5 Pitfalls To Avoid When Growing Your Recruitment Agency

19 Jan 2024

Recruitment Advice

You’re on fire! You’re flying! Your recruitment agency is heading for bigger and better things.

It’s a great feeling when you know your business is growing, suddenly the possibilities seem endless.

For over 20 years we’ve been supporting recruitment agencies through their growth stage, and it’s really an honour to be a part of their journey.

However, we always remind agency owners how crucial it is to navigate the path carefully, steering clear of potential pitfalls that can hinder your progress.

In this article, we’ll explore five common challenges that agencies face during the growth phase and discuss strategies to avoid falling into these traps.


  1. Neglecting client relationships


Your clients are your biggest asset.

Likely you know this, which is why your agency is in a great position. They appreciate that you put their needs first and they’ve come to rely on your experience and expertise.

When an attractive new client comes along, your existing client experience could start to wane.

You’re sure you’ll deliver what has been promised, but trust us, it happens. This gives your competitors room to swoop in!

It’s fine to be forever chasing the next opportunity, you just need to make sure you have a system in place to support your existing client base.

Putting together a plan for your growth is key, to ensure each step is careful and considered.


  1. Relying too heavily on one or two big clients


Landing that big client is such a win, and a sign that you’re great at what you do.

They have multiple vacancies they’re trying to fill and an ongoing stream of work that is making the future looking bright for your agency.

But what if you lost that client?

A client is never for life! You do need to build in a contingency for how you’d recover if they were to change direction and decide to work with someone else (as we know can happen with big companies).

Also, larger clients can sometimes totally swamp your agency and leave you unable to fulfil the needs of smaller companies.

Let this just be a little reminder to diversify your client base to mitigate potential business downturns.


  1. No investment in your infrastructure


Growing your agency means more revenue but of course it also means more work.

We understand it’s a balancing act, you don’t want to hire more people before you have a consistently higher workload.

However, you also don’t want to find yourself weighed down by admin when your recruitment agency is on the up.

Consider how you could outsource certain services as your business develops, such as back office support that can be particularly effective if you’re working with temps.

Choosing a specialist recruitment accountancy service can also help you meet your financial obligations when you’re under pressure.


  1. Poor cash flow


Cashflow is a challenge within recruitment, particularly when you’re expanding.

You make a placement and then wait months for the money to come in, which can put the pressure on when you’re trying to grow.

Plus, if the last few years have taught us anything, it’s that you can never know when an economic downturn is coming.

Luckily you can improve your cash flow by accessing our recruitment funding.

Recruitment finance gives you immediate access to the money you have tied up in unpaid invoices. It essentially plugs that gap between placement and payment.

You have the money to spend as needed and we even take on the responsibility of collecting invoices directly.


  1. Hiring a team too quickly


If anyone knows that it takes time to find the perfect candidate, it’s you!

Over the years we’ve seen some agencies jump to hire fellow recruiters in their growth stage as more people typically means more clients.

Being too quick to hire and not properly screening your recruiters can be detrimental to your growth.

Take your time to find the right person, not only the one who has a great earnings track record, but someone who reflects the values and vision you’ve created for your agency.


If you’re ready to take the next step with your recruitment business, and want the support of a finance specialist, then you can trust New Millennia.

Get in touch with our team who would be more than happy to talk you through what we can offer and the benefits to your agency.


Try New Millennia today!

Call us on 0161 337 9882 to get started

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