7 Steps for Starting a Recruitment Agency in Canada

In 2022, Statistics Canada reported that 61.3% of businesses in Canada found it more challenging to recruit and retain staff than the previous year.[1] One of the reasons for this struggle is that there are not enough people interested in doing the type of work required. [2] If you’re looking to start a recruitment agency in Canada, now is the right time. Let’s take a look at some solid strategies that good help you get a firm head start!

Strategies for Starting a Recruitment Agency in Canada

1. Determine your agency’s niche

An important step for starting a recruitment agency on a successful path is deciding the area of the employment market where your enterprise can stand out and have the most impact.

At a basic level, it might be worthwhile to recruit for positions in the most in-demand industries, such as web development, engineering, healthcare professionals, and financial advisors. Deciding whether to focus on national or international workers is another choice that should be made at the start of the business.

Understanding what type of business to set up also includes finding out the earning potential of employment agencies.

The country’s employment services industry, which includes recruiting services, temporary and contract staffing, executive recruitment, and general HR outsourcing and consulting, represents 13.6% of the workforce, according to the ACSESS. [3] Also, the revenue for the industry grew by 15% to $18.5 billion in 2021, with temporary staffing services representing 55.3% of the activity. [4]

Another feature of the business to consider is whether to operate as a specialist or generalist recruiter. Generalist agencies have a broad focus and access to a wider pool of applicants. Their focus is on placing candidates in entry-level jobs or roles that do not require a lot of experience. This will provide more flexibility in the market, but not the high fees that executive search agencies may earn.

Specialist agencies may have deeper industry knowledge or place candidates in senior-level positions that generate higher fees from clients. These agencies may have more insight into employers’ hiring needs and deeper relationships with candidates in particular fields, but a shift in market demand or a slowdown in hiring in your chosen area can negatively impact business growth.

2. Know your competition

Before taking the plunge and starting a recruitment agency, it is also essential to research the competitive landscape to understand which companies are successful and where there may be gaps in their services.

Canadian employers are in need of specialist recruiters who can find skilled talent and replace the large number of workers who are retiring. With unemployment levels already so low, international recruiting may also be an area where your agency can have an immediate impact. Recruiters in this environment will need to demonstrate solid results for employers and help them find the right talent quickly to meet their hiring goals.

Distinguishing your agency’s brand identity and value proposition quickly will be crucial to the long-term success of the business. It will attract the right employees and clients to stand out from the pack.

3. Get the required licenses and permits

The next essential step to take is getting the necessary licenses and permits from the relevant authorities. Depending on the type of recruitment agency you want to set up, you may need one or both of the following licenses:

• License for a national recruitment agency: With this license, you’ll be able to recruit Canadian citizens and residents for local or foreign employers. You can apply for this license with the Employment Standards Branch Office in the province where you plan to operate your agency. The application process and fees may vary depending on the province, so best to check the specific requirements for your location.
• License for an international recruitment agency: This license allows you to recruit foreign workers for Canadian employers or for employers in other countries. You can also apply for this license with the Employment Standards Branch Office in the province where you plan to operate your agency. However, you will need to provide an irrevocable letter of credit in the amount of $25,000, made out to the Director of Employment Standards. [5]
• This is to ensure that you comply with the Employment Standards Act, Employment Protection for Foreign Nationals Act, Occupational Health and Safety Act, and Workplace Safety and Insurance Act. Plus, you will need to follow the specific rules and regulations for hiring foreign workers, such as obtaining a Labour Market Impact Assessment (LMIA) or a work permit for the workers you recruit.

4. Calculate the costs of setting up and running an agency

In many ways, the most critical step in building a recruitment agency is estimating the cost. Being prepared for all of the upfront costs, as well as the ongoing expenses of the business, will make it more feasible for your agency to remain in operation past the first few months.

This should be weighed against the agency’s potential earnings based on the business model. In a contingency recruitment model, for example, the agency is paid a one-time fee equivalent to 15-20% of the role’s annual salary.

However, that amount is only paid if your agency provides a successful candidate. Retained recruiters can charge a higher fee (up to 50% of the role’s annual salary), but these are for highly specialized or senior-level positions. If you do not make time for this upfront planning and accounting for how your agency will earn money, you may run into liquidity problems.

• Starting the agency: Let’s first outline the costs associated with starting a recruitment agency. Along with obtaining a license, recruitment agency owners must also register their enterprise with the Canadian government. To register the agency, you will need to provide the location of the business, where you intend to operate, the proposed business name, and the type of business you are creating (i.e. sole proprietorship, partnership, corporation, or co-operative). During the registration, you will also need to obtain a business number for identification and tax purposes. The process for registering the business will vary by province.
• Details about the process in each part of the country can be found here.
• Purchasing insurance to protect the business against liabilities is also a must. Life and disability, property and liability, professional liability, and business interruption policies are some of the types of coverage that you should consider to protect the business. Make sure to speak to an adviser about the insurance coverage that is best for your agency.
• The next consideration in the start-up phase is the office space. It is your preference whether you start with a physical or virtual office. Opting for a virtual office lowers your overall business expenses since you won’t be paying an office lease, buying furniture, or other necessities expected in a traditional office.
• There are services available that can assist you with setting up a virtual office with a dedicated phone number, and address, collecting mail on your behalf, and arranging for a conference room when needed. Similarly, there are phone and internet providers such as Ooma, Grasshopper, and Nextiva that offer business services for virtual office setups.
• This can be very useful if your staff works remotely or you intend to outsource the majority of the business functions.
• Planning your business’ technology setup before the agency is up and running is also prudent. As companies transform their business systems to obtain the most advanced solutions, your agency can start off at an advantage as a digital-native, cloud-based enterprise.
• Software should be purchased with the aim of simplifying day-to-day operations and improving the client experience. A customer relationship management (CRM) tool, Microsoft or Google office suite, and an applicant tracking system (ATS) are essentials for any recruitment agency.
• Marketing the agency is also critical to stand out in a competitive market. The costs of setting up and managing an online presence for your business can vary. However, the only cost incurred for going the DIY route is purchasing the domain for the website, as creating social media accounts is free. Hire a web designer based on your budget, and consider freelancer platforms like Fiverr to find a professional.
• Ongoing expenses: Once the business is up and running, you will also need to account for the ongoing expenses that your business will incur. This can be software subscriptions and policy payments as well as payroll and taxes. Additional expenses that relate to operating a recruitment agency include posting on job boards, purchasing a LinkedIn premium membership, joining professional associations, IT and accounting support, and marketing.

Although you might have a cost plan for the tools, sometimes the cost may rise higher than you expected, especially when you have to pay for both ATS and CRM tools. The aim is to save cost and free up your time from repetitive tasks, but juggling between tools with a double payment might not be as smooth as you expected. This is where Manatal comes in as a solution. Combining ATS and CRM into a single platform and start only $15 per user/ per month, you can easily manage the recruitment process and client management without having to worry about the cost.

Manatal combines CRM and ATS into a single solution that comes with a reasonable price point.

{{cta}}

5. Make goals for the agency

To ensure the success of your recruitment agency, it is imperative to start with a clear vision for how your agency will operate today and in the future. A clear strategic vision encourages you to be audacious in your planning and envisions the potential paths your business may take. It will also ensure that you have a business model that is scalable, and agile, and clearly defines the values that will guide employees to meet their goals.

Here’s a business goals template to help you visualize your aim.

6. Develop a marketing plan

In addition to the services you offer, the way that your recruitment agency is marketed can have a substantial impact on the company. The employment services market in Canada is highly competitive, so it is necessary to consider how your agency will stand out. Developing a marketing plan when you are starting a recruitment agency provides the blueprint for how your recruitment agency will be presented to clients and job seekers. It should be authentic to the brand and speak directly to your target audience. This will help you build a loyal following and a positive reputation in the market.

Determine how your agency will utilize online and traditional channels to raise awareness and build the brand. It is equally important to minimize negative experiences and the erosion of brand value so that your agency’s revenue is not impacted.

Here’s how you can craft a marketing plan template to help you set a clear strategy.

• Develop a marketing plan  - Recruitment agency marketing plan template (Third party)

7. Finding clients

Now you’re all set. It’s time to go find your clients. You can start with these approaches:

• Utilize online job boards: One effective way to find clients for your recruitment agency is through job boards like Indeed, Monster, or LinkedIn. These platforms allow you to post job listings, search for candidates, and connect with potential clients looking to hire.
• Networking: Attend industry events, conferences, and job fairs to connect with potential clients and build relationships within the industry. Remember, building a strong network can lead to referrals and new business opportunities.
• Offer specialized services: To stand out in a competitive market, consider offering specialized recruitment services tailored to specific industries or job roles. For example, if you have experience in IT recruitment, focus on providing IT staffing services to attract clients within that sector.
• Cold calling and cold emailing: Reach out to potential clients through cold calling and cold emailing campaigns. Introduce your recruitment agency, highlight your services, and explain how you can help them find top talent for their organization. Personalize your outreach to make a lasting impression on potential clients.
• Social media marketing: Harness the power of social media platforms like LinkedIn, Twitter, and Facebook to promote your agency and attract clients. Share industry insights, job opportunities, and success stories to engage with potential clients and showcase your expertise in recruitment.

Types of Recruitment Agencies in Canada

1. Generalist Recruitment Agencies

Generalist recruitment agencies are the most common type of recruitment agency in Canada. They cater to a wide range of industries and job positions, helping companies find suitable candidates for various roles. These agencies have a large database of candidates and are experienced in matching the right candidate with the right job.

2. Specialist Recruitment Agencies

Specialist recruitment agencies focus on specific industries or job positions. For example, there are recruitment agencies that specialize in healthcare, technology, finance, or engineering. These agencies have a deep understanding of their niche market and can provide companies with highly skilled and qualified candidates who meet their specific requirements.

3. Executive Search Firms

Also known as headhunters. They specialize in recruiting top-level executives for senior management positions. These firms work closely with companies to identify and attract high-level talent with specialized skills and experience. Executive search firms often use a more personalized and targeted approach to recruitment.

4. Temporary Staffing Agencies

AKA: temp agencies. As the name implies, they provide companies with temporary employees to fill short-term roles or cover for staff absences. These agencies are particularly useful for companies that need to quickly scale their workforce up or down based on project demands or seasonal fluctuations.

5. Recruitment Process Outsourcing (RPO) Providers

RPO providers offer end-to-end recruitment services to companies, managing the entire recruitment process on behalf of their clients. This includes sourcing candidates, conducting interviews, and overseeing the hiring process. RPO providers are beneficial for companies with high-volume recruitment needs or complex hiring requirements.

6. Niche Recruitment Agencies

Niche recruitment agencies focus on recruiting for specific job roles or skill sets within a particular industry. For example, there are agencies that specialize in placing IT professionals, creative freelancers, or bilingual candidates. Niche recruitment agencies have in-depth knowledge of their area of expertise and can provide companies with highly specialized talent.

Conclusion

Starting a recruitment agency in Canada can be a rewarding and profitable venture if you follow the right steps and strategies. In this article, we have outlined the seven key steps for setting up your own recruitment agency. By following these steps, you can create a successful and sustainable recruitment agency that meets the needs and expectations of your target market. Whether you want to recruit for local or international employers, for general or niche industries, or for permanent or temporary positions, you can find your place and niche in the Canadian recruitment industry.

—

Citations:

1. 150.statcan

2. 150.statcan

3. ACSESS

4. 150.statcan

5. canada.ca