To start a recruitment agency in the UK, pick a niche you know, register a limited company, get your terms and compliance sorted, set up a recruitment CRM, then spend most of your time winning your first clients. You can do it from your kitchen table with a laptop, LinkedIn and a few months of savings.
A recruitment agency is a business that finds and places candidates into jobs for client companies, usually for a fee based on the candidate’s salary or a margin on their day rate. Starting one is exciting, can be very profitable, and is a lot harder than LinkedIn makes it look. This guide walks through the whole thing in order: niche, legal setup, costs, systems, sales, cash flow and your first hire.
If you’re still deciding whether you should go it alone at all, read What I’d tell someone before starting a recruitment business first. This post is the how.
People start agencies for control, higher earnings and the chance to build something of their own, and recruitment is one of the few businesses you can start with very little upfront investment.
The catch is that you’re now the recruiter, the salesperson, the finance team and IT support. More on that below.
Choose one market you already understand, because specialist agencies win clients faster and charge more than generalists. “We recruit everything” makes you just another inbox to delete.
A good niche is somewhere you already have contacts, know the salaries and can talk the language. For example:
Then decide your model: permanent placements, temp and contract, or both. Perm pays bigger fees less often. Temp and contract pays smaller amounts every week, but you fund the payroll until the client pays you.
You don’t need a 40-page document, but you do need a page or two that answers who you’ll sell to, what you’ll charge and how long your savings will last.
Cover these:
In the UK, most agency founders set up a limited company, register with HMRC and the ICO, put proper terms of business in place, and get insurance. Get an accountant early. It’s the best money you’ll spend in year one (here’s why appointing an accountant early matters).
| Task | What it means |
|---|---|
| Register your company | Usually a limited company through Companies House |
| HMRC | Corporation Tax, plus VAT once you go over the threshold, plus PAYE if you employ anyone |
| Business bank account | Keep the agency’s money separate from yours |
| ICO registration | You’ll hold candidates’ personal data, so you need to pay the data protection fee and follow GDPR |
| Terms of business | The Conduct of Employment Agencies and Employment Businesses Regulations 2003 say you must agree terms with clients and candidates before you work with them |
| Temp and contract rules | The Agency Workers Regulations 2010 and right to work checks apply if you supply temps |
| Insurance | Professional indemnity and public liability, plus employers’ liability once you employ staff |
Plenty of founders also join the REC for credibility and template contracts. This isn’t legal advice, so check the details with your accountant or a solicitor.
A lean agency can launch for a few hundred pounds a month. The biggest cost isn’t software, it’s the months before your first invoice gets paid.
Budget for:
Start with a proper recruitment CRM from your first candidate, because moving years of spreadsheets later is painful and you lose things along the way.
Your setup should cover:
Giig’s free recruitment CRM and free ATS cover all of the basics in one account. Keep the tech stack small: every £50 a month tool feels cheap until you’ve got ten of them.
Your first job is selling, not branding. Spend most of your week talking to hiring managers in your niche.
For the full sales playbook, read how to sell recruitment services.
Your database is your biggest asset, so start building it properly from the first conversation.
Every candidate you speak to goes in, tagged, with notes. Most won’t move this month, but they will in six. Build pools for the roles you fill most often, keep in touch, and treat every candidate well, even the ones you can’t place. A good candidate experience is what gets you referrals.
Cash flow kills more new agencies than lack of work does, because revenue on paper isn’t money in the bank.
Hire once you’ve got consistent work you can’t handle alone, not because a bigger team looks good on LinkedIn.
Many founders start with a freelance or contract recruiter, or an admin and resourcing person, before a full 360 consultant. When you do hire, your CRM matters even more: shared candidates, team permissions, tasks and reporting stop things falling through the gaps. For what comes next, read how to grow recruitment revenue.
The usual mistakes are trying to recruit for everyone, overspending on tech and branding before the first placement, and running out of cash.
It can be as little as a few hundred pounds a month for a lean, home-based agency, plus company setup and insurance. Software doesn’t have to be the big cost: Giig is free for one user. The real cost is living expenses for the three to six months before placements pay.
No, you don’t need a licence for most sectors in England, Scotland and Wales. You do need to follow the Conduct of Employment Agencies and Employment Businesses Regulations 2003 and GDPR. Some sectors need more: supplying workers in agriculture, food processing or shellfish gathering needs a GLAA licence.
Yes. Plenty of successful agencies start with one person, a laptop and a home office. All you need is a phone, LinkedIn, a recruitment CRM and somewhere quiet to make calls. Move into an office only when the team or your clients need it.
It varies a lot. In a market where you already have contacts it can be a matter of weeks, but starting cold it can take a few months. Getting paid can take another 30 to 60 days after the candidate starts, so plan your savings around that.
Most solo founders start with permanent placements, because temp means paying workers before your client pays you. Temp and contract income is steadier once you have the cash or invoice finance in place, and many agencies add it later as a second revenue stream.
You need a recruitment CRM and ATS for candidates, clients and jobs, plus email, LinkedIn and a job board or two. Giig gives you the CRM, ATS, careers page and website in one, free for one user, with paid plans from £14.99 per user/month +VAT and no contract.
Starting a recruitment agency comes down to a clear niche, solid foundations and a lot of conversations. Get the legal and money side right, set up your systems once, then spend your time with clients and candidates.
If you want the CRM sorted on day one without spending a penny, start on Giig for free. No credit card, no contract.
