If you’ve ever considered starting your own recruitment company, it’s likely that the chance to earn a bigger portion of the revenue you generate is a major driver.
On average, recruiters typically earn something between 20-50% of their total billings, while that percentage shrinks further for managers as a proportion of their team’s total sales.
It’s tempting to think you could make more if you did it yourself… but how much more?
How can your take-home pay change if you make the jump to running your own firm, and just how high can you push the return you make on long days and hard weeks solving clients’ recruitment problems?
Staying lean vs scaling
A key factor determining how much you can put in your pocket when running your own recruitment business is how quickly you scale the company.
If you enjoy your first few years operating as an independent recruiter, then you’re free to pay yourself as much of the profits as you like from the fee income you generate.
On the RecruitHub platform in 2020 multiple independent founders recorded billing months of £100,000+ (despite the pandemic), with no staff to pay or boss claiming 50%+ of the fees.
Plenty of others earned as much in a quarter of trading as they had in a year as an employee.
Creating a side-by-side comparison
Although the idea of ‘earning more’ sounds appealing, it’s a big decision to jump from the known quantity of a salary and commissions plan into entrepreneurship if the earnings potential remains unclear.
Simply throwing yourself into it and hoping it turns out to be more lucrative is extremely risky, and if you have a family or financial commitments it can quickly get you into difficulties.
RecruitHub works with founders to precisely calculate their projected take-home earnings based on a variety of performance scenarios, helping them clearly see how much they could earn in different scenarios, and by growing their companies in different ways over a number of years.
Value creation
In addition to the cash that business owners can earn from operating their ventures, there is also the additional benefit of wealth creation via shareholding in the company itself.
As recruitment businesses scale and develop, so too can the underlying value of the shares in the agency.
For recruiters comparing their projected earnings over a number of years in employment vs business ownership, it’s important to factor in the added financial benefit of owning and developing the value of the shares you own in your firm, something that – in the event of a successful exit – can ultimately eclipse the total amount you make while running the business.
