Let's start-up a CUK recruitment agency

[DodgyAgent]

I'm not suggesting anyone who is good at what they're doing now tries to be a pimp instead. I'm suggesting we pay a good pimp to do his/her job.

Add in office, IT, back office costs etc and a bonus sufficient to get the pimp a blingy watch, some sessions in his favourite tanning salon, a BMW that looks like an M3 etc etc and you're looking at £200k per year. That's covered by margin from having approximately 20 of us placed. If there were 50 of us and our non-CUK contemporaries on the books, there is a healthy profit to share among shareholders.

...and yes, at the risk of discussing winning the running race before we've even discovered our feet, a well-managed and profitable business could be sold in due course for a fruitful multiple of earnings.

That is exactly how I started. Four contractors set up a business and employed me... they never looked back

[Dominic Connor]

Like lawyers and accountants

The model to look at here is that used by lawyers and accountants, probably a limited partnership, trust me you don't want an unlimited liability partnership.


L&As vary a lot in their ability to sell and mostly work by having a subset who actually bring business in. Although many contractors would hate to seem themselves as sales droids they can be more effective, if you arrange so that the sales droid gets out of the way quickly and a guy who knows his stuff starts talking to the client.

You'd need someone to do the cold calling, arguing with clients about bills, smarming to HR and purchasing departments. He wouldn't need an office, but you'd need to pay for admin, phone, travel and client entertaining.

To get anyone halfway decent you'd need at least 15, more likely 20 contractors else they'd be more expensive than the way you operate now.

All 20 would have to agree on the deed of partnership which covers divving up the spoils. The legal bits are actually quite easy, since IT is the odd one out amongst the professions and most others operate at least vaguely like partnerships.

The hard part would be getting 20 contractors to agree on anything.

A partnership would also be able to bid for projects, which often have better margins than daily rate work, look at what Accenture and Crapita charge, it is possible that not one contractor who reads this charges as much as the average Accenture droid.

I'm not an expert on IR35, but it seems to me that such an outfit would be highly resistant.

To me the big problem is what do do about gaps.

The deed would basically pay by "eat what you kill" often used by loose legal partnerships with X% taken for overhead, like insurance the inhouse pimp, accounting etc

You will find that group schemes for insurance (liability and medical) are typically much less expensive than for one man bands.

A big hard question is what if a partner gets work from some other source ? In professional partnerships he'd be expected to put it through the firm which can mean that in effect he is paying two sets of pimps fees.

Conversely, what about someone who doesn't get work ?

Motivating the agent is pretty easy, he gets a rake off, but a challenge will be to tell the difference between one that is doing a good job and one that isn't. Also inevitably the posts he finds to fill won't evenly balance amongst the partners.

But, if you find a good one, you'll have someone who bothers to understand what you can offer.

Although I cite 20 as a lower bodycount, more is a lot better because if a client says "I need a SQL Server guy" and your inhouse pipm only has Oracle skills to offer that will make his job harder and his credibility lower, though obviously if you all do the same thing then saying "we are tulip hot Oracle experts" is an attractive proposition.

[evilagent]

I will take note of this thread with great interest.
As a ex-contractor who has gone to the "dark-side" I can only agree with all the issues raised so far, and may, in due course, hopefully add my experiences as well.

Being able to speak to the client managers knowledgeably about systems, and being able to suss out candidates by speaking to them only get you so far.
It is pretty much being almost constantly on the phone.
(One of the main reasons I may return to the contractor side. But I keep ALL the money! )

The main issues already raised are if contractor brings in work outside of the co-op, what fees are due.
Also, what about contractors who don't bill above a certain number of weeks per year.

Aside from the operating overheads, if a recruiter in this co-op is to earn the same as a contractor, lets say, then if you have 10 contractors fully resourced, the recruiter will need to be paid 10% margin, excluding overheads.

The contractor pool of 15-20, as mooted previously, if they are fully resourced, you might suggest 5% margin.
If you have any aspirations to get dividends, then it has to come out of margin. You are effectively delaying a bonus.

If the contractor pool is partially resourced, you need a larger pool to pay the recruiter a tad more of the margin.

It's a nice ideal, and might work for a small group of people as a quirky way of working.
The minute you want to run as a business with potential to sell on, you have the bureaucratic overheads of lawyers, admin, regulations, etc, and possibly even physical offices.

You may well be whingeing on about being ripped off on margins, but this time about your OWN company.
Despite that, I genuinely wish you well on this.

[NotAllThere]

The basic issue is that generally, contractors have the herd instinct of cats. The natural unit of contractors is "one". Each wants his/her own money, and doesn't trust the other lazy buggers.

I do know a few contractors who've managed to set up in the way proposed, with varying success. If you've already got good networks, and good reputations, then the chances of success increase.

I'll stick to product development and sales (where I have a partner company that does the sales side).

[eek]

The basic issue is that generally, contractors have the herd instinct of cats. The natural unit of contractors is "one". Each wants his/her own money, and doesn't trust the other lazy buggers.

Do you trust the other lazy buggers....

[northernladuk]

Have you noticed that the two people that started this way are now fully fledged agents which kinda dubunks the whole idea. This isn't something you can run along side, you either contract or agent. End of.

[Jubber]

Have you noticed that the two people that started this way are now fully fledged agents which kinda dubunks the whole idea. This isn't something you can run along side, you either contract or agent. End of.

I agree.

I already have an army of agents out there looking already. When they find stuff they call me !

[DodgyAgent]

Motivating the agent is pretty easy, he gets a rake off, but a challenge will be to tell the difference between one that is doing a good job and one that isn't. Also inevitably the posts he finds to fill won't evenly balance amongst the partners.

But, if you find a good one, you'll have someone who bothers to understand what you can offer.

.

You will either need to find someone who is totally self motivated.. in which case it will cost a lot of money plus equity, otherwise you will need to find someone that can be trained but will need micro managing. This then begs the question if you find someone who is fully self motivated then why would they not set up their own business.

If you get into this game and you are not leading it yourself from the front be prepared to employ a lot of agents before you find a decent one.

[evilagent]

Have you noticed that the two people that started this way are now fully fledged agents which kinda dubunks the whole idea. This isn't something you can run along side, you either contract or agent. End of.

That's it, in a nutshell.
I do know that some contractors who have worked together, tend to keep in touch, and recommend each other, so you have metamorphing, virtual teams, as and when needed.
Most of my contacts are people I worked with (in a niche ERP market) in a particular software house some 20 years ago. And we met on various projects over the years.

But the client would much prefer to bill through one single intermediary rather than having to raise POs for each one-man limited company.

It's an education learning the other side of the business.

[financial analyst]

The model to look at here is that used by lawyers and accountants, probably a limited partnership...

Thanks Dominic. This is an interesting angle that I hadn't considered. However offering our services collectively via our own Professional Services Group would require a different skillset, with many problems, some of which you have highlighted.

It is also likely that it would require substantially more resources to start up and then run successfully than a simple LtdCo Recruitment Agency. And as you mention, Partnerships seem to nuture far greater scope for disagreement between Partners.