How to start a recruitment agency
To start a recruitment agency, pick a niche you know, check your restrictive covenants, set up a company, get insurance, write your terms of business, set up an ATS and LinkedIn, then win your first clients. A solo agency costs about £5,000 to £8,000 in year one, and most make a first placement within three months.
By Brett Iredale, Founder and CEO of Lovelio. Updated
Starting your own agency is the best move many good recruiters ever make. You keep the whole fee, choose your clients and build something you own. This guide covers every step, what each one costs in the UK, Australia and the US, the licence rules, and a calculator that shows when you will be back in profit.
The 7 steps
1.Pick your niche
Choose the market you already know: the roles, the clients and the candidates. A tight niche makes you the obvious call for both sides and makes your first clients easier to win.
Cost: NothingTime: 1 week
2.Check your restrictive covenants
Read your current contract for non-compete, non-solicit and non-dealing clauses. Know exactly which clients and candidates you can call, and from when. A lawyer can read it in an hour.
Cost: Free, or a few hundred for a lawyerTime: 1 to 2 days
3.Set up your company
Register a limited company and open a business bank account. In the UK that is Companies House, in Australia ASIC, in the US your state.
Cost: £100 UK, A$636 Australia, $50 to $500 USTime: 1 day
4.Get insured and registered
Take out professional indemnity and public liability insurance, plus employers liability once you hire. In the UK, pay the ICO data protection fee before you hold a single CV.
Cost: About £1,000 to £1,500 a yearTime: 2 to 3 days
5.Write your terms of business and set your fee
Your terms cover your fee, the rebate if a hire leaves early, payment terms and what happens if a client hires someone you introduced. Most perm agencies charge 15% to 25% of first-year salary.
Cost: Free with a template, more with a lawyerTime: 2 days
6.Set up your ATS, email and LinkedIn
Put every client, candidate and call in one place from day one. Your database is the business you will one day sell. Add a domain email and LinkedIn Recruiter Lite.
Cost: Lovelio Solo free for 2 months on Lovelio LaunchTime: 1 day
7.Win your first clients and make your first placement
Call the hiring managers you know, within what your covenants allow. Take a few roles you can fill well, send strong shortlists fast, and bill your first fee.
Cost: Your timeTime: 4 to 12 weeks
What it costs in year one
A solo agency needs no office and very little kit. These are typical first-year costs for one person working from home.
| Topic | UK | Australia | US |
|---|---|---|---|
| Company set-up | £100 at Companies House | A$636 at ASIC | $50 to $500, by state |
| Data protection | £52 a year to the ICO | Nothing to register | Nothing to register |
| Insurance | About £1,000 to £1,500 a year | About A$1,500 to A$2,500 a year | About $1,500 to $3,000 a year |
| ATS | Free for 2 months on Lovelio Launch | Free for 2 months on Lovelio Launch | Free for 2 months on Lovelio Launch |
| Job boards | Free listings to start, paid ads when a role needs one | Free listings to start, SEEK ads when a role needs one | Free listings to start, paid ads when a role needs one |
| LinkedIn Recruiter Lite | About £1,500 a year | About A$2,800 a year | About $2,000 a year |
| Laptop and phone | £1,000 to £2,000 once | A$1,500 to A$3,000 once | $1,000 to $2,500 once |
| Accountant | £1,000 to £2,000 a year | A$2,000 to A$4,000 a year | $1,500 to $3,000 a year |
| Year one total | About £5,000 to £8,000 | About A$9,000 to A$13,000 | About $7,000 to $11,000 |
When you will be back in profit
Put in your own numbers. The figures start at a typical solo perm desk for each market.
- Fee per placement
- £8,100
- Back in profit
- Month 3
- Year one, after costs
- £72,300
Do you need a licence?
For most new agencies, no. You need a licence only for some kinds of work in some places.
- UK: no licence for a recruitment agency. You follow the Conduct of Employment Agencies and Employment Businesses Regulations 2003, pay the ICO data protection fee, and need a GLAA licence only to supply workers into farming, food processing, packaging or shellfish gathering.
- Australia: no licence for permanent recruitment anywhere. Supplying temps or contractors (labour hire) needs a licence in Queensland, Victoria, South Australia and the ACT. New South Wales, Western Australia, Tasmania and the Northern Territory have no labour hire licence.
- US: most states need no licence for an agency paid by employers. A few states, New York among them, license employment agencies, so check with your state labor department before your first placement.
What I would do if I started again tomorrow
I have spent more than 20 years building software for recruitment agencies and watching which new agencies make it. These are the habits the good ones share.
- Pick one niche and own it. Be the first name a hiring manager thinks of for that role.
- Keep costs tiny for six months. No office, no paid boards until a role needs one, no long contracts.
- Spend the first two hours of every day talking to clients. Candidates come easier than jobs.
- Put every call, CV and conversation in your ATS from day one. That database is what makes the agency worth something.
- Add contract placements early if your market allows. Weekly margin smooths the months between perm fees.
- Write your terms of business before your first role, so your first fee is paid on time.
The software you need
An ATS, a domain email, LinkedIn and an accountant. The ATS matters most, because it holds your database and runs your day. Most are priced per user. Lovelio is priced per agency, with unlimited users and the AI included.
| Topic | Built for | How it is priced |
|---|---|---|
| Lovelio | New and growing agencies that want the admin done for them | Per agency, unlimited users |
| JobAdder | Established agencies in Australia and the UK | Per user |
| Bullhorn | Large agencies and staffing firms | Per user, annual contract |
| Vincere | Mid-size agencies, strong in the UK | Per user |
| Recruit CRM | Small agencies wanting a simple CRM | Per user |
| Manatal | Small teams on a tight budget | Per user |
| Recruitly | UK start-ups | Per user |
Lovelio Launch: free software for new agencies
If you are starting your own agency, Lovelio Launch gives you the Solo plan free while you win your first clients.
| Offer | Solo plan free for 2 months, worth US$198. No card needed. |
|---|---|
| Then | 20% off any plan above Solo, for as long as you stay. |
| Who qualifies | Anyone starting their own recruitment agency, or in their first months of running one. |
| Users | Unlimited on every plan. Bring your business partner at no extra cost. |
| Review | A person reads every application and replies within 3 business days. |
| How to apply | A 2-minute form at lovelio.ai/launch. |
Ask AI about this
Questions
How much does it cost to start a recruitment agency?
A solo agency run from home costs about £5,000 to £8,000 in its first year in the UK, A$9,000 to A$13,000 in Australia and $7,000 to $11,000 in the US. The biggest costs are insurance, LinkedIn Recruiter and an accountant. Company set-up is £100 in the UK and A$636 in Australia.
Can I start a recruitment agency from home?
Yes. Most new agencies start from home. You need a laptop, a phone, a business address for your company registration and an ATS. Meet clients at their offices or online.
Do I need a licence to start a recruitment agency?
Usually not. The UK has no general licence, only a GLAA licence for farming and food work. In Australia, permanent recruitment needs no licence, while labour hire needs one in Queensland, Victoria, South Australia and the ACT. In the US, a few states such as New York license employment agencies.
Can I start a recruitment agency with no recruitment experience?
You can, if you know an industry well. Clients pay for your network and your judgement in their market. Learn the basics of sourcing, screening and terms of business first, and start in the niche you already know.
How long does it take a new recruitment agency to make money?
Most solo agencies make their first placement within three months and cover their year one costs with one or two fees. The calculator on this page shows your own break-even month.
How much do recruitment agency owners earn?
A solo owner keeps the whole fee. At 18% of a £45,000 salary, one placement a month is about £97,000 a year in fees before costs and tax. Owners who build a team earn from their consultants as well as their own desk.
What are the 7 stages of recruitment?
Take the brief, source candidates, screen them, submit a shortlist to the client, run the interviews, manage the offer, then look after the placement through the guarantee period.
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