If your recruitment business employs up to five people, where should the founder’s attention be directed? The answer depends on what you are trying to achieve.
Understanding this size
The founder is the business. Clients know the founder personally. Most revenue is generated by the founder. Most important decisions, and many of the daily ones, rest with the founder.
This is not a weakness. In fact, it is often the reason the business exists. The founder’s reputation, relationships and energy are the business’s greatest strengths.
The challenge is recognising that this creates both opportunity and responsibility. You have built yourself a job. That job can become exhausting if energy and activity are not managed over time. It can also provide an outstanding income, flexibility and lifestyle.
The founder’s role at this stage is broad. Recruiter, salesperson, manager, administrator and owner describe the same individual. The objective is not to become more corporate simply because others suggest it. The objective is to consciously build the type of business that supports your own ambitions and values.
Some founders will remain at this size for many years and build rewarding careers. Others will use this period to establish the foundations for a much larger organisation. Neither approach is inherently better. They simply require different decisions.
Building the business you want
Many founders work at this size for decades and provide an outstanding lifestyle for themselves.
The focus is not always about employing more people. It is usually on enjoying the work, building strong client relationships and creating a business that delivers consistent income and personal satisfaction.
One implication is that founder energy remains one of the business’s most important assets.
Even at this size, founders should purposefully decide how work will be performed across internal staff, technology, automation, AI and outsourced or offshore resources. Or even through partnerships or collaboration.
Being small does not give freedom for a lack of rigour. Small businesses deserve the same professional foundations as large businesses. The benefit of consciously designing your business is so that it remains enjoyable to own over an extended period. The unintended consequences of an old, borrowed legal document are common conversations in our industry.
Reducing risk, protecting time and reducing unnecessary pressure are not indulgences, they are part of building a business that is sustainable for you over time. Tasks that are less enjoyable (or you are less capable of) can be undertaken in a different manner – delegate or outsource – so that energy remains high and you operate a business you still enjoy owning.
Financial discipline also deserves attention. Many businesses at this size generate healthy profits, but those profits need to achieve more than simply funding the next year of operations. Building personal wealth month-by-month is the primary objective.
Earlier articles on equity value remain relevant. But the perspective that characteristics such as strong client relationships, predictable earnings, sound financial management and reduced dependence on one individual, also make the business stronger and more enjoyable to own.
The reality is that businesses of this size will not achieve a life-changing equity sale. That should not be seen as a disappointment. It simply means wealth creation is more likely to come from consistent profitability and disciplined savings over many years rather than from a future transaction.
Have fun. Generate wealth. Noble objectives.
Preparing for growth
Many founders assume the next challenge is employing another recruiter. The first challenge is if the founder can stop doing everything.
Every new employee increases the number of decisions, conversations and expectations directed towards the founder. Continuing to do everything personally becomes increasingly difficult.
Simple processes begin to matter. None of the essential operational, marketing, compliance or financial processes need to become complex corporate structures, but they do need to become more consistent than they were when the founder worked largely alone.
Some decisions made now are surprisingly difficult to reverse later. They may seem relatively unimportant, but they set much of the culture and rhythm of the business and can be difficult and expensive to change later. Consider commissions and how they are calculated, and how viable that would be in a business that has teams and team leaders. And performance targets. And employment conditions such as working from home, or hours worked. And even shares for staff if that topic surfaces. It is important to begin with the bigger picture in mind and get advice on making appropriate decisions now.
The founder also needs to become increasingly selective about where personal time is invested. Where can staff accept more responsibility? Which activities genuinely require you? Is the next appointment another recruiter, or would an administrator, accounts person, researcher or offshore support create more value? Allowing capable people to accept responsibility is one of the earliest steps towards building a larger organisation.
Financial priorities may also begin to change. Profits that were initially distributed to the owner are increasingly used to employ people, improve systems and strengthen the capability of the business. That does not mean wealth creation is not a priority, but there are more competing priorities to be navigated.
The objective is not simply to become larger; it is to build a business capable of supporting growth.
What this means for the founder
Whatever path you choose, your attention eventually needs to become more whole-of-company focussed. The first step is recognising that the founder cannot continue being the solution to every problem.
Stop believing you have to do everything yourself.
It is important to recognise that it is your choice. Businesses of this size can provide outstanding careers, financial security and personal satisfaction. They can also become frustrating if they evolve by accident rather than design. The habits you establish now will shape both your business and your life for many years.
This article is part of HHMC’s Appropriately Corporate series for staffing and recruitment business owners, exploring growth, leadership, valuation and transaction readiness. If these issues are relevant to your business, we would be pleased to continue the conversation.
