Operating a recruitment agency in the Philippines requires a lot of planning with stellar execution. You need to identify your business’ niche, understand the local laws and regulations as well as invest in the right technology. Your marketing and hiring strategy has got to be near perfect if you want to keep staying ahead of your competition. Let’s take a look in detail what you need to do.
1. Identify Your Niche
The first thing you want to do is jump into the business blindly. You need to do your market research first. Identify which industry you want to offer your solutions to - is it technology, oil and gas, or education? Then you got to assess your competition and who could be your potential clients. Develop and offer them your unique selling proposition, and test, and optimize it as you scale up.
2. Calculate the Costs
It is not cheap to start a recruitment agency. You need to pay to register your business and obtain the necessary licenses. In addition to all that, renting an office can be a major cost in cities such as Manila. To ensure that your business operates without a hitch, you need to choose the right Applicant Tracking System (ATS) and Customer Relationship Management (CRM).
Below are the possible costs that you can consider:
Technology Solutions
You can save costs on your tech stack by using a solution that combines a recruitment ATS and a sales CRM in one price such as Manatal, which starts at $15 per user.
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License Fees and Business Registration
The cost of business registration and obtaining licenses depends on the type of business and other factors. Here are the possible costs you might encounter [1]:
1) Bureau of Internal Revenue (BIR):
i) Annual Registration Fee: Php 500
ii) Documentary Stamp: Php 75
iii) Books of Account: Php 200
iv) Cost of Printing Official Receipts: Php 3,500
v) Total Cost at BIR: Php 4,275
2) Security and Exchange Commission (SEC):
i) Business Name Reservation for 90 days: Php 120
ii) SEC Express Lane: Php 600
iii) SEC Registration Fee: Php 2,530
iv) Stock Transfer Book: Php 500
v) BIR Documentary Stamps: Php 1,500
vi) Notarial Fees: Php 1,500
vii) Total SEC Expenses: Php 6,750
3) Department of Trade and Industry (DTI):
i) Barangay level/coverage: Php 200
ii) Municipal/city coverage: Php 500
iii) Regional coverage: Php 1,000
iv) National coverage: Php 2,000
v) Documentary tax for DTI documents: Php 30
Obviously, there are other costs that you need to think about like Barangay clearance, permits and administration overheads. The numbers can vary depending on your location.
Personnel Costs
You obviously need some personnel to operate your business like recruiters, office admin, HR executives, and more. Since you are most likely going to hire junior recruiters, the estimated total pay is Php 66,000 per month[2].
These are just example figures and the actual costs can vary greatly depending on various factors. It’s always a good idea to do thorough research and possibly consult with a financial advisor before starting your business.
3. Your Business Model
Now that you have seen the possible costs, you need a business model that can determine your revenue stream. The model that you are going to choose will also influence your relationship with your clients and candidates. So be careful when choosing one because there is no one-size-fits-all approach. There is the contingency model (risk and reward), hourly model (steady income), flat model (certainty income), and retainer model (upfront income). Each model caters to different needs and scenarios.
Let’s delve deeper into each of these models and explore how they can shape your recruitment agency’s path to success:
1. Contingency: In this business model, your clients will pay you when they hire a candidate you provide. Since your income depends highly on the successful placement of a candidate, you can understand why it can be risky. But, if you have a high placement rate, the Contingency model can be advantageous.
2. Hourly: If your recruitment process requires a significant amount of time and resources, then this model might be beneficial for you as it provides a more steady income. However, it may not be as lucrative as the contingency model if you can place candidates quickly.
3. Flat: On the contrary, in the flat fee model, you charge a flat fee for your services regardless of the time it takes to fill the position or the salary of the candidate placed. This model provides certainty in terms of income and can be attractive to clients as they know upfront how much the service will cost.
4. Retainer: In the retainer model, you receive a retainer fee upfront from the client before the recruitment process begins. The retainer is usually a percentage of the estimated recruitment cost. This model provides income upfront and allows you to cover some of the initial costs of the recruitment process. However, it may be less attractive to clients as they have to pay a portion of the cost upfront.
4. Set Up Your Agency Website
The Internet is one of the places where your potential clients can find and interact with you. It has to be professional-looking, easy to navigate, and accurately reflect your company’s brand identity. This includes clear messaging about your services and contact information. As time goes by, you can include testimonials from clients to build trust with visitors.
5. Create Content for Lead Generation
Then you need to create and share relevant, valuable content that addresses the needs and challenges of your target audience. For instance, you can publish blog posts on topics such as AI in recruitment and showcase your employer’s branding. With enough useful content, you can position your business as an expert in the field, attract traffic to your website, and generate leads.
6. Use Social Media for Branding
An effective tool to increase your employer brand visibility and engage with your potential clients is social media. You can use LinkedIn, Facebook, X (previously known as Twitter), Instagram, and TikTok to regularly post updates about your agency, share your blog posts, and participate in relevant discussions to build a strong online presence. Plus, you need to keep your branding consistent across all platforms to reinforce your brand identity.
7. Choose Management Tools
Up until now, we know that when you are starting a recruitment agency, you do more than just sourcing, attracting, and tracking candidates. You also need to manage your client relationships. So you need to use management tools to help streamline your recruitment process and improve efficiency like Trello (keep track of ongoing projects), MS Teams (collaboration tool within your team), and GSuite (create and share documents with all stakeholders.)
8. Build a Team
When building your team for your recruitment agency, you need to hire the right people because they are the backbone of your business. This is not only your team of recruiters, but also other staff who will handle the administrative tasks, marketing, and legal. So, when you are recruiting your team, look for individuals who share your agency’s values and are committed to providing excellent service to clients and candidates alike.
9. Find Clients
Finding clients is often one of the most challenging aspects of running a recruitment agency. However, there are several strategies you can use to attract potential clients. These include networking at industry events, reaching out to businesses in your niche, and leveraging your website and social media platforms to showcase your services. Remember, building strong relationships with clients is key to your agency’s success.
Conclusion
In conclusion, the Philippines' optimistic economic environment makes starting a recruitment agency an appealing venture. Despite client acquisition challenges, networking and online strategies are recommended to foster lasting client relationships. Success in the recruitment agency business hinges on a comprehensive approach, integrating strategic planning, financial prudence, effective marketing, and meaningful client and candidate engagement.
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