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 headhunter business plan 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 headhunter business plan 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.
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 headhunter 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 headhunter 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.
|Research and Development||$25,000|
|TOTAL START-UP EXPENSES||$375,900|
|Other Current Assets||$209,000|
|Start-up Expenses to Fund||$375,900|
|Start-up Assets to Fund||$1,187,000|
|TOTAL FUNDING REQUIRED||$1,562,900|
|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|
|Liabilities and Capital|
|Accounts Payable (Outstanding Bills)||$42,000|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$1,562,900|
|Loss at Start-up (Start-up Expenses)||$367,100|
|TOTAL CAPITAL AND LIABILITIES||$2,002,000|
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 headhunter business plan, 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
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.
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
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.
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.
|Potential Customers||Growth||Year 1||Year 2||Year 3||Year 4||Year 5||CAGR|
|Office-Clerical and Administrative||28%||30,000||31,000||32,000||33,000||34,000||10.00%|
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.
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:
- 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.
- 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.
- 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
6.4 Sales Yearly
6.5 Sales Forecast
|Unit Sales||Year 1||Year 2||Year 3|
|Human Resource Consulting||42,000||44,520||47,191|
|TOTAL UNIT SALES||168,000||178,080||188,765|
|Unit Prices||Year 1||Year 2||Year 3|
|Human Resource Consulting||$56.00||$64.96||$75.35|
|Human Resource Consulting||$2,352,000.00||$2,892,019.20||$3,556,026.81|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Human Resource Consulting||$54.00||$61.00||$71.00|
|Direct Cost of Sales|
|Human Resource Consulting||$2,268,000.00||$2,715,720.00||$3,350,575.20|
|Subtotal Direct Cost of Sales||$8,480,000.00||$10,187,660.00||$12,497,802.80|
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.
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
|Year 1||Year 2||Year 3|
|Chief Financial Officer||$12,000||$13,200||$14,520|
|Social Media & Marketing Expert||$8,000||$8,800||$9,680|
|Receptionist/ Call Operator||$6,500||$7,150||$7,865|
The last part of the headhunter business plan 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
|Year 1||Year 2||Year 3|
|Current Interest Rate||8.17%||8.23%||8.30%|
|Long-term Interest Rate||8.37%||8.40%||8.45%|
8.2 Break-even Analysis
|Monthly Units Break-even||5348|
|Monthly Revenue Break-even||$132,400|
|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|
|Direct Cost of Sales||$8,480,000||$10,187,660||$12,497,803|
|TOTAL COST OF SALES||$8,480,000||$10,187,660||$12,497,803|
|Gross Margin %||3.81%||6.02%||6.24%|
|Sales and Marketing and Other Expenses||$118,000||$120,000||$124,000|
|Total Operating Expenses||$319,529||$338,860||$361,905|
|Profit Before Interest and Taxes||$16,471||$313,634||$469,345|
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|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|
|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|
|SUBTOTAL CASH SPENT||$51,000||$55,080||$59,486|
|Net Cash Flow||$15,000||$16,000||$17,000|
8.5 Projected Balance Sheet
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$1,000||$1,000||$1,000|
|TOTAL CURRENT ASSETS||$293,000||$328,160||$368,852|
|TOTAL LONG-TERM ASSETS||$23,000||$25,760||$28,980|
|Liabilities and Capital||Year 4||Year 5||Year 6|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$15,390||$17,237||$19,374|
|TOTAL LIABILITIES AND CAPITAL||$285,400||$333,760||$375,480|
8.6 Business Ratios
|Year 1||Year 2||Year 3||INDUSTRY PROFILE|
|Percent of Total Assets|
|Other Current Assets||2.19%||2.43%||2.69%||2.40%|
|Total Current Assets||150.08%||152.00%||152.60%||158.00%|
|Percent of Sales|
|Selling, General & Administrative Expenses||94.88%||97.44%||100.17%||97.80%|
|Profit Before Interest and Taxes||42.00%||43.13%||44.34%||33.90%|
|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.|
|Accounts Receivable Turnover||7.7||7.7||7.8||N.A.|
|Accounts Payable Turnover||15.1||15.3||15.5||N.A.|
|Total Asset Turnover||2.4||2.5||2.6||N.A.|
|Debt to Net Worth||-0.04||-0.03||-0.04||N.A.|
|Current Liab. to Liab.||1||1||1||N.A.|
|Net Working Capital||$237,790||$251,106||$265,168||N.A.|
|Assets to Sales||0.86||0.87||0.87||N.A.|
|Current Debt/Total Assets||1%||0%||0%||N.A.|
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