Recruiter - Special reports: Start-ups 2021 Sept/Oct 2021

Special Report

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The UK is still Europe’s leading start-up nation, having attracted €17.2bn (£14.67bn) of investment in the first half of 2021, according to start-up news and information service Sifted.eu.

Start-ups are big news, with HR/recruitment tech start-ups such as Beamery and Hibob proving attractive to investors. And start-ups are such a part of the landscape that a platform catering to start-ups themselves, which claims to automate every step of a funding round, is available now to help cut the paperwork.

Are you planning to make news – or even a comfortable living – by setting out a recruitment business on your own in the next few months?

Read on to learn about the landscape of the UK recruitment industry – some do’s and don’ts, signposting to tax relief, a case study of an ambitious new start-up and insight from experienced hands in the start-up arena.

Get ready to make 2022 your year with your own recruitment business.

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EDITOR’S COMMENT

When is the right time for recruiters to start a new recruitment business? With many competitors vying for a slice of the recruitment pie, now might just be the right time to take the plunge

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DeeDee Doke Editor Recruiter/ recruiter.co.uk 32 RECRUITER

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t’s hard to think of anything good coming out of the pandemic, but as the world slowly attempts to right itself, it’s worth asking what kind of environment it has created for recruitment start-ups and whether 2021-22 is a good time to go it alone.

Paul Jacobs, co-founder and director of Jump Advisory, gives an unequivocal ‘yes’. “We’re seeing and will continue to see a huge number of start-ups, not just in our own industry but across every single industry sector,” he says. “It’s a brilliant time to set up a new business because we are already coming into one of the fastest economic recoveries that this country has seen since World War II. Employers are coming back strongly and trying to make up for lost time and lost profits. They’re scaling up and taking on more staff.”

Jacobs himself set up and launched Jump Advisory, a management consultancy business serving the recruitment sector, last September during the height of the pandemic and has been in business for about 11 months. “ ‘If not now, then when?’ is the cliche doing the rounds,” he says.

“We’re seeing a lot of movement in the labour market. People are looking for new jobs to feel secure and safe, and, of course, you’ve got the continuing Brexit situation with a shortage of staff across multiple sectors.”

According to Joe Davis, founder of Recruitment Start-up Services, it’s the shift to online that has only been heightened by the pandemic that is working in favour of the small, nascent operator. “The current economic climate has made every company, both large and small, think long and hard of ways in which they can reduce their overheads,” he says. “Top of their agenda is finding and utilising a more cost-effective recruitment service instead of paying the exorbitant fees charged by traditional high-street recruitment agencies.”

For Davis, operating a home-based recruitment agency that generates high-profit margins, even after reducing the fees charged to clients, coupled with minimal overheads and

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“The current economic climate has made every company, both large and small, think long and hard of ways in which they can reduce their overheads” JOE DAVIS, Founder of Recruitment Start-up Services

low running costs, allows recruitment start-ups to undercut and even take business from well-established recruitment companies.

It’s definitely a good time to strike out on your own then, but you need absolute self-belief, warns Alex Niarchos, investment director at Recruitment Entrepreneur, a provider of recruitment business funding.

“With roughly 9,000 recruitment companies set up at Companies House last year, you’ve got to completely

believe in what you’re trying to achieve, and that you can effectively generate your own income and business, because there are just so many others out there trying to do the same thing,” he says.

Admittedly, trying to find something that’s completely distinct and different is virtually impossible in such a mature industry, so it comes down to details

and content. Do your research and focus on specifics, advises Jacobs. “Look at opportunities where you’re specialising; where you’re providing a real, expert, deep experience; where you can find candidates who are in demand and capable of doing work in very specific spaces. It’s the old cliche of operating about half an inch wide and a mile deep.”

Case study: Talent Today Gary Wills is well placed to talk personally and authoritatively about the start-up landscape, having launched his own recruitment company called Talent Today in November of last year. His business fasttracks the recruitment process by shortlisting and videointerviewing candidates for IT programmes of work.

Not everyone was urging him

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on. “I had a few people telling me to ride the storm out, go back to my employer and just take the money,” he says. “But for some reason I just felt that if I could make it in the worst of times, then I could make it anytime. So, I decided to hand my notice in and just go for it.”

Wills admits to spreading his net a bit too wide at the outset.

“We went quite generic in terms

of our target audience to start with, but now I realise how important it is to occupy a niche, which is why we’re exclusively specialising in the IT project delivery world now.”

However, he did do his homework in terms of what he felt was lacking in the recruitment market and the value-add he could bring. “I looked around and found it was

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Niarchos couldn’t agree more, believing that sector-specific offerings are without question a faster way to generate returns. “You often get higher fees in those markets and, because they are more niche markets, they are obviously harder for clients to find candidates for themselves, and therefore represent an opportunity to outsource that provision to a recruiter,” he says. “Where you’ve got generic offerings –and they do exist, and people still do make money from them – the reality is that they are lower-fees-higher-volume-type opportunities.”

As for which specific sectors currently offer rich pickings, it’s simply a case of take your pick, bar the obvious likes of aviation and travel hit hard by the pandemic. As a funding provider, Niarchos admits to being approached from just about every sector. “We’re very key keen to engage with all markets, but obviously recruitment in life sciences and medical, and supply chain and logistics are some of the areas where we’re seeing particularly fast growth. Interestingly, hospitality at the more senior end is also recovering quickly,” he says.

In trying to keep us all working from home through various lockdowns and office closures, the last year has undeniably been driven by technology, which has also created a very active sector, says Wendy McDougall, CEO and founder of recruitment and marketing platform Firefish Software.

a very cold experience on the video side of things,” he says. “Candidates were being faced with automated questions, with recruiters interviewing candidates but not actually being there present. We conduct true in-person interviews rather than have impersonal prompts on a screen. I think a lot of recruiters say they do video recruitment, but it’s quite a lazy form of it.”

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“With roughly 9,000 recruitment companies set up at Companies House last year, you’ve got to completely believe in what you’re trying to achieve” ALEX NIARCHOS, Investment director at Recruitment Entrepreneur

He also decided to go after the IT project delivery space after having noticed there had been no activity in this sector for a good 12 months.

“My thinking was that there’s always going to be a need for digital transformation or business change, so although companies weren’t spending initially in the pandemic, I knew they were going to start spending at some point.”

And what advice would

“You’ve also got a big drive on renewables again with the G20 conference coming up,” she adds, “and biotech’s doing exceptionally well.”

But McDougall adds a cautionary note: “A good recruiter has to know their sector and their niche to survive.

So don’t jump at something without thinking. This is an industry that you’ve got to make your own for the next 10 to 15 years that you’re in business, so you’ve got to enjoy it.

That’s more important than just picking a sector for the sake of it.”

Ask Jacobs about viable sectors, and he agrees that almost everywhere is experiencing huge growth, but believes the bigger question is where the candidates are going to come from. “We are in a candidate-short market and that’s not going to change anytime soon,” he says. “Every recruitment business, large and small, is being challenged by finding enough candidates to fulfil the requirements of their clients.” And let’s not forget that the new recruiters themselves may face difficulties sourcing their own staff as they scale up in such an environment.

What there isn’t going to be is a shortage of other start-ups looking to get their slice of the recruitment pie.

Whatever sector a start-up is planning to target, many competitors will already be vying for that space.

Running a business clearly isn’t for the fainthearted, but as Jacobs says above, if not now, then when? ●

Wills offer anyone else thinking of going it alone at this time? “You’ve got to ask yourself if you can truly get new business in your current market,” he says, pointing out that many people striking out from their employers will also have non-compete clauses in place prohibiting them from sourcing particular clients for a time. “You’ve got to be able to answer the fundamental question of why would people

want to work with you. What makes you different?”

Also make sure that you have a runway of cash, he counsels.

“You’ve got to have at least six to nine months of money in the bank to be able to pay yourself, your family and your mortgage, because the cash doesn’t come in straightaway. If you can remove the financial pressure and can give the business your all, you’re more likely to succeed.”

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CONGRATULATIONS TO OUR 2021

Agency Recruitment Leader of the Year Sponsored by RSM-UK

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THE RIGHT SET-UP FOR YOUR START-UP It may be a good time to go it alone, but to be successful means putting in the legwork first, say the experts tart-up founders typically have one thing on their minds: securing their first deal. And after that it’s the next deal and the next deal… Of course, getting business in and cash flowing is critically important but as a business owner, you are also responsible for the nuts and bolts of business operations – tax, legalities, compliance, funding and more.

Recruiters need to adopt a totally

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new mindset and approach to work when they strike out on their own.

Helen Phillips, director at The Contract Doctor, an organisation that provides legal, compliance and back-office

services to recruitment agencies and staffing agencies, says: “You’re not a recruiter anymore, you are a business owner… The biggest thing people need to learn when setting up a company is

The UK start-up sector

4.2% 1,843 Growth in new companies

Companies founded every day

672,890 72 New companies founded

Companies founded every hour

Source: Fundsquire https://fundsquire.co.uk/startup-statistics/

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Enterprise Investment Scheme or the Enterprise Investment Scheme (see column, right). It can be harder to draw on these schemes once you’ve started trading.

A classic mistake that new business owners often make, according to Phillips, is setting their share value at a meaningless figure. “I spoke to someone who had incorporated their company with a million shares valued at £100 each. A lot of people don’t even know what a nominal share is – they don’t think about it. You ask people how they come up with the figure they have come up with and they say, ‘Because it sounds good’.”

Although share values can be adjusted later, it does take a bit of work and the tax office may start sniffing around if there are unexplained irregularities. This kind of situation can be avoided by getting the financial set-up right at the very beginning.

TOP TIPS FOR NEW BUSINESS OWNERS Neil Denniss: Think through your business plan carefully and not with rose-tinted spectacles Put contingency plans in place so that you don’t run out of cash Take suitable advice at the right time

Get the right advice

mindset as there are a lot more obligations than just earning money.”

Get the right structure Start by identifying the best way to structure your company. Is it as a sole trader or as a limited company? What’s corporation tax and will you be liable further down the line? Will you be VAT registered or not? And so on. It’s important that the financials are sorted before you set up the company and register the name even, so that you trade on terms that will work best for you now and in the future. Leave it until the tills have started ringing, and you may regret it.

For example, if you set the business up correctly, there’s the potential to take advantage of tax-efficient investment options, such as Seed

Yet not all business founders seek professional advice before starting out. Phillips says a surprisingly high number of recruitment start-ups ignore the basics and launch themselves straight in. “A lot of people bury their heads in the sand,” she says. “Many aren’t interested in it, and don’t realise it’s important – they think it’s only admin and it doesn’t mean anything. They only come to us after something has gone horrifically wrong.”

All indices suggest that now is a good time for recruiters who want to go it alone to make their move. But as Neil Denniss, a founding partner of Bespoke Tax Accountants, says, it only works if people put in the legwork to understand what

TAX RELIEF FOR START-UPS The Seed Enterprise Investment Scheme (SEIS) targets investment for early-stage companies – those with less than two years of trading history and 25 employees.

Individual investors – no companies – can invest up to £100k in a SEIS business per tax year. SEIS companies can accept no more than £150k SEIS funding total.

SEIS is not a source of venture capital; it is an incentive offering. The government does not provide cash. Instead SEIS provides tax relief to investors who buy shares in qualifying businesses. The intention is for companies to find it easier to attract the investment they need.

There are three tax reliefs available under SEIS, each requiring that the investor is an individual who is UK tax resident. The three reliefs are: Income tax relief: Limited to £50k (£100k at 50%) per investor. The income tax can be claimed in either the tax year in which the investment was made or the preceding tax year.

Capital Gains Tax exemption sale of SEIS shares: Any increase in value of the SEIS shares is exempted from Capital Gains Tax so long as the shares qualified for and retained their income tax relief for at least three years.

Capital Gains Tax relief on other disposals: The capital gains on disposals of other assets can be partly exempted from CGT where the gain is matched with a SEIS investment in the same year. A maximum of 50% of the SEIS investment can be matched with a relevant gain. For example, an investment of £25k can be matched with a capital gain of £12.5k in the same tax year in which the income tax relief is claimed.

Among the many conditions to be met by the company is it must be an unquoted trading company and the company’s gross asset value cannot be more than £200k before the share issue.

Sources: Financial information company Swoop and Bespoke Tax Accountants

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it means to run a business on a practical level.

“There’s going to be an awful lot of people setting up a business who are going to have to be ‘Jack of all trades’ in areas they haven’t been trained in, who don’t understand how a company works, how a sole trader works… You are learning all this on the job and experience can be useful, but it can also be expensive if it goes wrong,” says Denniss.

Like Phillips, Denniss advises that new business owners take professional advice early on. But in his experience, finances are often tight for start-up professionals, leading many to cut costs where they can. They either decide to manage tax and the other financials themselves or they put off sorting it out until the money is coming in. “They make a cost analysis rather than a value analysis,” he says.

“And like anything in life, if you buy the cheapest or cut costs, it either saves you money or ends up being very expensive for you.”

One problem that Denniss sees time and time again is two or more business partners setting up without formalising how they intend to do business or how they will deal with various scenarios that could arise further down the line.

Partners need to draw up a shareholders’ agreement when they set up the business so that differences and disputes can be resolved easily, Denniss says: “It’s what I call the birth, the life and the death of the business – the foundations of the business, what happens if someone wants to sell out…

You need to cover all of this in the shareholder’s agreement so that everyone has a good feel for the rules of the game and people play by the rules.

And if they don’t play by the rules, then you have the rules book to refer to.”

When shareholders disagree about how to run a business or the direction it needs to take, it can cause ruptures that are impossible to heal. It can be terminal for a business. And

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TOP TIPS FOR NEW BUSINESS OWNERS Helen Phillips: Realise that nothing happens overnight with back-office processes Planning is essential – don’t wait for a deal to get your processes in place Don’t set yourself up for failure – get the basics in place Know every area of your business and what other people do in case that person leaves or is ill and you must do their job

if a shareholder’s agreement isn’t in place and the business partners can’t resolve the situation amicably and fairly themselves, then Denniss says it typically ends in the law courts. “The fallout is like a divorce. There’s a lot of acrimony, fairness doesn’t necessarily prevail, and it’s the lawyers who win.”

On the horizon, Denniss predicts, is a change to when assessments are made for tax. Currently, everything happens at year end, but because of Covid-19, the government is now keen to get real-time information on business finances. “I think we will get to the point of monthly tax bills, based on real-time information,” says Denniss. “We know it’s in the wind, and I can see it happening in three to five years’ time.” ●

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Get the right agreement

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A DV E RTO RIA L ADVERTORIA

RIP TO THE TRADITIONAL CV Video is a game changer in the world of work. So why waste time with written CVs when a 60-second film says so much more You’ve heard the saying a picture is worth 1,000 words? Well, a one-minute video is worth 1.8 million words according to Forrester Research. And in the world of recruitment those 60 seconds now add up to staggering savings in terms of time and costs, thanks to an innovative new app that’s set to revolutionise the way recruiters work forever.

1 Minute CV harnesses the power of video to provide recruiters with a platform to create job postings that are sent to candidate app users based on their preferences and skill set. Applicants can create video CVs answering the questions posed, which recruiters can view, rate and save to a shortlist.

If you’ve ever been wowed by an amazing written CV, then left underwhelmed when meeting the applicant in person, a 1 Minute CV will give you a far more holistic view of the person behind the pdf. Reducing the average 40 days’ searching for the perfect candidate to just 10, and cutting the average £4,000 cost by up to 700%.1

Built to disrupt The 1 Minute CV app’s inventor Kevin Barry has spent his working life thinking and looking at business challenges in a different way.

Helping to successfully transform the fortunes of operations from the North Sea to Colombia via Japan then Kuwait.

When he was at a turning point in his own career and found the experience of having a professionally written CV

7 reasons to use 1 Minute CV Find top applicants 4x faster Make informed decisions Avoid unconscious bias Rate and shortlist with ease View instant video references Arrange interviews in the app’s calendar Share your shortlist with clients uninspiring – and expensive – his mantra “there must be a better way of doing this” came into play.

Supported by some of the best technical and creative minds in the business, Kevin set himself the task of developing an app “deliberately berately built to tdated disrupt” age-old and outdated recruitment practices. arity of Leveraging the popularity n obvious route. short-form video was an ople person”, And as a committed “people top of his mind throughout the app’s development was that 1 Minute CV should put

people first and allow each candidate’s personality to shine through.

“It’s built to put the applicant to the forefront,” he emphasises. Free and simple for them to use, and enabling employers to see the person as well as their achievements.

Recruiters are compelled to reply (albeit with the minimum of effort) when videos are submitted, giving applicants the recognition that Kevin believes is essential to inject greater respect into the recruitment process.

1 Minute CV recently launched in Apple's App store and Google play store.

And the next step in its evolution will be a 1 Minute CV Doctor consultation to ensure candidates are putting their best face forward.

Join the revolution Watching video is the top choice for consuming information in 2021.2 With consumers predicted to spend $6.78bn via social apps and 548bn hours live streaming this year.3 In the recruitment world, all current tech trends indicate that video CVs are the inevitable next step in the job application process, with 1 Minute CV leading the way.

So why rely on paper CVs? Join 1 Minute CV today and be part of the recruitment revolution.

Find out more at www.1mincv.com Sources: 1 Statista; 2 Hubspot; 3 App Annie

89% of employers would 8 watch a video CV (Source: Vault Inc)

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or Ben Broughton, the months since March 2021, when he left permanent employment, have been truly exciting. He knows all about growing a business, having grown Premier Group Recruitment from a single office business to multiple offices.

But this is the first time he has built his own business.

“Building something brand new and having a completely blank canvas has been amazing. I’m taking everything I’ve learnt over the past 23 years and applying it here. The most important lesson I learnt and am applying is to look after your people, which is why our slogan is People First. Without your people, you are nothing.”

The best teams Broughton has worked with in his 23-year career have always been diverse, made up of people from different backgrounds, at different stages of their working lives and with different perspectives.

So, when he left his role as Premier Group Recruitment’s MD, a position he had held for over 14 years, he decided

F

Starting from scratch is something Ben Broughton knows all about

diversity was going to be a key focus for his next venture. Combine that purpose with his background in recruitment and Primis was born, a new company providing talent solutions to the technology sector in the UK and the US. Primis is focusing on the tech start-up market because most larger organisations will already have a diversity & inclusion lead. Then the Primis vision is to be ‘the fastest-growing privately owned talent and solution provider to the technology sector operating across the UK, US and Europe before the end of 2025’. What Broughton wants is to be turning businesses away by then. He says it will be a case of “If you’re not taking diversity and inclusion seriously, then we are not going to work with you.”

Launched in early September, Primis is on a mission ‘to improve the D&I landscape within the technology sector’. When a client engages with Primis, they sign up to three two-hour workshops. The first is the Unconscious Bias Workshop. “We get people to open up their minds,” says Broughton. “We get them to open up about their own experiences, putting them into break out rooms to talk about what their unconscious bias are.”

The second workshop is on Attracting and Retaining Diverse Talent and it’s aimed at anyone with recruitment responsibilities. It covers aspects such as how to write job adverts that will attract a diverse range of candidates and how to become a change agent.

The third workshop is Diversity and Inclusion Training for recruiters, covering areas such as barriers to inclusive hiring and how businesses portray themselves.

Primis prides itself on its family-friendly focus. Broughton has two children and wants to be able to drop them and pick them up from school regularly and thinks it should be the same for all employees. He believes any modern business has to offer flexible working patterns and good maternity and paternity schemes.

“Flexibility is key. We don’t live to work we work to live.” ●

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