Table of Content

    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

    Landlord business plan
    Helps commercial tenants get landlord approval.

    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.
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    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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