting journey of expanding their recruitment start-up.
After all, expanding & growing your recruitment start-up is one of the many joys of running your own recruitment agency & therefore it’s right to take a step back & explore some of the practical advice that comes with hiring top talent into your start-up. Provided some of the superstars here at Isotope.
With the hire of a consultant into your business, as a business owner, you naturally gravitated towards thinking about their base salary, commission structure & any other benefits that might be included.
& while it’s hugely important to ensure that the salary & commission is right for that particular employee in that particular role, it’s important to be aware of the additional costs around the base salary.
Things to also consider are employer’s pension contributions (minimum of 3%) and employer’s National Insurance contributions (13.8%), which ultimately mean that actual cost is a little higher to the employer.
As an example, if you took on a consultant with a base salary of £25,000 – the actual cost to your business would be £27,800.06. On a base salary of £30,000, the actual cost is £33,640.06. & so on & so forth.
Luckily, there is currently an employer’s National Insurance allowance in place by HMRC to incentivise employers with taking on new staff. As of the 2020/21 tax year, the allowance covers the first £4,000 in employer’s NI.
Something worth being aware of when you come to the exciting stage of hiring talent into your recruitment startup.
As well as the salary costs mentioned above, you should also think about the added day to day costs of taking an employee on.
Things you would need to consider here would be:
The cost of additional insurances for your business
Additional computer equipment & technical provisions
Additional job board access & CRM licenses
Phone costs
Perhaps even some office space?
& it’s worth noting, following on from our discussions above about commissions payable; any commission payments are subject to the same employer costs mentioned above (namely pension & NI contributions).
Given our experience of our recruitment start-up clients hiring talent into their agencies, we generally look at advise you set aside around 4-6 months’ salary before said employee joins the business.
In our experience, this makes sure you would be able to comfortably pay the associated costs, while allowing time before the employee starts making placements themselves – which should then cover their costs going forward. Call us cynical but we would not advise anything less than – it simply isn’t worth the undue pressure & stress it will bring you if things don’t go the way we all hope!
The accounts team here at Isotope are excel wizards & witches & have spreadsheets, calculators & formulas galore which can help our clients explore & understand the real cost associated with hiring top talent into their agencies.
But asides from the economics, hiring talent into your business has to feel right. This is your business, your identity, your ‘baby’ & therefore anyone that joins you needs to reflect the same values, morals & impeccably high standards you have worked hard to ensure your business is synonymous with.
But I suppose you don’t need us to tell you that!
If you’re interested in learning more about what it takes to run your own recruitment startup, perhaps it’s worth checking our 5 top accounting tips that every recruitment startup needs to think about.
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