Starting an Agency

**craig1** · 15 December 2010, 12:35

Originally posted by MJP View Post

Hello all

I have been using this forum as a silent member for over a year now, and have found it highly useful and informative

My situation – Currently a contractor specialising in business change, I have enjoyed high utilisation and competitive rates since the switch from a large permie consulting outfit

I have a large network, and it has recently become apparent that I am well positioned to cross to the dark side and start an agency putting clients and consultants together. I would appreciate help and advice form forum members with any experience of the following;

-Registering as an agent. What formal steps do I have to take in order to act as an intermediary?

-Dual operation – Whilst I grow the agency, is it possible/legal to continue to offer consulting services (potentially to the same client that I am acting as agent for)

-Ltd company status – I currently operate using a tld company. Do you advise separating existing contracting company from agency?

Any input would be much appreciated

Normally I'd leave things like this alone but I know the answer to two questions:

- Dual operation. Yes , you can. It's up to the client to choose the right candidate and if you're that then fine. Look at the consulting arms of some of the large recruitment agencies out there who now use the "employed consultant" model and pimp out their own people to their clients. Business-to-business models all rely on you acting in good faith and letting them know the details.

- Ltd co. I'd personally go for a separate company wholly owned by me for all-round neatness but you could also go for a subsidiary of your existing ltd co or a "trading as" operation. Best bet is to talk to a good accountant though and decide what you really want from it. I'd certainly have separate names though for your companies so that you don't confuse clients with invoices, discussions, emails, etc. Also, if you find that you don't like the recruitment consultancy business or it's unsuccessful then it's easier to wind it up than have your consultancy company getting recruitment emails, calls and so on for years.

On becoming a recruitment consultant, remember to get a locker in your office where you can store your morals and ethics at the start of a day

**malvolio** · 15 December 2010, 12:48

And look very carefully at the finances. If you have 10 contractors out there on £400 a day they will most likely want to be paid on 30 days while you will be lucky to get 90 day payment from the clients. That means you have to cover 8 weeks outgoings with no income just to pay them. That means £((8 * 10) * (400 *5)) = £160k sat there doing nothing and you laying out £20k a week from nowhere...

**Craig@Clarity** · 15 December 2010, 12:51

One question which may help with responses is are you intending on setting up an agency or are you simply going to be an introducer?

**northernladuk** · 15 December 2010, 12:56

I think we all go through this phase at some point in our contracting career and nearly all of us sack it off once we have looked in to it further. All these positions & contractors and potential cash flowing around can be very attractive but.......

Having a large network just isn't enough. If they are all decent guys they are going to be in contract a majority of the time. You will have to start ringing around interviewing, visiting clients, getting on PSL, having cash upfront to pay if the clients can't and all the other crap that comes along with it. It isn't something you can do just because you have a contacts.

To me you are either in or your out. You can't do this part time and make it work for a whole host of reasons. If it was so easy we would all be doing it and the bottom line it isn't. You just can't contract while building up as you will be taking calls as an agent while you are on client time which is very bad form indeed.

**MJP** · 15 December 2010, 13:58

At Craig – I intend to start an agency. Being an introducer (as I am now) is simply not profitable enough

At Northern lad – To borrow from the words of someone wiser than myself – I choose to do this not because it is easy, but because it is not. Building a business on the back of a network alone would be foolish, and I am fully aware of how competitive this market is. Without being arrogant, I would not be considering this venture if I didn’t believe that I could provide a better service than what the current market has to offer

I actually disagree with your last comment. In an ideal world, where concepts such as bankroll and the fact that building a reputable business takes time do not apply – I would leave my current post and start an agency tomorrow. However this simply isn’t the case. Provided I am not in breach of any contract I see no reason not to have my cake and eat it

Comments appreciated

**TestMangler** · 15 December 2010, 14:03

Originally posted by MJP View Post

At Craig – I intend to start an agency. Being an introducer (as I am now) is simply not profitable enough

At Northern lad – To borrow from the words of someone wiser than myself – I choose to do this not because it is easy, but because it is not. Building a business on the back of a network alone would be foolish, and I am fully aware of how competitive this market is. Without being arrogant, I would not be considering this venture if I didn’t believe that I could provide a better service than what the current market has to offer

I actually disagree with your last comment. In an ideal world, where concepts such as bankroll and the fact that building a reputable business takes time do not apply – I would leave my current post and start an agency tomorrow. However this simply isn’t the case. Provided I am not in breach of any contract I see no reason not to have my cake and eat it

Comments appreciated

I worked with a contractor years ago (early 90's) who started 'agenting' by introducing contractors to his current client.

He sold out three years later for 2.1 million. It can be done.

**northernladuk** · 15 December 2010, 14:20

Originally posted by MJP View Post

At Craig – I intend to start an agency. Being an introducer (as I am now) is simply not profitable enough

At Northern lad – To borrow from the words of someone wiser than myself – I choose to do this not because it is easy, but because it is not. Building a business on the back of a network alone would be foolish, and I am fully aware of how competitive this market is. Without being arrogant, I would not be considering this venture if I didn’t believe that I could provide a better service than what the current market has to offer

I actually disagree with your last comment. In an ideal world, where concepts such as bankroll and the fact that building a reputable business takes time do not apply – I would leave my current post and start an agency tomorrow. However this simply isn’t the case. Provided I am not in breach of any contract I see no reason not to have my cake and eat it

Comments appreciated

I have no problems with your comments. All valid but I too also disagree with your last comment. Doing business while on client time could quite possibly in breach of contract or get you walked in the worst case. I have worked with a number of network guys who are running small hosting business in the background and were walked due to them carrying on their other work in client time. Obviously it is a balance though, a few calls here and there isn't going to kill anyone and if it is getting that busy you are using a lot of client time it must be going well enough to consider going for it full time. Was just playing devils advocate.

Starting an Agency