What makes recruitment start-ups stumble?

by: Barney Cotton

We all know the statistics show that lots of start-ups fail. Even the relatively optimistic Small Business Association puts the figure at 30% in the first year. Consider these fatal flaws for recruitment start ups. They’re the ‘ins’ to leave out of your planning.
Inadequate funding

It’s not just about not having enough money, it’s about having the right amount, and the right plan to administer it. Even a massive investment can lead to disaster. Suppose it comes from a backer who knows nothing about recruitment. They’ll impose conditions that may sit uneasily with the way your business operates. Or perhaps the cash came from ‘friends and family’. Be very aware of the emotional issues that come with that.

Inadequate funding is often inadequate because it comes without proper guidance and support for the long term.
Insufficient cash flow management

Because it is about the long term, the cash flow is crucial. There will be high outgoings at the outset and 30 day waits for payment as the days go by. Initial investment will prime the pump but not keep it running. New clients will probably want to give you a probationary period, temps will want paying before you get paid – there are a lot of pressures on cash flow and failing to plan for it can be disastrous.

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