How to Start a Recruitment Business in Europe

Recruitment agencies perform a vital role in matching candidates with their clients. These agencies can be found across the world, as their services are often in high demand. The online recruitment industry in Europe is worth over £6 billion in 2021 and is expected to reach £10 billion in value by 2028.

Business owners and entrepreneurs who wish to open their own recruitment business in Europe should understand the steps necessary for doing so. This guide will explain each step as well as the considerations to keep in mind.

Step 1: Create a Business Plan

As with any business, it is vital to set up a business plan prior to forming your agency. This plan will dictate how your business will be run. Therefore, you should strive to make it as detailed as possible. 

A typical business plan includes information about:

  • Your background
  • Your business
  • Market research
  • Business costs and forecasts

Your Background

Your business plan should discuss who you are and why you are fit to run your recruitment business. This could include information about your contacts, professional experiences, personal qualities, and qualifications. 

Your Business

It is also important to discuss your intended business. There are many different types of recruitment companies out there, so you should disclose what type of business you intend to run. 

This section of your business plan should also discuss the different sectors and the types of clients you will be catering to. This includes a mention of whether you intend to focus on both full-time and part-time employees, or only full-time ones. 

Market Research

Your business plan should also include information on market research. This includes key information such as your target market and major competitors. You can specify the geographic area you will be focusing on and the different ways you will attempt to make your business stand out.

Business Costs and Forecasts

You should mention your business costs in your business plan. After all, you may have a great recruitment business idea in your mind, but turning it into reality requires a firm understanding of business costs. This includes costs for:

  • Setting up and optimizing a business website
  • Renting or purchasing office space
  • Business insurance
  • Day to day operations

This section of your business plan should also include a realistic business forecast. This involves explaining your target profits for the next year as well as the year after.

Step 2: Determine Your Pricing Structure

Knowing how to price your services is important when starting a recruitment business. This will make it easier when advertising your services and attracting clients. Most recruitment agencies make a distinction between permanent and temporary employees when coming up with a pricing structure.

For permanent employees, recruitment firms typically charge a fee equivalent to 15 – 25% of their annual salary. This is on a contingency basis where the agency receives payment only once their candidate has filled a job role.

Recruitment firms may also need to include a rebate in their fees. This is a portion of the fee that is returned if the candidate leaves their new job after a short amount of time.

Step 3: Finance Your Business

Once you have a business plan in place, you will need to finance your business. This can be approached in any number of ways. Some business owners and entrepreneurs may fund their recruitment agency themselves by taking out loans. Others may need to find investors to fund their venture.

Step 4: Obtain Licenses, Permits, and Complete Registration

Depending on the European country you reside in, you may need to obtain specific licenses, permits, and register your company with the government.

For example, recruitment businesses in Ireland will need a recruitment license issued by the Department of Business, Enterprise and Innovation.

Similarly, recruitment companies in Germany must register for a labour leasing license or an AUG license. These are issued by the Bundesagentur für Arbeit in the region and will need to be renewed annually for the first three years. Please contact us to learn more about the different licenses and permits you will require to set up a recruitment business in Europe.

Step 5: Comply With Regulations

Prospective business owners and entrepreneurs who wish to set up a recruitment business in Europe will also need to ensure they comply with regulations in their chosen country. For example, business owners are required to put up a minimum capital investment amount when setting up a new business in certain European countries.

Similarly, the recruitment firm may need to create and sign work contacts for the temporary and permanent employees they will be matching with jobs. These regulations also vary from country to country, so please contact us to learn more about the regulations you will need to comply within your chosen country.

Step 6: Market Your Business

Once you have cleared the legal steps in setting up your business, it is time to market it. You can market your business in many different ways. Many recruitment firms start by setting up a business website and optimizing it for search engines. This helps potential candidates and clients discover the recruitment agency via search engines such as Google and Bing.

Many recruitment firms also use ads to attract people. These could be Google ads, social media ads, as well as public flyers and posters. Recruitment agency owners should spend time coming up with a robust market strategy that fits their current needs. This strategy can then be updated as your business grows.

Final Thoughts

Starting your own recruitment agency in European countries like Germany, Poland or Netherland can seem challenging at first. However, the payoff can be great if you are successful. Prospective business owners and entrepreneurs who require assistance with setting up their recruitment agency should reach out to Open A European Company.

At Open A European Company, we have assisted numerous clients with opening their own recruitment business in Europe. We are familiar with the different setup steps and can make this process quick and easy. Please get in touch with us to learn more about our company formation services.