In 2003 I was 28, I had been in recruitment for 5 years, had built up a strong client base in a niche area and was earning far more than the average 28 year old… I was driving a Porsche and was having exotic holidays! I gave all of that up to set up my own recruitment firm a decision I did not regret at the time and one that I still do not regret to this day!
There are however 3 things I would do again if I was that 28 year old striking out alone, if you are looking at the current situation and thinking about the option of striking out alone then have a thought to these things before you do…
1 – Cash is king
As a recruitment consultant I was quite lucky I had a view on the P&L of my business so I had an idea of what things cost, software, phone, car etc. However in common with 99% of recruitment consultants I wasn’t responsible for sending invoices and collecting the debts. I was also paid my commission and salary each month irrespective of whether my client had paid (even if the commission was 1 month in arrears).
When I struck out alone I suddenly realised cash flow was a key issue for me and my new company, even if I was okay to not be paid (I had some savings – see point 2) the suppliers I used often wanted me to pay upfront as I had no credit score as a company, thus I wasn’t just not taking a salary but I was also paying for things in advance – a double whammy to my cash flow…
2 – Getting your first sale will take longer than you think
Like you I was a very good recruitment consultant, I put 3-6 sales in every month and I had a group of clients who respected me and saw me as their “go to guy” for their needs. The day I left I said goodbye to all of those companies due to the restrictive practice clauses of my contract, which I am sure you have in your deals to. I had a plan to attack similar companies with the same skill needs and with “references” from my old clients. That worked well and I got some strong “warm” leads and some immediate requirements.
I was one of the lucky ones, I have heard stories of new companies taking 2-3 months to get new roles, but let’s assume you get a new client on day 1 and a new role on day 2…. How long will it take you to fill that role? How long before the person starts? How long before you can invoice? Then what is your rebate clause, you don’t want to spend money that you may need to return?
Work on the worst case and assume that you may not make a sale for 3-4 months after you start and then factor that into your cash flow. If you beat this then amazing your ahead of the curve and up on budget, so keep going and work to stay ahead!
3 – it’s lonely out there
One of the things that drew me to recruitment was the competition and “team” ethos of the company I joined. Work hard/play hard was a way of life, we had a great team and we were all very competitive that team and that competition fired me up and helped make me be successful.
The day I stepped out on my own I lost that, I had good friends in my old company who stayed friends and remain friends to this day but they were no longer in the “fox hole” with me. Neither truthfully were any of the people I hired over the years, they were part of the team and most were good friends too by the end but in the end it was my company and I was alone.
One thing I did do was make sure I kept up my none work relationships, running your own business is stressful and you need to be able to switch off (no matter how hard that might be) even if it’s just for an afternoon watching rugby or playing golf… You will need that escape route and you need to keep it open.
If I could go back again now I would have either tried to set up with a good friend who matched my vision for the new company or I would have taken on some form of “outside” support whether that was a mentor or perhaps an investor who also had experience. That way when I needed to discuss big ideas or issues I would have someone to go to.