There is no single correct path

For the last few decades I have had the pleasure of meeting a lot of Staffing and Recruitment Agency founders and leaders. And I’ve come to admire the industry for the freedom it provides.

Every recruitment agency founder is in the fortunate position of being able to choose their unique path within the industry. And, in most instances, create a rewarding business venture. But that freedom is both the opportunity and the risk.

Consider the variation of recruitment agencies.

• City center, suburban, regional.  

• Perm recruitment, temp recruitment or both. 

• Pure recruitment, or complex solution services.  

• Sole trader business up to multi-billion-dollar corporates.  

• Geographic specialists or state / national providers. 

• Locally owned, publicly listed, private equity backed, subsidiaries of multinationals. 

• Short term equity plays through to multi-generation ownership. 

• And of course, specialisation – industry sectors, employment type, level of role and so on.

Is there another services industry that allows such variety in a relatively unregulated environment?

Best Practice?

All of this freedom has implications.  There is always a real danger of the business drifting without a set course, without strategic intent.

There are few guardrails to guide the new founder, often relying on experience gained in previous employment in the industry. But this previous experience only helps guide a process and a comfort level for the function of recruitment that the business will deliver.  

That does not contribute to the business of recruitment that is being established. For most founders of recruitment agencies, this is their first venture into being a shareholder in a business.  

The list of decisions that impact the business is enormous.

• One or more shareholders? Structuring ownership of shares?

• How the business will be financed

• What are the company values? And brand?

• How to handle Technology decisions? Offshoring? Payroll and accounts, and Tax?

• Legislative obligations?

And these decisions have not addressed what I consider to be the major defining decisions about the business. How is the relationship between the business and personal circumstances are defined.

Given every founder’s very real personal and family life, what is possible to give to this business. And what does it need to give back? As you can imagine, a single person with no mortgage is in a very different position to someone with children and a mortgage. 

That is only part of the important external influence. Personal values and characteristics are important. What are your personal strengths? What do you need to hire or partner with to support your strengths. Can you sustain the grind of being a business owner? What is your medium-term goal? Are you looking for a business that maximise medium-term freedom, or are you looking to commit long term to build an iconic business?

And that is just some of the decisions to get started. Every time there is a change in the business (such as growth), many of these decisions need re-evaluation.

The enormity of this leaves me a bit cynical for those promoting best practice for businesses as though there is a cookie-cutter solution. No doubt there are some that would fit into every defined business model, but there are many more that would not. Best practice without context is actively dangerous in this industry.

Choices are required

There is no single correct path for any business in the staffing and recruitment industry.

That means conscious decisions are required, sometimes determining what is not right for you more than defining with clarity what is right. Choosing amongst the many choices is the magic of business ownership. And often these choices need to be made in a timely (not hasty) manner with incomplete data.

What is dangerous is drifting without conscious decisions.  There is a saying that if you don’t make decisions about your business, it will make them for you.  

You do not want to own a business that is not right for you or those that are relying on the business you have developed. Conscious choice amongst the many options is required.

HHMC Global operates within the staffing and recruitment industry on equity transactions, market valuations and business growth advisory. Contact us to discuss further.