Have you had enough of working for somebody else or are you out of work and there doesn’t seem to be many jobs going?
In either case, one option open to you is to launch your own agency, but will you be able to make it? In this blog I’ve outlined 3 tests that you should apply to help answer this question for you.
1) Existing Relationships
It’s so much easier to build your own business if you have some existing relationships with clients.
OK, you may have a restrictive practice clause in your previous contract that stops you trading with them immediately but eventually it will pass. In recruitment people really do buy from those they like and trust. So, some of the clients you have a good relationship with may give you an opportunity when you set up on your own. In my first business we only succeeded because we had two clients from our previous business who supported us in our new venture. It made all the difference.
This test also applies to intermediaries who can introduce you to potential clients. The more you have, the better you’ll do.
2) Talent for New Business
Whether you start with the support of a few old clients or not you still need to win new ones. Without this ability, growth will be almost impossible.
Sure, you can set up a simple Proactive Referral System (PRS) that can increase referrals by up to 10% but that’s not going to be enough. Besides you can’t depend upon referrals because you can’t control the frequency, quality or number that you’ll receive. This means you must be able to win net-new clients by whatever means.
This may be cold-calling (not recommended as a long-term strategy) or using a more systematic technique such as AIDA Connection Campaigns. Here at Blue Bay we provide a lot of net-new client support for this very reason. In a larger company winning new clients may be taken care of for you but when you’re on your own it’s your responsibility.
3) A War Chest
I accept that whatever your personal financial situation, if you’re out of a job you’ve got nothing to lose by setting up on your own.
But given the choice, I’d suggest you build up a war chest of 3 months living expenses to reduce the pressure on yourself to make placements early on. You can also slash your personal expenditure to help you achieve this. I re-mortgaged when I set up my first business but it was, and still is, a risky strategy and I could have found myself in trouble had the business not worked out.
Things always take longer than you think and setting up a traditional company has all sorts of costs associated with it. My advice is to build two forecast spreadsheets: a realistic one and a pessimistic one. You’ll need both. Business is full or risks and you can’t wipe them out completely but you can control them. That’s the smart thing to do.
Setting up solo is tough but sometimes it’s the only option.
I think it’s easy to overlook the support you get from your employer and colleagues. All gone when you’re on your own. You can set up with another person as partners (there are pros and cons); you can join a Blue Bay type organisation or you can tough it out yourself.
There’s no right or wrong option – the decision comes down to personal choice.
One thing I will say, I’ve worked for myself since I was 25 and once you get used to it there’s no other way!