Recruiters are their own worst enemy when it comes to funding and growth

It’s easy to blame external factors when it comes to your business’ failings, but ‘The Financial State of UK Recruitment Businesses in 2012-13’ report reveals that when it comes to a lack of growth and development, the responsibility may lay a little closer to home.

Put together by the Institute of Recruiters and the recruitment finance experts at Simplicity, the report details the financial state of the UK recruitment industry in recent years and the results confirm that many of the UK’s small and medium sized recruitment businesses were merely treading water during 2012-13.

The key to growth, simply put, is cash and a huge 71% of respondents agreed that access to more funding would help them develop their strategies, enable their business to grow and create a platform for further development. Because of the unstable nature of the economy at the time, it was difficult to make solid growth plans when funding seemed so hard to come by. Over half (56%) of respondents found it difficult to increase funding levels with their current financier; overdrafts were costly and the interest rates crippling. Less than 20% of those asked felt that their financial facility was actually good value for money, whilst just under half found it to be expensive - no wonder growth was limited!

David Thornhill, Simplicity’s Managing Director says, “At Simplicity, our sales team speaks to recruiters and recruitment business owners on a daily basis, listening to how restrictive the funding from banks and larger finance houses can be. This causes recruitment businesses a great deal of difficulty and often they find themselves unable to achieve their potential growth and success.”

However, despite stating that their efforts to secure finance in other ways were either denied or not elaborated on, a whopping 72% admitted that they hadn’t yet looked at alternative ways to fund growth.

David Thornhill says, “To me, the fact that struggling recruitment businesses recognised there was a funding problem in their business yet neglected to do anything about it is testament to the difficulties businesses have faced during the recession. Confidence really did hit rock bottom and it seems many recruitment owners went into a period of stagnation - afraid to make any moves which could potentially rock the boat.”

That’s the exact reason that Simplicity and the IOR decided to conduct the survey - they wanted to assess the state of a recession-battered industry to find out just how well it was performing and whether or not there were any plans for growth in the future. Without a survey of this kind, the funding issue would go unrecognised and a solution to it would not be found.

Through the survey, Simplicity and the IOR have been able to gain an insight to the world of recruitment and realise the struggle to thrive in an industry that demands constant growth.

David Thornhill says, “At Simplicity, we believe it is hugely important to understand our market. We focus on providing tailored finance and back office solutions to new and growing recruitment businesses - businesses of all sizes - and if we didn’t know the industry, our product offering, in my opinion, would be far weaker. We play an important role in helping recruitment businesses to thrive and it is surveys such as this which help us on our way.”

With news of falling unemployment and an economy which is fast gaining momentum, 2014 is seeing a different, more positive UK and in turn, it’s an interesting time to again evaluate the confidence in the market and to assess how opinions have changed over the course of the last two years. By taking part in the 2014 Accessing Funds for Growth in the Recruitment Industry survey, you will play your part in helping the recruitment industry to grow and develop. There is a massive potential for growth - the funding and support is available - it just needs to be unlocked.