For many recruitment professionals who want to start up for themselves the concept of becoming a franchisee is very tempting.
For many recruitment professionals who want to start up for themselves the concept of becoming a franchisee is very tempting.
It means you have some financial backing, strategic input and a structured route to market. On the face of it, it’s difficult to see why it wouldn’t be the best option.
If you’ve got a massive stash of capital you won’t need it of course. Draw on your own resources, and do it your way.
No offence, but I’m guessing that most of you reading this don’t have a massive stash of capital tucked away. I’m also guessing (and I bet I’m right) that ‘doing it your way’ is your main motivation for considering starting up on your own.
And there’s the problem that faces franchisees.
Recruitment people are highly motivated, with a strong entrepreneurial spirit. When it comes to starting up for themselves, all too often the half-way house of a franchise falls short of their dreams.
Firstly, a big part of the dream is to have your own brand. In a franchise arrangement you’re often trading under the established branding of the franchise.
‘Doing it your way’ is usually driven by a desire to break out of somebody else’s rules. It’s about putting your own ideas into practice, because you’ve identified a way to do it better. It can be frustrating to find that as a franchisee you’re still working to rules imposed on you.
Typically that leads to a disappointment, and a feeling of deflation, because you’re not as autonomous as you wanted to be.
Autonomy of course is a big ambition. Key within it is the drive to be in control of your own destiny, and in truth that’s very closely linked to financial goals. Tired of working hard to see your salary remain static while your employers and owners beef up the bottom line, you want to see a direct link between your effort and your rewards. It will be your business.
The trouble comes when, having entered a franchise agreement, you realise that you’ve parted with a hefty startup fee and you’re still seeing a percentage of what you earn go into someone else’s pocket.
There can be no doubt that it works for some. But for many a franchise starts to feel like you’re not in control of your own strategy, you’re working to someone else’s rules, it’s not your own brand and you’re not seeing all the rewards. So, wait a minute. Weren’t they the very things you wanted achieve as a start up?
Without that previously mentioned, and let’s assume nonexistent, pile of cash you’ll need backing. Talk to the bank by all means. Let’s face it, interest rates have been higher. Ideally though look for a backer who understands recruitment businesses. And one that has experience of systems, procedures, marketing and operating in the recruitment sector.
Even the most experienced bank manager won’t know the details of recruitment life. Details that affect cash flow, like paying temps on time (which is hugely important for your reputation) before your client has paid you. It’s that kind of knowledge and experience you need from a backer.
They’re out there, and it’s worth looking for them. Because jumping straight into a franchise could leave you feeling strangely similar to how you felt as an employee.
So if you are still looking for a way to fund and support your new business why not look to a Joint Venture partner? With the sole aim of helping recruitment professionals set up on their own by providing the creation of the brand, investment in your business, up to let them concentrate on building their business, it’s their company, with the advance capital for the start-up becoming part of a formal shareholders agreement.
Call us today to discuss how Recruit Ventures can help you to start your own recruitment agency.