How to start a recruitment agency in 2026

I onboard new recruitment agencies onto Recruitly every week. Some of them have been running for years. Some of them are literally setting up their business the same week they sign up. The ones starting from scratch always ask the same questions, so I figured I'd write them down.

This is everything you actually need to know. Not the motivational stuff. The practical stuff.

Pick a niche before you do anything else

The biggest mistake new agencies make is going broad. "We recruit for everyone." No you don't. You're one person with a laptop. You need a niche.

Pick the sector you know. If you spent five years recruiting accountants, start there. If you came from construction, recruit for construction. Your network, your knowledge of salary bands, your understanding of what hiring managers actually want. That's your competitive advantage over established agencies. You know the market. Use it.

A niche also makes marketing easier. "I recruit senior finance professionals in the Midlands" is a message. "I recruit everyone everywhere" is noise.

The legal setup is simpler than you think

In the UK, you can start as a sole trader and switch to a limited company later. Most people go straight to ltd because it looks more professional and gives you limited liability. Companies House registration takes about 15 minutes online and costs £12.

You'll need professional indemnity insurance. It's not legally required for perm recruitment but most clients will ask for it. Costs about £300-500/year for a solo recruiter. If you're doing temp or contract, you'll also need employer's liability insurance.

Register with ICO for data protection (£40/year). You're handling candidate personal data, so you need this from day one. Get a basic privacy policy on your website. Our GDPR guide covers what recruitment agencies specifically need.

You don't need an office. Most solo recruiters work from home for the first year at least. Clients don't care where you sit. They care if you can fill their roles.

The tech you need on day one

Don't overcomplicate this. Here's the actual list.

A recruitment CRM. Not a spreadsheet. Not a generic CRM like HubSpot. A proper recruitment CRM with candidate tracking, job management, and a sales pipeline. Start with this from day one. Migrating data later is painful and you'll lose things. Here's how to pick one.

A phone. Your mobile is fine to start. When you can afford it, get a VoIP number so you have a business line that isn't your personal number. Some CRMs have calling built in.

LinkedIn. Free is fine at the start. Sales Navigator if you can stretch to it. You don't need Recruiter Lite on day one. There are cheaper alternatives that work well.

A website. One page is enough. Your name, your niche, a way to contact you. Don't spend three weeks building a website before you've spoken to a single client.

WhatsApp. Candidates prefer it to email. Response rates are significantly higher. If your CRM has WhatsApp built in, even better because every conversation gets logged automatically.

That's it. Don't buy ten tools. Buy one good CRM and use it properly.

Finding your first clients

This is where most people get stuck. You can source candidates all day but without clients, nobody's paying you.

Start with your network. Everyone you've ever placed a candidate with, every hiring manager who liked working with you, every colleague who moved to a company that hires. Call them. Not email. Call. Tell them you've gone independent and you're focused on [your niche]. Ask if they have anything coming up. Most won't. Some will. One client is all you need to start.

LinkedIn is your second channel. Post about your niche. Not "I'm excited to announce I've started my own agency" posts. Useful stuff. Market insights, salary trends, hiring tips for your sector. Build credibility. Hiring managers will come to you when they see you know the space.

Job boards are your third channel. Companies posting jobs on Indeed and LinkedIn are actively hiring and may not have an agency yet. Look for companies posting the same role repeatedly. That's a sign their internal recruitment isn't working. Call them.

Building a candidate database from zero

You're starting with an empty CRM. That feels daunting but it fills up faster than you'd think.

Day one: add every relevant contact you already have. People you've placed before, candidates you've kept in touch with, connections from your previous roles. That's your seed database.

Then build from there. Every CV that comes in from a job ad goes into the CRM. Every LinkedIn conversation, every referral, every speculative application. Within three months, most solo recruiters have 500-1,000 candidate records. Within a year, 3,000-5,000. That database becomes your most valuable asset.

If you want to move faster, platforms with built-in sourcing give you access to millions of profiles from day one. You can search, find contact details, and add candidates to your pipeline without leaving the CRM. We wrote a full guide on building a candidate database if you want the detail.

Cash flow will catch you off guard

This is the thing nobody warns you about properly. You make a placement in week two. Great. The candidate starts in four weeks. The client's payment terms are 30 days from start date. You get paid in about 10 weeks from when you did the work.

That gap is where solo recruiters get in trouble. You need enough savings to cover your personal costs for at least three months, ideally six. Some people use invoice factoring to get paid earlier but that eats into your margin.

Keep your overheads low at the start. Work from home. Use affordable tools. Don't hire until you have consistent revenue. The agencies that survive the first year are the ones that respect the cash flow gap.

Mistakes I see every month

Starting without a CRM. "I'll use a spreadsheet until I can afford a proper system." You'll lose candidates, forget follow-ups, and waste hours on admin. There are free CRM plans. Use one. Ours included.

Going too broad. Already said this but it's worth repeating. Niche down. You can expand later when you have revenue and a team.

Spending weeks on branding. Your logo doesn't matter. Your website doesn't need to be perfect. Go talk to clients. The branding can happen when you're billing.

Not tracking KPIs from the start. Even as a solo recruiter, know your numbers. Calls made, CVs sent, interviews booked, placements. If you track from week one, you'll know what's working and what isn't. Here's what to track.

Undercharging. Know your market rates. Don't discount to win your first client. You set a precedent that's hard to undo. Standard perm fees are 15-20% of salary depending on the sector and seniority.

What the first six months actually look like

Month one: set up your company, get your CRM running, start calling your network. You'll probably feel busy but won't have billed yet. That's normal.

Month two: you should have a few roles to work on. Maybe one or two from your network, maybe a speculative approach that worked. Focus on filling these. Your first placement sets the tone for everything.

Month three to six: you'll start to see patterns. Which clients are worth your time. Which sourcing channels produce the best candidates. Which parts of the process take too long. This is when you start building systems instead of winging it.

By month six, most solo recruiters who stick with it are billing consistently. Not every month is great. But the pipeline is building and the database is growing. That's when it starts to feel like a real business.

If you're past the solo stage and thinking about hiring, we wrote a separate guide on scaling from 1 to 50 consultants.