Recruitment is a simple business at its core: get a phone, call people, make placements. But if you’re researching how to start a recruitment agency, one thing’s not so simple: cost.
There’s no general rule on the cost of starting a recruitment agency. Location, agency structure, and even what your business can skip out on (e.g. no rent for a remote team) will affect the calculation.
In this article, we’ll assume that you want to get a lean new recruitment agency off the ground quickly. We’ll cover a recruitment agency’s start-up costs in the UK versus ongoing costs to budget for. Plus we’ve got some tips on business plans, cash flow, and more.
Once the basics are clear, you can make the right investment decisions (or find ways to save). Get started with our rule-of-thumb guide to the costs of setting up a recruitment agency.
How much does it cost to start a recruitment agency in the UK?
Set-up costs
Company registration: £12
Make your new agency official by registering with Companies House. This should only cost as much as a fancy sandwich, and will get your company legally created within a day.
There are a few steps to prepare for company registration:
- Choose an agency name
- Appoint a director
- Choose at least one shareholder
- Note any PSCs (“people with significant control”)
- Create articles of association
You can complete these steps online and use templates for legal documents. Note that if you bring in multiple shareholders or a business partner, getting legal advice is a must.
Recruitment website: Free - £15,000 for design, £3 for hosting, or all-inclusive £250-900 per mo.
For a recruitment website design, costs can come in low:
- The free DIY option
- £100 for a quick build by a friend or freelancer
In the mid-range, you could get a bespoke design for £2500 - £15,000. And the prices go up to £45,000 for a multinational enterprise website (though you’ll probably skip this one as a start-up).
That’s just for design alone. Budget in a few extras for your live website:
- Domain name registration: £7 – £12 p.a.
- Site hosting: £2-12 per mo.
- SSL certificate: ~£4-20 p.a.
With a SaaS model website like Access Volcanic, costs will come in around £250 - 899 per month. This includes most website expenses (like domain name, hosting, and design) in one set price.
A branded website with strong SEO will be a magnet for candidate and client attraction. And it saves on job ad spend later if you set up your own job board. For more on recruitment website features and costs, check out this overview.
Branding and social media: £80-2400
If you’re confident in your design skills, you can create a business logo for free with Canva.
For the less artistically inclined, a logo and visual style guide should be a one-time cost of £80-2400. The range depends on whether you work with a freelance designer or a marketing agency.
On the plus side, social media is free. Setting up your agency’s official LinkedIn page is the next logical step. (Though LinkedIn also has its costs, as we’ll cover below).
Ongoing costs
Recruitment technology: £2,800 - 11,920+ p.a. minimum
“Recruitment technology” is a broad term. It could cover:
- Client Relationship Management (CRM)
- Applicant Tracking System (ATS)
- Timesheet management
- Pay & bill software
- Recruitment analytics tools
- Video interviewing
- CV screening
- And more
The most essential rec tech tools are CRM and ATS platforms. Automating candidate and client relationships saves on admin headache and cost. It’s a much better alternative to Excell hell.
A CRM comes in around £25 per user per month with a vendor like Zoho Recruit, to £80-160 per user per month for an enterprise platform like Bullhorn.
And for an ATS, average costs start at £2,500 p.a. (but can get up to £10,000 p.a.).
It’s hard to generalize on rec tech costs because the right system depends on what you want to get from it. With that said, we’d recommend investing in tech that:
- Is specifically designed for recruitment
- Includes ATS / CRM at a minimum
- Provides reporting on business performance and financial forecasting
For some more guidelines on tech investment, read our CRM Buyer’s Guide.
LinkedIn Recruiter: £1345+ p.a. per license
For a small startup agency, Recruiter Lite (~£1345 p.a. per license) could be a good choice. Its downside is the limits on data ownership and InMails.
The Professional Services and Corporate plans don’t have publicly listed pricing, but they do come with more benefits. For more details on the differences between these tiers, you can read LinkedIn’s guide.
Insurance: £60-300+ per employee p.a.
To protect your agency, sign up for Employers’ Liability insurance. Once you hire one person, it’s legally required to have coverage for up to £5m.
The cost for EL goes up with every employee. On average, you can expect to spend £60-300 per employee p.a.
You might also consider public liability insurance. This would cover any accident, injury or property damage related to contractors’ work.
Public liability insurance costs depend on coverage and the risk level of candidates’ work. We’d recommend getting a quote to find if this is a worthwhile investment.
Job board ads: £70-239 per post
Here’s a small sampling of UK job board costs:
- Glassdoor: £149 for 30 days
- Monster: £130 for 30 days
- Career Builder: £239 for 30 days
- Reed: £150 per posting for six weeks
If you can’t stomach the thought of spending that much to post a JD, consider:
- Adding a job board to your own recruitment website
- Investing in an ATS that comes with job portals
Office costs: £207+ per mo.
There are huge savings to be had if you start up a remote recruitment agency. But if you’re looking to create an in-office agency, the benefits stand out:
- Meeting space for clients and candidates
- More collaboration in-person
- Increased productivity
- Training opportunities for juniors
What it takes to go in-person is:
An office space. If you’re setting up a new recruitment agency, it’s easier to start with the flexibility of a co-working space. A hot desk in London will be around £273 per month on average, while in the rest of the country it’s closer to £202.
Traditional office rent is between £35-120 per sq ft in London alone. Your business might also be on the hook for office equipment. If you’re focused on a quick start, this may not be the best option.
A virtual phone line. Having your own office phone number costs around £5-40 per mo.
Industry memberships: £8.69-249+ per mo.
Networking isn't just for job seekers. Joining a professional network can be a boost to your business.
Popular examples would be the REC (starting at £104 p.a.) and The Recruitment Network (£249 per mo.).
Payroll: £31,462+ per consultant
According to Glassdoor, average salaries for UK recruiters come in at around £31,462. And the business will be paying out commission to consultants, likely in the range of 10-40%.
There are also management and support roles to consider. At the beginning, you may have to focus on hiring billers before spending on admin support. This means wearing many hats as a leader and asking your team to do the same.
Paying your team (not to mention yourself as an owner) can be an enormous expense. Hire lean and be prepared to rely on external funding, i.e. a bank loan, self-funding, or angel investors.
Accountancy: £150-600+ per mo.
Accountants in the UK will charge in the range of £150-600 per month, depending on the size of the company’s accounts.
Getting an accountant to cover payroll services, tax returns and more will add another couple of hundred pounds per month to the bill.
3 things to consider before setting up an agency
Creating a business plan
From sticking to guidelines to securing a bank loan, a business plan helps guide the way.
Here are a few steps to help you get on the right foot:
- Define your business: To start, put down an executive summary (about the agency, its purpose, and strategy) and a personal summary (why you’re qualified to run it). This is the first step to persuading lenders and clients why they should work with your business.
- Identify your niche: Choose your agency’s recruitment specialism and industry, such as healthcare recruitment agency. It’s better to stick close to your own experience, as industry knowledge and connections will come in handy later.
- Set goals: Add in a market and competitor analysis. Explain how your agency will fit in to the current market - what solutions can only your team provide? It’s also a good idea to outline your management team and agency structure.
- Forecast finances: Outline your agency’s costs and forecast what the business might bring in over the next few years.
Maintaining cash flow
Realistically, it could take months or even a year to bring in enough cash to cover agency expenses.
With a few tips, you can get extra cash flow sooner:
- Set up a payroll system to collect on invoices quickly
- Stick to hiring plans to keep in-house payroll under control
- Track average days to invoice payment and include in financial forecasting
- Offer discounted rates for clients who pay within a set number of days
Legal requirements
The most relevant law for UK recruitment agencies is the Employment Agencies Act 1973.
Your business should follow these guidelines:
- Agencies can’t charge candidates for finding them work
- Candidates must be provided with a written contract
- Agencies can’t withhold candidate pay
- Agencies must check that the candidate is suited for the role
- In job ads and candidate communication, be clear that it’s an agency offering the role
Final thoughts
Starting a recruitment agency isn’t for the faint of heart. But with some tips and a plan for cost overhead in mind, you can set up a plan for success.
At the beginning, start-up costs are low. It only takes £12 to register an agency, and you can keep it cheap and cheerful with branding, social media, and recruitment website set-up.
But once your business gets rolling, the costs will add up. New bills will come due: payroll and accountancy, insurance, recruitment technology, and job ad spend, to name some.
Some of these costs can be used as leverage. For example, a CRM/ATS is near-mandatory to track relationships and keep business humming.
On the other hand, you don’t have to pay for everything just because it’s “needed” for recruitment. Expenses like job board spend can be cut with savvy social media strategy and job ads on your own website.
With these cost ranges set out in front of you, order what your business needs like off a set menu. Best of luck with your new agency.