Did you know the average recruitment agency makes nearly $174K per recruiter each year?

Whether you want to start a recruiting business or just understand how a recruiting agency can help your company, you’ll be happy you learned from Brianna Rooney.

Brianna Rooney has been running her own recruitment agency for almost 20 years. In fact, she started Techees, which she later sold to a major tech company for seven figures. Her current recruiting venture, TalentPerch, brings in over $240K monthly.

We’ll share how to start a recruitment business, with advice from Brianna on finding clients, finding talent, closing deals, and more.

Keep reading or click on any of the links below to jump to the section that interests you.

Case Study: TalentPerch

Brianna Rooney started as a recruiter for NextPhase Recruiting in 2005. When she was 24, her stepdad asked, “What does your boss do for you that you can’t do for yourself?” Her answer was, “Nothing.”

So she decided to create a recruitment agency, Techees, in 2009.

Techees was a contingency recruiting business, which means she only got paid when she got someone hired. She wanted more reliable income, so she started a recruitment process outsourcing (RPO) company called TalentPerch in 2020. Brianna sold Techees for seven figures the next year.

Since then, Talent Perch has grown and combined RPO and contingency strategies. They now help businesses find engineers ranging from entry level to the executive suite.

Today, Brianna’s recruitment business makes more than $2.9M annually, but it’s not easy to start a recruitment agency. Brianna told us:

Check out our interview with her below:

Build Your Recruiting Skills With UpFlip

Join the UpFlip Academy to learn more from successful business owners like Brianna. Her course on starting a recruiting agency includes dozens of lessons, hours of on-demand videos, and access to a private community.

Types of Recruitment Services

There are several types of recruitment agencies that handle various aspects of the human resources and recruitment process. A recruitment agency niche is defined by its:

• Industry: Tech, nursing, and military recruiting are some of the largest recruitment sectors.
• Position: Agencies might focus on executive, entry-level, or management positions.
• Services: Services often include staffing, recruiting, filling temp-to-hire roles, payroll, and consulting.
• Billing method: Billing may include consignment (commission), variable fees, fixed-rate billing, or fees plus payroll.

We’ll discuss some common types of recruitment agencies next.

Idea #1. Headhunting Agency

A headhunter works for the client to help them find people who meet the criteria for job openings. This type of business will normally be paid a 20% to 30% contingency based on the candidate’s first-year salary after they’re placed in the position.

Idea #2. Staffing Agency

A staffing agency handles the entire recruitment process (except potentially interviews, hiring, and payroll). They will normally charge a premium based on the candidate’s salary.

There are both general and specialized staffing agencies. Positions normally have a set contract time, but they might also be temp-to-hire arrangements. Brianna told us:

Idea #3. Talent Agency

A talent agency focuses on recruiting professionals and finding jobs. The difference between these and other recruiters is that they represent the talent, not the eventual employee.

Therefore, their goal is to help their clients find the best employer possible.

Idea #4. Startup Recruiter

This niche of the recruitment business focuses on helping new companies define their needs and find the right talent. Recruiters in this niche may need to understand unique areas of human resources like stock compensation.

This business model may be more risky but could have higher rewards. Given the salary might be mostly stock options, your recruitment business can request some or all of your pay in stock options as well.

While this is a gamble, a successful recruitment agency could see a windfall if they get options in a company that becomes worth billions.

Idea #5. Executive Recruitment Business

Recruitment agencies with a large network of high-net-worth individuals may want to start an executive recruitment business. This business model can have much longer recruitment processes, but the placement fees are normally much larger.

Idea #6. Contingency Business

Recruitment agencies using this method only get paid when you fill a position. This can be an easy way to start your own recruitment business, but you’ll have to hustle to earn your commissions, and sometimes you’ll put in a lot of work but not be paid.

Idea #7. Recruiting Process Outsourcing Business

These types of recruitment agencies get paid for the services they manage. They are more like a business partner who takes over the recruiting process for their clients. It is more regular pay than contingency businesses but may not be as lucrative per position placed.

Idea #8. Diversity Hiring

The human resource industry has focused on diversity hiring for quite some time. Many talent acquisition specialists will need to help companies build diverse talent pools to support their equal opportunity goals.

Make sure to research laws before offering these services. It’s illegal to discriminate based on protected classes, and looking for a candidate from a specific protected category could open up both your recruitment business and your clients to lawsuits.

How to Become a Recruiter

According to Indeed, there are no definite requirements to start recruiting, but many employers require a bachelor’s degree. It is also helpful to have human resources experience and work history before you start a recruitment agency, but it’s not required.

The main thing you’ll need to become a recruiter is a large network of people who you can refer to clients. Brianna told us:

For those of you who find her quote contradictory, it’s much easier to find someone who meets the job requirements when you have a huge database than if you are trying to find them once you have a role to fill.

How to Start a Recruiting Business in 11 Steps

Here are the basic steps you’ll need to follow to start a recruiting agency:

1. Create a business plan
2. Choose a business name
3. Create a legal structure
4. Secure funding
5. Set up a LinkedIn Recruiter profile
6. Find clients
7. Create job descriptions
8. Find talent
9. Review resumes
10. Prepare talent for interviews
11. Negotiate offers

Step #1. Create a Business Plan

You’ll want to define your business idea and lay out what you’ll do when starting a recruiting agency. At a minimum, you’ll want to:

• Research the industry: You want to do some market research to understand how much money your new agency can make.
• Identify your target audience: Identify potential clients based on their industries and needs.
• Research competitors: Establish how you will stand out from other competitors in the field.
• Define your services: Create a list of services you’ll offer.
• Create a pricing structure: Decide how you’ll charge for recruitment services.
• Find recruiting tools: Decide what tools you will use and how much they will cost.
• Establish funding needs: Create a budget to plan how you’ll spend money as you scale your business.

Brianna told us:

She also recommends keeping a diary:

Step #2. Choose a Business Name

A business name is one of the things you might get stuck on when you start a recruiting agency. Brianna explained:

You can also use our business name generator to come up with ideas and automatically check whether the associated domains are available.

Step #3. Create Legal Structures

Whether you’re starting a recruitment company from home or providing staffing agency services, you’ll need to choose a business structure.

Brianna and most business owners agree new businesses should start with an LLC. Then when you meet business goals, you can convert to a corporation if you need to.

You’ll also need an employer identification number from the Internal Revenue Service.

Step #4. Secure Funding

While you don’t need a lot of money to start helping people and companies fill roles, you will need some funding when thinking about starting a recruiting company.

At a minimum, you’ll need the funds for:

• Business registration
• Business license
• Website
• Recruitment technology
• Three months of living expenses

Step #5. Create a LinkedIn Recruitment Profile

One of the key tools for a successful recruitment agency is LinkedIn. Up to 95% of recruitment agencies use it, and there’s a special service for recruiters. According to Kinsta, six people are hired every minute from LinkedIn recruitment efforts.

Step #6. Find Clients

Recruitment businesses need clients. Depending on your recruitment agency, your clients may be companies, professionals, or both.

A new recruitment agency can use numerous tools to find potential clients. In addition to LinkedIn, you should also consider using the following for your agency:

• Content marketing: Creating content will make it easier to attract new business clients and relevant candidates.
• Social media: Sharing your content on social media will allow you to reach a wider audience.
• Public relations: Publishing press releases and getting your recruitment agency on TV and podcasts are great marketing strategies.
• Search engine optimization (SEO): A recruitment agency can benefit from optimizing its website rank highly for popular search terms. Consult an SEO expert and pick relevant keywords to go after.

One of Brianna’s weaknesses with the whole recruitment process was getting referrals. She thought people would refer her just because she placed a candidate, but she explained:

Brianna also shared that you can get government contracts after getting proper certification from SAM.gov.

Step #7. Create Job Descriptions

Recruitment agencies commonly help their clients construct effective job descriptions. Like other types of marketing, marketing an open position requires understanding the types of keywords job applicants search for. Include them while staying faithful to the job requirements.

Make sure to go beyond describing the job. Help people understand what is different about the company’s culture and why people will enjoy working for it.

Pro Tip: You don’t want to include employer branding in the job description when working on contingency because candidates might try to bypass you.

Step #8. Find Talent

You’ll want to find multiple candidates for any position so that you have a higher probability of filling the position. To widen your net, some of the places you’ll want to post jobs include:

• LinkedIn: LinkedIn is one of the best job boards when you’re recruiting for executive positions or college students. Only 2% of users don’t have any college education.
• Job boards: Betterteam has a list of 27 job boards that are useful when starting a recruitment agency. You can also use their site to post on multiple job boards at once.
• Unemployment offices: Unemployment offices can be a great way of finding available candidates quickly.
• Personal connections: You should always share open positions with your network because they might know (or be) an eligible applicant.

Step #9. Review Resumes

When you start a recruitment agency, you’ll want to review resumes to understand how well the candidates match the job posting.

Be sure to independently verify their resumes to the best of your ability. Some people fabricate or inflate their job history to look like the best candidate.

For example, if someone’s resume and LinkedIn are completely different, be cautious. If someone claims to have held executive positions with large companies, search for their names on websites and even news articles. As a new recruitment business, sending unqualified or dishonest candidates could harm your reputation.

Step #10. Prepare Talent for Interviews

It’s not enough for recruiting agencies to find talent. You’ll also need to prepare them for the interview process. When you’re first starting out, you probably won’t know how each company interviews, but you can train candidates with general interview tips and mock interviews.

You can also ask candidates who have interviewed with a company about the interview process and document what the interview was like. As you gather more information, you’ll learn more about what the company wants. Applicant tracking will also help you understand what you need to help the candidate improve.

Step #11. Negotiate Offers

You’ll also be responsible for helping both the business and the applicant establish realistic targets for an annual salary and benefits. Research the market for the position the business is looking to fill. Finding a new employee in a low-unemployment environment may mean suggesting a high hourly rate and providing add-ons that create extra value for an employee.

Meanwhile, job seekers may have unrealistic expectations about how much the industry pays and how valuable their skills are. You’ll have to help them understand the types of positions they qualify for, what skills they lack, and how they can increase their value.

How to Start a Recruitment Agency With No Experience

So you’re considering starting a recruitment agency with no experience? It will be a challenge, but don’t let that stop you if you think you’ll be good at it. You might consider some of these ways of finding potential customers:

• Contingencies: Provide your services as a commission based on results instead of a flat upfront fee. This will help you get clients when you start.
• Cold calling: You can reach out to businesses and offer to help them fill the roles they have listed. A business owner might be cautious of this approach, but if you offer a contingency pricing model, you can remove much of that hesitation.
• Freelancing: You can find freelancing jobs for clients and only charge if you place a candidate. As you place people, you’ll get reviews and start building a reputation.
• Working with a recruiter: Some recruiters pay others for referring clients. This can be a good way to get started and learn the ropes.
• Working with job seekers: Help job seekers create resumes, find positions, do market research, and prepare for interviews.

How Do Recruitment Agencies Make Money?

When you’re ready to start your own recruitment agency, you’ll want to choose your billing method. Whether you charge contingency or offer full-cycle recruiting, some of the most common ways to charge include the following:

• Percentage: Many recruiters charge based on a percentage of the first-year salary for each job filled. The percentage will vary based on the services you provide and the salary level of the position.
• Fixed fee: This can be a flat success fee, retainer-plus-remaining fee, or piecemeal based on the services needed.
• Hourly: Some people charge a flat hourly fee, but this isn’t the most beneficial way to charge. Certain positions are easy to fill, while others are more difficult. The hourly fee model doesn’t always capture the value added from the service.

Recruiting and hiring can be a time- and money-intensive process. The Society for Human Resource Management found that the average cost to hire a new employee is $4,700.

Senior positions cost more to fill, so many companies are willing to pay for a recruitment agency to help find a general manager or above but not entry-level employees.

Start Your Successful Recruitment Agency

Think you’re ready to start your own recruitment agency?

If you’re not quite ready, that’s okay. Check out Brianna Rooney’s UpFlip Academy course to learn how to become a highly successful recruiter. She shares all the information you need to develop your skills and become successful.

What is your experience with recruiting and hiring?