Headhunter Business Plan for Starting Your Own Agency

Hiring people for a job is not easy and necessitates a separate human resource department. As human resource happens to be a high-paying job, not all businesses can hire an HR wing. This makes a Headhunter business a very viable one and one that can hardly go out of business.

It is not difficult to start such a business as we will be providing you with a detailed business plan for recruitment firm. So, if you are looking for guidance on how to start a headhunter agency, we’ll be providing you all the guidance you need here. Like the previous investment group business plan, this one will be based on an actual startup. The startup we are explaining today is Stevenson Headhunters.

Headhunter Business Plan Summary

2.1 The Business

Stevenson Headhunters will be a registered and licensed recruitment agency based in Detroit. The firm will be aimed at providing hiring services for small to medium enterprises that do not have a dedicated HR department. This business will serve as a perfect business plan headhunting example. Let’s see how to set up a recruitment business without further ado.

2.2 Management of Headhunter Business

The entire headhunter business model is based on the fact that there are companies who want someone to recruit for them. So, the business will require people who have experience in human resources. Ex-HR managers and heads of recruitment departments will be a valuable resource for such a business.

Human resource is a very broad field and recruitment can be necessary from a janitor to an executive. So, it would be helpful to start a business with a defined niche. You can provide services for a class of employees like accountants, doctors, engineers, clerks, or any other type of workers.

The main cost involved in starting this business will be that of renting a place to set up the office. Other costs will include the office furniture and appliances and the pays of the staff for the duration before which the business starts making profit.

2.3 Customers of Headhunter Agency

The major customers of our headhunting business will be small to medium companies who do not have a dedicated HR wing. The businesses who have an HR department but do not have specialized hiring wing will also fall under this category.

2.4 Business Target

Our targets are:

  • To obtain and sustain a CSAT score of more than 90% from the very start.
  • To make the company profitable enough to earn more than $31.3k a month on average by the end of the third year.

Headhunter Business Plan - 3 Years Profit Forecast

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Company Summary

3.1 Company Owner

Stevenson Headhunters will be owned by Michael Stevenson. Stevenson is a retired HR manager from a multinational firm and has previously worked in many managerial position. He will not only be the owner but also the chief operations officer of the company.

3.2 Why the Headhunter Agency is being started

Stevenson is setting up recruitment agency as he has a vast experience in this field. He has worked as a hiring manager for the better part of his life. He has also developed contacts with the major companies in the state which can become his clients. Let’s see how to create an employment agency.

3.3 How the Headhunter Agency will be started

Step1: Create Headhunter Business Plan

The first thing we can observe in this headhunter business plan template is the strong business plan at its back. The business is focused at a simple rule of economics, charge less, deliver more. This business proposal for recruitment agency will be successful given the experience of the founder and owner, Stevenson.

Step2: Create the Brand Image

The next step would be to create a brand. This staffing business plans will be based on making a brand that people can trust. This is not a call center business plan or a freelance business plan where the brand has no importance. The brand name here matters a lot for the business to be successful.

Step3: Establish Online and Physical Presence

Once the business plan has been made and a brand has been created, the next step is to be available. Most of the companies prefer hiring through online channels hence an online presence is a must. The office also has to have a physical address and location.

Step4: Promote and Market

Marketing needs to be started even before the business has a physical presence. You need to tell people that you exist. The focus of marketing needs to be on the things you have different as compared to the competitors.

Headhunter Business Plan - Startup Cost

Start-up Expenses  
Legal $239,000
Consultants $0
Insurance $32,000
Rent $24,000
Research and Development $25,000
Expensed Equipment $52,000
Signs $3,900
TOTAL START-UP EXPENSES $375,900
Start-up Assets $320,000
Cash Required $360,000
Start-up Inventory $51,000
Other Current Assets $209,000
Long-term Assets $247,000
TOTAL ASSETS $1,187,000
Total Requirements $1,562,900
START-UP FUNDING
Start-up Expenses to Fund $375,900
Start-up Assets to Fund $1,187,000
TOTAL FUNDING REQUIRED $1,562,900
Assets
Non-cash Assets from Start-up $1,558,000
Cash Requirements from Start-up $355,000
Additional Cash Raised $58,000
Cash Balance on Starting Date $31,000
TOTAL ASSETS $2,002,000
Liabilities and Capital
Liabilities $30,000
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $42,000
Other Current Liabilities (interest-free) $0
TOTAL LIABILITIES $72,000
Capital
Planned Investment $1,562,900
Investor 1 $0
Investor 2 $0
Other $0
Additional Investment Requirement $0
TOTAL PLANNED INVESTMENT $1,562,900
Loss at Start-up (Start-up Expenses) $367,100
TOTAL CAPITAL $1,930,000
TOTAL CAPITAL AND LIABILITIES $2,002,000
Total Funding $1,562,900

 

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Services of Headhunter Agency

Any sample staffing business plan will be incomplete without discussing the services the agency will provide. For writing a strategic business plan we need to define the services. If you are looking for the answer to how to start staffing agency, we’ll tell you what services it must provide.

  • Recruitment Services

The main services provided by our headhunter agency will be hiring people on behalf of other companies. You must keep in mind that this is not a mortgage lender business plan. We are not targeting customers. This is a business to business thing, and you must understand that. The main service provided will be hiring the best people for any job as asked by the client/customer.

  • Employee Training

As we are targeting a market of companies with no HR wing, it will be a good idea to provide training services as well. The firm can provide all sorts of trainings. This means it can be helpful to go through a life coaching business plan to address this aspect of the business.

  • Human Resource Consulting

The services of the headhunter agency can also extend to HR consulting. Under this head we can provide the services like analyzing the amount of workforce required. Other workforce related consultation services can also be made a part of it.

  • Employee Reporting

As the companies lacking an HR wing need someone to report the performance of their employees, this service can also be provided. Annual or monthly reports on the performance of the employees can be provided.

Marketing Analysis of Headhunter Agency

For a  head hunting business , it is important to have a marketing analysis. This is aimed at the analysis of the relationship of the provision and demand of the services described above. This  sample business plan headhunter  covers this aspect too.

5.1 Market Trends

Before starting a headhunting business you need to have a close eye on the market trends. Now that you know how to start a headhunter business, you must know the fact that this business has been around since 1940. There are more than 20,000 headhunter agencies working in the US.

The market cap on the staffing industry, with a total of 39,000+ offices is above $174 billion. This is also one of the most rapidly growing industries in all US. While most of these companies are making under $10M a year, there are at least 100 recruiting firms in the US that are making over $100M a month.

5.2 Marketing Segmentation

Note

Market segmentation is also an important thing to consider when it comes to establishing a recruiting business. It is must to know how much of the business will be coming from what sort of clients.

Market segmentation is also important to consider because it is the thing that will help you determine how many experts from every segment of the market you need to hire in order to effectively run a headhunting business.

Last, but not the least, if you want to extend your services to HR consultation and trainings, you will have to know the market you are operating in order for you to be successful at what you are planning to do.

Headhunter Business Plan - Marketing Segmentation

Mohit R.
Trustlink

L-1 Update – RateGain – KOTHARI, Siddharth

Alex has been super quick with his responses to my emails. I needed my business plan very urgently and whether it was Saturday or Sunday, Alex made sure that i had my plan ready in the shortest amount of time possible. My finance team is also very impressed. Well done Alex and keep up the good work!!!!! Sid Kothari Executive Vice President www.rategain.com 470.422.8578 8300 Greensboro Drive, Suite 800, Mclean, VA, 22102

∙ Mohit R.

5.2.1 Industrial Clients

Industries hiring makes the bulk of the business conducted by headhunters in the US. This segment of the business contributes for as much as 41% of all recruitments done by headhunters. This segment can include anywhere from unskilled workers for construction work to engineers and technicians. We will make a separate department in the company to handle this sort of hiring.

5.2.2 Office–Clerical and Administrative

The second largest market segment for the headhunter business is the office, clerical and administrative recruitments. This makes up 28% of the total business conducted by this industry. We will not make a separate department for it as it is linked to the next segment.

5.2.3 Professional Managerial

20% of all the recruitment done by headhunters is for professional and managerial jobs. This might not look like very much but as the fee is charged based on the pay of the hired person, this segment means a lot in monetary terms.

5.2.4 Healthcare

A separate wing will be dedicated to the recruitment of healthcare staff. This segment makes up for 11% of the market. As doctors are highly paid people, this segment means a lot in terms of money.

Market Analysis
Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Industrial Clients 41% 39,000 41,000 42,000 43,000 44,000 10.00%
Office-Clerical and Administrative 28% 30,000 31,000 32,000 33,000 34,000 10.00%
Professional Managerial 20% 27,000 28,000 29,000 30,000 31,000 10.00%
Healthcare 11% 18,000 19,000 20,000 21,000 22,000 11.00%
Total 100% 114,000 119,000 123,000 127,000 131,000 10%

5.3 Business Target

By focusing our efforts on the above-mentioned segments of the business, we aim to achieve the following targets:

  • To obtain and sustain a CSAT score of more than 90% from the very start.
  • To make the company profitable enough to earn more than $31.3k a month by the end of the third year.
  • To extend our services to at least 2 states within the first five years.

Business Plan for Investors

5.4 Product Pricing

The pricing model we follow is the same as the industry standard and above the average price. The American headhunter market charges on the basis of a percentage of the first annual salary of the person they hire. The average amount charged by headhunters is between 15 to 20 percent of the first annual salary.

However, some companies do charge up to 50% of the first annual salary. We will keep our charges at 35%. This is because we are not noobs in the industry and have a vast experience of the field. We are also not charging the highest-in-the-market rate so that we can capture the market in the start.

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Marketing Strategy of Headhunter Agency

Now that you know in detail  how to build a staffing agency, the next step is to develop a viable marketing plan for your agency. This is one of the most important parts of  headhunter business plan.

6.1 Competitive Analysis

Stevenson Headhunters will have the following competitive advantages over the market:

  1. We will hire all the top-ranking professionals with extensive experience in the field to make sure that the services we provide are the best in class. We will make a solid recruitment plan for all market segments and incorporate any special instructions from the clients.
  2. We believe in collective effort. Our experts will have detailed meetings with the clients to make sure we understand what they mean and what they want.
  3. We will also train our employees and executives with the best trainings available on the market in order for them to be a useful part of our company and to be helpful for our clients.

6.2 Sales Strategy

  • To drive sales, we will use online channels like Google, YouTube, and Facebook ads.
  • We will establish a strong presence on social media.
  • We will provide waivers and discounts on all our services at the start to earn clients.

6.3 Sales Monthly

Headhunter Business Plan - Sales Monthly

6.4 Sales Yearly

Headhunter Business Plan - Sales Yearly

6.5 Sales Forecast

Headhunter Business Plan - Unit Sales

Sales Forecast      
Unit Sales Year 1 Year 2 Year 3
Recruitment Services 38,000 40,280 42,697
Employee Training 43,000 45,580 48,315
Human Resource Consulting 42,000 44,520 47,191
Employee Reporting 45,000 47,700 50,562
TOTAL UNIT SALES 168,000 178,080 188,765
Unit Prices Year 1 Year 2 Year 3
Recruitment Services $50.00 $58.00 $67.28
Employee Training $58.00 $67.28 $78.04
Human Resource Consulting $56.00 $64.96 $75.35
Employee Reporting $46.00 $53.36 $61.90
Sales
Recruitment Services $1,900,000.00 $2,336,240.00 $2,872,640.70
Employee Training $2,494,000.00 $3,066,622.40 $3,770,718.90
Human Resource Consulting $2,352,000.00 $2,892,019.20 $3,556,026.81
Employee Reporting $2,070,000.00 $2,545,272.00 $3,129,666.45
TOTAL SALES $8,816,000.00 $10,840,153.60 $13,329,052.87
Direct Unit Costs Year 1 Year 2 Year 3
Recruitment Services $48.00 $55.00 $63.00
Employee Training $56.00 $63.00 $74.00
Human Resource Consulting $54.00 $61.00 $71.00
Employee Reporting $44.00 $50.00 $57.00
Direct Cost of Sales
Recruitment Services $1,824,000.00 $2,215,400.00 $2,689,898.40
Employee Training $2,408,000.00 $2,871,540.00 $3,575,295.20
Human Resource Consulting $2,268,000.00 $2,715,720.00 $3,350,575.20
Employee Reporting $1,980,000.00 $2,385,000.00 $2,882,034.00
Subtotal Direct Cost of Sales $8,480,000.00 $10,187,660.00 $12,497,802.80

Personnel plan

The headhunter business plan will be incomplete without the list of people needed to start the business. This is not a property preservation business plan where the need for employees will fluctuate greatly. Most of the workforce will be permanent.

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7.1 Company Staff

Stevenson will be the Chief Operations Officers of the business. He will have to hire the following people to run the company.

  • A CEO to head the company.
  • 3 Recruitment Executives to head each of the three wings.
  • 1 IT Expert to handle the IT needs of the company.
  • 6 HR Consultants, two for each market segment.
  • A Chief Financial Officer to manage the finances of the company.
  • 1 Training Manager to handle the training part of the services.
  • 1 Web Developer to maintain the company’s website and apps.
  • 1 Social Media & Marketing Expert to look after social presence and marketing.
  • 1 Receptionist/ Call Operator to handle calls and visitors.

7.2 Average Salary of Employees

 Personnel Plan      
Year 1 Year 2 Year 3
CEO $14,000 $15,400 $16,940
Recruitment Executives $34,000 $37,400 $41,140
IT Expert $9,000 $9,900 $10,890
HR Consultants $58,000 $63,800 $70,180
Chief Financial Officer $12,000 $13,200 $14,520
Training Manager $11,000 $12,100 $13,310
Web Developer $8,000 $8,800 $9,680
Social Media & Marketing Expert $8,000 $8,800 $9,680
Receptionist/ Call Operator $6,500 $7,150 $7,865
Total Salaries $160,500 $176,550 $194,205

Financial Plan

The last part of the business plan headhunter staffing is the financial plan. The startup needs to raised money via debt or equity or a combination of both for:

  • Renting a place to set up the office.
  • Hiring top professionals for the services we have to provide.
  • Establishing the office and furnishing it with all the required things.
  • Establishing an online presence through a website and social media.

8.1 Important Assumptions

 General Assumptions      
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 8.17% 8.23% 8.30%
Long-term Interest Rate 8.37% 8.40% 8.45%
Tax Rate 23.90% 24.15% 24.78%
Other 0 0 0

8.2 Break-even Analysis

 Break-Even Analysis  
Monthly Units Break-even 5348
Monthly Revenue Break-even $132,400
Assumptions:
Average Per-Unit Revenue $236.00
Average Per-Unit Variable Cost $0.66
Estimated Monthly Fixed Cost $163,290

8.3 Projected Profit and Loss

 Pro Forma Profit And Loss      
Year 1 Year 2 Year 3
Sales $8,816,000 $10,840,154 $13,329,053
Direct Cost of Sales $8,480,000 $10,187,660 $12,497,803
Other $0 $0 $0
TOTAL COST OF SALES $8,480,000 $10,187,660 $12,497,803
Gross Margin $336,000 $652,494 $831,250
Gross Margin % 3.81% 6.02% 6.24%
Expenses
Payroll $160,500 $176,550 $194,205
Sales and Marketing and Other Expenses $118,000 $120,000 $124,000
Depreciation $2,249 $2,380 $2,490
Leased Equipment $0 $0 $0
Utilities $2,880 $2,900 $3,010
Insurance $2,000 $2,030 $2,100
Rent $2,900 $3,000 $3,100
Payroll Taxes $31,000 $32,000 $33,000
Other $0 $0 $0
Total Operating Expenses $319,529 $338,860 $361,905
Profit Before Interest and Taxes $16,471 $313,634 $469,345
EBITDA $16,471 $313,634 $469,345
Interest Expense $0 $0 $0
Taxes Incurred $3,294 $62,727 $93,869
Net Profit $13,177 $250,907 $375,476
Net Profit/Sales 0.15% 2.31% 2.82%

8.3.1 Profit Monthly

Headhunter Business Plan - Gross Margin Monthly

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8.3.2 Profit Yearly

Headhunter Business Plan - Profit Yearly

8.3.3 Gross Margin Monthly

Headhunter Business Plan - Gross Margin Monthly

8.3.4 Gross Margin Yearly

Headhunter Business Plan - Gross Margin Yearly

8.4 Projected Cash Flow

Headhunter Business Plan - Projected Cash Flow

 Pro Forma Cash Flow      
Cash Received Year 1 Year 2 Year 3
Cash from Operations
Cash Sales $57,000 $61,560 $66,485
Cash from Receivables $18,000 $19,440 $20,995
SUBTOTAL CASH FROM OPERATIONS $75,000 $81,750 $88,290
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
SUBTOTAL CASH RECEIVED $76,000 $82,000 $89,000
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $33,000 $34,000 $35,000
Bill Payments $17,000 $18,100 $19,300
SUBTOTAL SPENT ON OPERATIONS $50,000 $52,000 $54,000
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
SUBTOTAL CASH SPENT $51,000 $55,080 $59,486
Net Cash Flow $15,000 $16,000 $17,000
Cash Balance $23,800 $25,000 $26,500

8.5 Projected Balance Sheet

 Pro Forma Balance Sheet      
Assets Year 1 Year 2 Year 3
Current Assets
Cash $270,100 $302,512 $332,763
Accounts Receivable $23,900 $26,768 $30,087
Inventory $4,000 $4,480 $4,900
Other Current Assets $1,000 $1,000 $1,000
TOTAL CURRENT ASSETS $293,000 $328,160 $368,852
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $17,700 $19,824 $22,302
TOTAL LONG-TERM ASSETS $23,000 $25,760 $28,980
TOTAL ASSETS $298,000 $333,760 $375,480
Liabilities and Capital Year 4 Year 5 Year 6
Current Liabilities
Accounts Payable $18,000 $20,160 $22,660
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $15,390 $17,237 $19,374
Long-term Liabilities $0 $0 $0
TOTAL LIABILITIES $15,400 $17,248 $19,387
Paid-in Capital $30,000 $31,000 $32,000
Retained Earnings $52,000 $56,680 $62,348
Earnings $190,000 $207,100 $227,810
TOTAL CAPITAL $270,000 $294,300 $323,730
TOTAL LIABILITIES AND CAPITAL $285,400 $333,760 $375,480
Net Worth $299,000 $325,910 $358,501

8.6 Business Ratios

 Ratio Analysis        
Year 1 Year 2 Year 3 INDUSTRY PROFILE
Sales Growth 7.33% 8.12% 9.00% 3.00%
Percent of Total Assets
Accounts Receivable 9.24% 10.24% 11.34% 9.80%
Inventory 5.43% 6.02% 6.67% 9.90%
Other Current Assets 2.19% 2.43% 2.69% 2.40%
Total Current Assets 150.08% 152.00% 152.60% 158.00%
Long-term Assets 11.31% 11.38% 11.49% 12.00%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.89% 4.93% 4.97% 4.34%
Long-term Liabilities 0.00% 0.00% 0.00% 0.00%
Total Liabilities 7.62% 7.68% 7.75% 7.38%
NET WORTH 101.01% 101.82% 102.75% 110.00%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 94.91% 97.47% 100.20% 99.00%
Selling, General & Administrative Expenses 94.88% 97.44% 100.17% 97.80%
Advertising Expenses 1.56% 1.60% 1.65% 1.40%
Profit Before Interest and Taxes 42.00% 43.13% 44.34% 33.90%
Main Ratios
Current 33 34 36 32
Quick 34 34.2 35.055 33
Total Debt to Total Assets 0.18% 0.18% 0.17% 0.40%
Pre-tax Return on Net Worth 73.05% 74.60% 75.80% 75.00%
Pre-tax Return on Assets 96.20% 101.01% 106.06% 111.30%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 33.10% 34.13% 35.18% N.A.
Return on Equity 55.02% 56.73% 58.48% N.A.
Activity Ratios
Accounts Receivable Turnover 7.7 7.7 7.8 N.A.
Collection Days 100 100 100 N.A.
Inventory Turnover 30.4 31.92 32 N.A.
Accounts Payable Turnover 15.1 15.3 15.5 N.A.
Payment Days 27 27 27 N.A.
Total Asset Turnover 2.4 2.5 2.6 N.A.
Debt Ratios
Debt to Net Worth -0.04 -0.03 -0.04 N.A.
Current Liab. to Liab. 1 1 1 N.A.
Liquidity Ratios
Net Working Capital $237,790 $251,106 $265,168 N.A.
Interest Coverage 0 0 0 N.A.
Additional Ratios
Assets to Sales 0.86 0.87 0.87 N.A.
Current Debt/Total Assets 1% 0% 0% N.A.
Acid Test 29 30 30.3 N.A.
Sales/Net Worth 2.1 2.3 2.3 N.A.
Dividend Payout 0 0 0 N.A.

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