Starting your own recruitment business is an exciting step – the chance to take command of your financial future and channel years of experience into a company that you own and control.
But the process of starting up can be clouded by lack of information, misconceptions and inaccuracies.
RecruitHub works daily with experienced recruiters who are exploring their options in entrepreneurship, fielding hundreds of questions on the best way to start and scale a recruitment business.
To help bring clarity to the process, we’re sharing our conversations and tackling 10 of the biggest myths about starting up, head-on.
Without further preamble… let’s get stuck in!
Myth #6 – All investors offer the same thing
For many founders, taking some form of investment is essential in order to make their ventures possible.
Whether it’s some extra help paying the bills in the form of a salary or additional capital to accelerate growth through early hiring, there are plenty of people who start recruitment companies assisted by someone else’s cash.
This doesn’t mean, however, that all investors can be lumped together as ‘offering the same thing’ – neither in terms of the rates and conditions on which they invest, nor the additional value they may add on top of their financial contribution.
In fact, the variation can be staggering at times, with some investors requesting up to four or five times as much equity for the same cash investment as others.
Founders who fail to explore their options fully and ‘shop around’ for the best deal can literally cut themselves off from hundreds of thousands of pounds of future reward – based purely on the terms on which they accept the initial cash boost to get their company started.
Investor partnerships aren’t just about initial equity percentages either – they should also allow for future scenarios as the business grows and evolves.
Often founders are encouraged by investors to build out their ‘wishlists’ for the tools and resources they’d like to have when starting up, as this inflates the initial cash injection required and therefore allows the investor to demand a bigger piece of the pie.
A more collaborative approach is to examine whether the business really needs everything that is scheduled to be funded by start-up capital, or whether it can purchase or fund some of it organically through profit as it begins to generate income.
And, while every investment arrangement should result in a win-win deal, there are certainly routes and approaches which keep the founder’s long-term interests firmly in mind – and others which are tilted heavily in the investors’ favour.
This article is an excerpt from RecruitHub’s Top 10 Recruitment Start-up Myths, breaking down 10 of the most commonly-discussed misconceptions around starting a recruitment business.
