Recruitment Agency Business Plan: Estimating the market potential
The recruitment agency business plan needs a very detailed market analysis and estimates of the potential job openings with the new recruitment agency and the number of clients, which can be grabbed from the market.
The market potential estimate is very important for the business plan, as it is the main source of the information for the financial analysis and the analysis of the future cash flow. The good market estimation can prepare the basis for the future development of the recruitment agency.
The new entrants to the market of recruitment agencies can usually make the following mistake. They overestimate the growth of their own business without a deeper knowledge of the market behavior and the habits of the HR Recruiters operating on the market. They just project the future as it is shown in the following chart. It can be very misleading as the real behavior of the recruitment agencies market can be completely different and the business plan can really fail just in the beginning.
The more sophisticated approach to the estimation of the recruitment agencies market potential is the detailed monitoring of other recruitment agencies and their behavior on the market.
The Internet can provide a lot of useful data for the estimation and the new entrant to the market has to monitor their vacancies posted at job recruitment websites.
The first very important information for the market potential estimation is the structure of job openings in the area. It can help to find the right focus of the new recruitment agency and to save money invested in marketing activities. The new agency has to decide about the correct approach as the segments with the highest number of job openings can enjoy the highest competition from the other recruitment agencies.
The other analysis is about monitoring the complete number of job openings assigned to different recruitment agencies. The numbers can show the real market share in hands of different recruitment agencies. It can be very interesting to show in the business plan and the market estimate the potential to grab a number of job openings from different recruitment agencies, but the new recruitment agency has to be prepared to compete for them as the current recruitment agency will not just watch the outflow of the clients.
The last market estimate potential analysis is the number of job openings combined with the number of clients of the recruitment agency. It shows the possibility of grabbing big clients from the current competitors on the market. The new recruitment agency should grab the small clients in the first step to make sure of building of a good portfolio.
The more recruitment agencies market potential analysis can be done in more detailed way, but for the beginning this approach is enough.
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