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DĶŖď ƊƙƀƀŠƃƓ īƃŠŕ ƓIJĖ ĖƹƀĖƃƓƊ ìƓ ÚŠďĖƂ 01244 617 087 | paul@zodeq.com | www.zodeq.com REC.OctNov20_042.indd 2
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Start-ups - the time is now
OFF ON THE RIGHT FOOT THERE ARE GOOD OPPORTUNITIES OUT THERE
S P O N S O R’S STAT E M E N T
EDITOR’S COMMENT
HOW ZODEQ CAN HELP RECRUITMENT START-UPS TO SUCCESS All recruitment businesses face challenges when first starting out. It can seem like a mammoth task to juggle the required recruitment-related responsibilities alongside the tasks that go hand in hand with starting up on your own. Much of your valued time can be swallowed up by admin, rather than doing what you love: building your client base, sourcing candidates and servicing clients. Choosing the right finance can be one of these challenges. In fact, 82% of small businesses fail due to cash-flow issues. We at Zodeq can help you with this, taking you through the options available and helping you to secure the funding for your dream business. Zodeq is an award-winning provider of finance and back-office support services that help both new and growing businesses to maintain healthy cash flow, operate efficiently and ultimately achieve their long-term goals of success.
Paul Cooney Managing Director Zodeq
THE POST-PANDEMIC UPHEAVAL MAY PROVE TO BE THE RIGHT TIME TO TAKE THE PLUNGE There’s a new twist this year to our annual focus on Start-Ups: the Covid-19 pandemic. Certainly, the virus has left terrible human and business destruction in its wake, none of which is to be taken lightly. However, for some it is the catalyst for a new beginning, a fresh start – at the helm of your own business. If you had been mulling over the idea of starting up your own recruitment business, perhaps one with a highly specialist niche, you will find both encouragement and hard truths from the industry entrepreneurs interviewed for this Special Report. Much has been said about the pandemic offering the benefit of a reset for individuals and businesses alike and the chance to develop a new future vision. Well, read on: the time is now.
DeeDee Doke Editor Recruiter/recruiter.co.uk
EDITORIAL +44 (0)20 7880 7606: Editor DeeDee Doke deedee.doke@recruiter.co.uk Contributing writer Sue Weekes Production editor Vanessa Townsend vanessa.townsend@recruiter.co.uk Art editor Sarah Auld Picture editor Akin Falope ADVERTISING +44 (0)20 7880 6231: Senior sales executive Joanna Holmes joanna.holmes@redactive.co.uk PRODUCTION +44 (0)20 7880 6209: Senior production executive Rachel Young rachel.young@redactive.co.uk PUBLISHING +44 (0)20 7880 8547: Publishing director Aaron Nicholls aaron.nicholls@redactive.co.uk
Redactive Publishing Ltd 78 Chamber Street, London E1 8BL 020 7880 6200
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Special Report Report Special ADVERTISEMENT FEATURE
CHALLENGES TO LAUNCHING YOUR OWN BUSINESS
your clients are 30 days, you’re going to find yourself with a bit of a problem. There are two main ways to help you manage your cashflow:
Mark from WeDo talks about his experience running a business, the challenges it brings, and how new business owners can overcome them
That’s easier said than done, right? When you’re just starting out, a healthy bank balance can seem a million miles away. Start by looking for investors to help bankroll your business. In fact, if you run or are thinking about starting up a recruitment agency, we can help with the start-up capital you need to keep that balance in the black.
tarting your own business can be one of the most exciting and most terrifying experiences. While there are plenty of benefits to running a business, there are also various hurdles most business owners will face. I’ve been there, I’ve done it, so I’m here to spare you the stress. Here are my answers to two challenges most business owners will face.
Find someone to help you run things
Use freelancers and partner agencies
Having a business partner can help take away a lot of the pressure when you’re running a business. It also gives you the opportunity to find someone who shares your vision and values but has a different, complementary skillset.
BUILDING A TEAM
Sometimes you need someone with experience in a particular field, but don’t pay too much mind to qualifications and number of years’ experience. You want to build a team of people who are good at what they do, but also who share your businesses’ values.
When you’re starting out, employing staff is a huge commitment. If the role you’re looking to fill doesn’t require full-time work or could benefit from expertise in a completely different area, look at outsourcing. Whether you contract freelancers or work with another business or agency, things like admin, finance, marketing and design can all be outsourced.
S
The first challenge you may face is building a team. There are business models that suit working alone, but for most business types, there’s just too much work for one person. Here are my top tips for building a team that’ll help your business thrive:
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Look for mindset over merit
MANAGING YOUR CASHFLOW If you’re starting your business without capital, cashflow can very quickly become a problem. When the payment terms for your suppliers are on receipt but your terms with
1
Make sure you have plenty of money in the bank
2
Look into invoice financing
Another way to keep your cash flowing is to work with an invoice financing business. Simply put, they’ll keep your cash flowing and get repaid when your clients pay. At WeDo, we’re experts in invoice finance, so if you rely on paying various suppliers or contractors, give us a buzz. Give WeDo a buzz on 0330 900 5000 or email hello@wedo.finance
MARCH 2018
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Start-ups - the time is now
HOW LOCKD WN UNLO KED CREATIVITY There has been no shortage of would-be entrepreneurs deciding that the upheavals in the wake of the pandemic are as good a time as any to take the plunge and set up on their own. Sue Weekes explores the challenges they are facing
espite the desperately uncertain economic climate, there were a record-breaking number of new business formations in June. Analysis of Companies House data by the Centre for Entrepreneurs (CFE) shows that while formations dropped year-on-year in March, April and May, they rose by 47% in June. In London and the West Midlands this was even higher, with 60% increases.
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CFE reports that, overall, start-up figures between March and June are only down by 3% – and London actually came out of lockdown with 6% more new businesses than the same period last year. Matt Smith, director of policy and research at CFE, said that the figures demonstrate that entrepreneurs’ confidence has returned. “Many new ideas developed during lockdown are now being implemented,” he added.
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While the UK’s start-up spirit is apparently in good shape, such businesses must be mindful that they are launching in the deepest recession since records began. According to a research report by trade credit insurer Atradius, insolvencies in the UK are forecast to jump to 27% this year, above the global average rise of 26%. Moreover, the UK is expected to experience the largest gross domestic product contraction in northern Europe in the wake of the lockdown and ongoing uncertainty around Brexit.
Seizing the day Taking the decision to start a new business is dependent on many things, not least the risk appetite of the person behind it. Feedback from those organisations providing services to recruitment start-ups suggests that there is no shortage of recruiters
London came out of lockdown with
6% more new businesses than in the same period last year
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prepared to make the leap, with many perhaps keen to take charge of their destiny following redundancy as a result of the global pandemic. Wendy McDougall, ‘chief fish, CEO and founder’, of recruitment software firm Firefish Software, says the company has helped three times as many new start-ups get up and running in the past five months compared with this time last year. “The driving force of this is largely through recruiters being made redundant or deciding that life has been flipped on its head anyway, so it seems like a great time to take the plunge,” she says. These sentiments are echoed by Paul O’Rourke, operations director, New Millennia Payroll Services, part of The New Millennia Group, who was surprised by the amount of interest. “We’ve taken on some fantastic recruitment start-ups during lockdown, which I’m assuming is because a lot of good recruiters on furlough have had a lot more time to consider setting up for themselves,” he says. Firefish recently conducted a survey of more than 100 SME recruitment owners and start-ups and, unsurprisingly, their main concern was the
those setting up a new business, such as being based at home and having a web-based shop window rather than having to worry about establishing costly bricks-and-mortar premises.
“We have helped three times as many new start-ups get up and running in the past five months, compared with this time last year” WENDY MCDOUGALL is CEO and founder of Firefish software
uncertainty in the marketplace. McDougall reports, however, more than 27% of these respondents were also predicting the biggest sales growth in the next 12 months. “This is demonstrating how agile, adaptable and innovative this segment of the marketplace can be while the largest agencies are still trying to work out how to get everyone back into the office,” says McDougall. Indeed, agility and the ability to innovate quickly are likely to be key differentiators over the coming months and are qualities found in many entrepreneurs which, as McDougall points out, should be exploited. And while the economic conditions are challenging, Covid-19 has also been the catalyst for new ways of working that favour
The importance of technology The impact of the global pandemic is also accelerating the adoption of technologies such as video-interviewing, which will make everyday remote working much more practical and, ultimately, help to level the playing field and lower overheads for smaller recruitment companies. “Everyone has recognised that technology has enabled our recruitment world to progress, even if we are not in an office,” says McDougall. “So, for the start-up market it’s recognised that they must have a good shopfront website promoting their services. The next most important thing is candidate automation – ensuring a good workflow from web application straight through to placement. “Using an integrated website and recruitment CRM platform ensures that your time is spent with those candidates who are flagged as ones you can assist and make money from quickly.” Kim De’ath, sales and marketing manager of 3R, which provides a range of start-up services, says its comprehensive service, which comes with minimal upfront costs and offers branding, website, CRM, finance, back-office and legal support, has proven popular with recruiters keen to hit the ground running.
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EMERGING AND GROWTH AREAS TO EXPLORE Start-ups outside of recruitment can be an indicator of growth sectors and therefore future in-demand job roles. In its analysis of Companies House data, the Centre for Entrepreneurs (CFE) brought evidence of an “emerging Covid economy” to the surface, and identified other sectors where jobs might be created. For example, there have been major increases in the areas of:
Manufacture
+243% and retail
+227
+317%
Manufacture of cleaning preparations
+196%
of medical goods
Manufacture of workwear
Wholesale of pharmaceuticals
+178%
+85% Specialised cleaning services
+69%
services
Disinfecting
+400%
“Most I have spoken with recently just want to get on with making perm and contract placements,” she says. “They recognise the market is tough, but they want to make money for themselves and build a business for their future.” When it comes to the most in-demand services of the moment, O’Rourke reports that no-risk funding and no-minimum fee contracts, attractive at the best of times, are even more so now. He advises start-ups to ensure they keep overheads to the bare minimum and warns against signing long-term agreements that could put them financially under pressure. And he adds: “Above all, if you have the experience and want to set up by yourself, then do it with three to six months’ salary saved behind you.” De’ath similarly advises aspiring entrepreneurs not to rush and to speak to other start-up recruiters and service providers. “Find the right suppliers and partners. We provide a consultative service, as starting a recruitment business isn’t for everyone,” she says. “We’ve seen the most success from experienced, niche, 360 recruiters, setting up in teams of two or more, with drive and determination.” Would-be start-ups should find that good service provider companies are sensitive to their needs because of the uncertain market conditions. Look for one that offers flexible services and who is also prepared to provide education and support,
Research on biotechnology
CFE also found that some consumer businesses have increased significantly, including 13,904 new internet retail businesses (+110%), as well as growth in sports retail (+89%), games and toys retail (+89%), computer retail (+99%), bakeries (+58%), and clothing retail (+53%). “With many businesses set to close, and unemployment rising, it is entrepreneurs who will drive Britain’s much-needed economic recovery and create new jobs,” said Oliver Pawle, chairman of CFE. “These figures provide reassurance that there is a ready supply of new ideas and growing sectors across the UK.”
including in terms of what grants and government help might be available and how appropriate this might be. Firefish launched a special promotion, called #getbackinthefight, at the start of lockdown to help redundant recruiters. It worked with industry service partners to combine specific help and coaching to support the first year of running a recruitment agency.
A matter of optimism Launching a business is not easy even in good times, but in these darkest of days it is still possible to identify areas of opportunity. De’ath said 3R has observed optimism in the industry, and start-ups in tech, IT, engineering, manufacturing and education have continued to grow. New opportunities have also been created by the pandemic (see box, left). It is also important to remember that prior to the health crisis, all the talk was about the jobs and sectors that would be created in the fourth Industrial Revolution thanks to transformative technologies such as artificial intelligence and machine learning. Alongside this, start-ups should take confidence from their own unique selling points. McDougall says: “The main advice we give to start-ups is this: differentiate yourself on the market, go deep in your niche and always try to work to your strengths as a small, agile, specialist agency.” “Don’t be intimidated by the big guys – there are lots of reasons clients will choose you over them.”
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HOW ZODEQ CAN HELP YOU TO START YOUR OWN RECRUITMENT BUSINESS Is now the perfect time to set up your own recruitment business? Zodeq believes it is
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and finance for your start-up. The many different options out there can make it seem like a minefield. But choosing the right avenue can make a significant difference. The good news is that there are companies out there that specialise in providing funding to start-ups, and even firms that provide funding specifically for start-up recruitment businesses. Zodeq is one of these companies. Zodeq offers the perfect solutions for starting and running your own recruitment business with minimal risk, and with all time-consuming back office tasks taken care of. Even better, you don’t need your
of this year, we can clearly see the recruitment market picking up, so now is the perfect time to get involved. For those looking to set up their own business, the good news is that help is out there for those more difficult admin tasks and the financial preparation that is key to ensuring your business succeeds in the long term.
FINDING FUNDING FOR YOUR RECRUITMENT BUSINESS One of the more difficult challenges that new recruitment businesses face is often finding the best funding
own capital in order to do this; Zodeq provides all the finance you may need to get you up and running. This leaves you free to dedicate your time and resources to doing what you love; building your client base, sourcing candidates and servicing clients. We will support you through your start-up’s early years in which the transition to business owner is the hardest and then on into the future, as your business grows.
INVOICE FINANCE AND FACTORING Many start-ups fail to consider the variety of finance options
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hether you are in the early stages of starting a recruitment business, or even just thinking about it, it can be an arduous task to juggle recruitment-related responsibilities alongside the tasks that go hand-in-hand with starting up on your own. Much of your valued time can be swallowed up by admin, rather than doing what you love. For those who have never gone it alone before, there can be much to learn and it is almost guaranteed that you will come across tasks that you have previously never even considered when working for someone else. Add this to the ever-increasing amount of legislation that is involved with the recruitment sector and your dream of the day-to-day running of your own recruitment business can soon seem unattainable. Whilst this may sound daunting, starting your own business can also be a fantastic opportunity for those that are tired of working for someone else and want more flexibility and autonomy. With the Recruitment & Employment Confederation (REC) recently revealing a sharp rise in weekly job postings from May to August
Weekly active job postings in the UK
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Start-ups - the time is now ADVERTISEMENT FEATURE
FUTURE CHALLENGES FOR RECRUITERS The uncertainty of the next few years may be challenging for recruitment companies, particularly for start-ups, with changes to IR35 and the commencement of Brexit on January 1st 2021. Zodeq is here to help you through these challenges, to secure you with funding and support you and your business through to the future. To find out more about the financing and support options open to recruitment start-ups please visit www.zodeq.com or contact us on 01244 617 087
available to them to support their business in the long run. Bank loans and overdrafts are an obvious solution but many assume that alternatives to these are only for those who have been refused a bank loan or have already exhausted their overdraft. This is certainly not the case. Invoice finance and invoice discounting can be attractive options, particularly for recruitment firms for whom consistently positive cashflow is essential. Both finance options allow you to release a percentage of money (depending on provider) from an invoice as soon as it is raised, with the remaining
percentage provided after a client has paid in full. The main difference between the two options is, with invoice finance (or factoring), the provider will chase the payment of invoices for you, relieving you of the burden but also meaning customers will be aware of the type of finance you use. With invoice discounting, however, your choice of finance is completely confidential but leaves you responsible for chasing your own payments. Zodeq can offer you both types of finance, allowing you to choose the most appropriate for your business.
WHAT CHALLENGES MAY YOU FACE? Every business from start-ups to large corporations will face challenges, but ensuring you are aware of any potential ones and how you plan to overcome them will determine how well your business succeeds. A few challenges you are likely to face are:
Credit control – Credit control and credit management can be difficult for any business, particularly start-up businesses that are unlikely to have previously faced the challenges that credit management can pose. In fact, 82% of small businesses
fail due to cashflow problems. Poor payment practices have plagued the recruitment industry in particular, for years. Understanding how to overcome common practices, such as late payments and extended payment terms is key to ensuring your cashflow remains positive and you don’t receive bad debt.
HMRC regulations – Ensuring compliance with the ever-increasing raft of HMRC regulations can be intimidating for any start-up business, particularly in those early years when focusing on your work is essential to building a strong service and reputation. WWW.RECRUITER.CO.UK 43
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A QUESTION OF EXPERIENCE Mike Beesley tells Sue Weekes what he looks for in a start-up recruiter, which industries are experiencing growth and why the post-Covid era will be one of great opportunity for the right people 44 RECRUITER
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Start-ups - the time is now
As well as finding the next great recruiters, what do you hope to achieve with TIMESTWO?
ike Beesley stepped down from his role as CEO of national recruitment company Sanderson earlier this year to co-found TIMESTWO Investments, which aims to find the next big names in the sector and help people build recruitment businesses with purpose. Working with Keith Dawe, his business partner of 40 years, the company has already invested in four enterprises.
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We began in a start-up and are essentially a start-up again now, and we know it can involve a leap of bravery. We want to create a safe environment for people to move from the world of employment to the world of running their own business. Unless you’re very young and you’ve a brand new piece of tech and someone says: “That’s brilliant – let’s run with it,” most people will have done a number of years in an employed role and accrued not only experience but a number of responsibilities that have financial implications. These can become a deterrent for living and fulfilling one’s dream. What you don’t want is an entrepreneur who is then worrying about whether they’re going to be able to pay the electricity bill or put food on the table. Ours is not what I would call a traditional model, where you give people cash and they spend it. We back the start-up financially but also provide all of the support, so from day one the individual can focus on
business development and not have to worry about things like setting up a bank account, getting a VAT number, building a website and all the things that become a distraction. We give them the funding, emotional support and infrastructure backing and then they receive all the ongoing mentoring and support. We believe this will encourage those who wouldn’t ordinarily make that leap of faith.
What type of people are you looking to back? As a consequence of this model and approach, we look for a slightly different person –someone with maybe eight to 12 years’ experience under their belt, knows their market, is an authority in that space and can genuinely provide value to the end-customer. That’s the basis we’ve traditionally run businesses on. I’ve always found it vaguely amusing that in the
“We look for a slightly different person. Someone who maybe has eight to 12 years’ experience under their belt, knows their market” recruitment space everyone is called a ‘consultant’. In the medical world, you’re called a consultant because you’ve acquired a vast amount of knowledge, experience and authority. In the same way, we look for people who are
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NEXT ISSUE
Payroll/IR35 If you want to advertise contact: 020 7880 6231 joanna.holmes@redactive.co.uk 46 RECRUITER
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it to market it’s going to wither and die on the vine. Now, marketing in any business covers internal comms to everything you project externally about the organisation, together with the customer interaction piece, so digital and traditional marketing skills are another area we’d be keen to look at.
What key characteristics and personality traits are important to lead a start-up? experienced, provide value and already have a terrific reputation in the marketplace. Because of what was happening at the back end of last year around IR35 and with Covid-19, our timing probably wasn’t brilliant. But equally, I believe customers will crave even more of that sort of knowledge-based solution rather than a pile-it-high, sell-it-cheap approach. They will be looking for people who genuinely know what they’re talking about. As we come out of this awful market, I think the opportunities will be enormous because the end customer will want a different solution to the one previously provided.
What type of industries are you looking it and what drives your thinking in this respect? You have to look at a host of things: legislation and what the governmental drivers are, as well as what’s going on globally from a political and societal point of view. For example, one of our start-ups, Surya
Recruitment – Surya is Sanskrit for sun – is solely targeting the renewables sector. If you look at the political statements of the UK government and the European Union, one of the areas where investment is going is into the green energy and renewable space. OK, we have to exercise some caution, but if you also look at what’s happening from a societal point of view, we’re going to move away from the fossil fuel era and into a whole different way of thinking and behaving. So, the battery and car development space and, indeed all forms of transport, is also very interesting.
“I’ve always said that one of the first people you should hire into any new business is someone with strong marketing skills”
You also have to look at the government policy around housebuilding and infrastructure projects such as HS2, and dovetailing back to energy, the two nuclear power stations being built in Somerset, and say that it’s likely to be a growth market. Of course, anything that is tech-based or cyber-based is experiencing growth. But it’s also important not to write off any of the traditional industries. From a business point of view, we’ve done very well out of the banking in the finance sector, and they’re not going anywhere. Overall though, if it’s different, we’re going to be interested in it. For example, look at digital marketing. I’ve always said that one of the first people you should hire into any new business is someone with strong marketing skills. You can be the best techie or innovators with the best product on the planet, but if you can’t take
Other than the obvious demonstrable entrepreneurial skills and behaviours as well as a strong work ethic, we want to work with people who have a genuine passion for what they do. I don’t want to work with someone who is only interested in getting rich and moving on. Clearly, there has to be sound commercial thinking underpinning it all, but we also need to see a strong, identifiable moral compass. They must also regard recruitment as a profession, not as something you do on the way to something else. We also look at how committed and authentic individuals are around policy. I learnt a good lesson many years ago in the days when corporate social responsibility (CSR) was first emerging, and you needed a CSR strategy when filling out tender documents. I went to an APSCO event where the speaker read out the CSR strategy statements from the websites of each of the
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companies in the room. Fortunately, I recognised mine, but no one else did. If you have these policies you need to take them seriously, and not just pay lip service, for example, in areas like diversity and inclusion.
proper profession – and things have become a lot better. But, equally, at the same time as trying to achieve that goal, the industry has grown exponentially. I’m ever the optimist, though.
Do you think recruitment is becoming more of a career profession than previously?
With the coronavirus pandemic responsible for many redundancies, is there a danger the wrong kind of people will decide to start their own businesses?
I came to Bristol as a student and, in theory, I should have gone into the IT industry, but it was in a recession, I needed a job and went into recruitment. I took it very seriously, and it’s been my career ever since. I still work with the business partner I met 40 years ago. It’s been our chosen career all of that time, and we try to engender this type of thinking with the people we employ. Unfortunately, there are still too many models out there that are exclusively driven by revenue and KPIs [key performance indicators], which can often crash and burn people. The behaviour of suppliers is more than 90% down to what the customer will accept. The reality is if they continue to accept it, the supplier will only behave that way. The customer may want great service but if one of their KPIs is who gets the CV there first, it is not going to make for a quality-led service. People will cut corners to get the CV there first, even if that includes not speaking to the candidate – which is an appalling practice but still goes on, sadly. I’m ever hopeful that people will genuinely see the recruitment industry as a
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CAREER SNAPSHOT 1977-1980: Studied business studies at Bristol Polytechnic 1980: Began working at a small Bristol-based IT specialist recruitment business with partner Keith Dawe; They went on to buy and develop the business before founding other brands. 1995-2005: Chairman, Resource Solutions Group 2008: Led the creation of a unifying non-trading corporate brand called Resource Solutions Group (now rebranded as Sanderson) for the numerous companies operating under the same board 2015: Launched the HR World thought leadership platform 2020: Steps down as CEO of Sanderson to launch TIMESTWO Investments
Yes and no. You could argue that if the entire market and economy is flying, there are going to be more dubious start-ups. What you get is people saying: “This is really easy,” and they don’t end up provisioning for difficult times. They take all the profits out, they’ll probably invoice discount, have overdrafts, borrow and spend and then the moment the market gets difficult, there’s no cash left in the business and they risk going under. I would say that boom markets are more likely to generate poor business ethics and poor business behaviours and practices than this current market.
What are some of the life lessons you would pass on to those wanting to set up on their own? Develop your listening skills. Recruiters don’t tend to make great listeners. What they want to do is tell you about themselves and their candidate. The reality is that if you can demonstrate that
“Recruitment is a simple process if done properly. Ultimately, one of the differentiators is your ability to build fantastic relationships with your customers and keep them” you really are prepared to listen to the person who has a problem, you’re more likely to be a success. Also, culturally, to run your own business, remember that there’s a big grey area about when we are at work and when we are not at work. For me, it’s not a hardship to get that right. Recruitment is a simple process if done properly. Ultimately, one of the differentiators is your ability to build fantastic relationships with your customers and keep them. The cost of sales of winning a piece of business is enormous, so why on earth would you throw it away? Whatever you do, enjoy it and if you don’t enjoy it, don’t do it. Finally, be kind. No one ever benefits from people not being kind.
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