Start a headhunter business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your headhunter business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a headhunter business?
Headhunters can get started with very few resources since most clients don't expect a formal office space. They may only need business cards and a professional website to get up and running.
What are the ongoing expenses for a headhunter business?
Headhunters typically won’t have too many expenses besides basic marketing costs, unless they choose to operate from a standard office. In that case, they’ll need to maintain their lease/mortgage and commercial insurance if they have employees or see clients in their location.
Who is the target market?
The target market is usually people looking for lucrative and fulfilling careers. Headhunters can technically work in any industry, but they tend to be more popular in well-paying industries such as finance, tech, or engineering.
How does a headhunter business make money?
The payment structure for a headhunter is not always straightforward. They may be paid by the employee or the employer, depending on which party the headhunter primarily serves. Payment is often related to the salary the employee will make.
How much can you charge customers?
Whether being paid by the employee or employer, most headhunters are paid a percentage of the first-year salary for the employee. Unlike recruiters, who typically receive 15 – 20%, a headhunter can make up to 30% of the salary.
How much profit can a headhunter business make?
Headhunters can make quite a bit of profit relative to their business costs. It only takes one client to be placed in a $100,000-a-year job to earn $33,000 for the headhunter.
How can you make your business more profitable?
Successful headhunters may want to also do recruiting work on the side. While a different business model, it utilizes many of the same skills. Plus, it gives headhunters the opportunity to branch out and learn more about the many kinds of companies who rely on help to find the right candidates.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your headhunter business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a Headhunter Business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a headhunter business
In-person networking is the key to marketing a headhunter business. You need to be willing to jump in and start conversations with practically anyone. Always have a business card at the ready, showcasing your website where people can go for additional information. You may also want to try paid internet advertising, though this can be more effective once you’ve established a good reputation.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Employers will have no trouble keeping you on their contact list as long as you can provide employees who are good at what they do and get along with the rest of the team. There’s a perfect job for practically anyone. The more you hone your formula, the more people will reach out to you for help.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Headhunter Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This business is good for people who enjoy helping others find more fulfilling careers. A headhunter also needs to enjoy absorbing a lot of details while on the job. They'll need to know the employee and the position well enough before they can start making meaningful matches.
What happens during a typical day at a headhunter business?
Most days will find headhunters interacting with their many clients. They may be coordinating meetings between potential employees and employers, or updating potential employees on their status in the job process. Headhunters field questions, research information, and facilitate connections. They reach out to countless people trying to find those who are both qualified and interested in making a job switch.
What are some skills and experiences that will help you build a successful headhunter business?
Headhunters may not need to have an advanced degree in the industry in which they practice, but they should have some advanced knowledge to understand where and how to place people. Many people have likened headhunting to matchmaking because there’s a lot more to it than just working with people who are ‘good on paper’. Headhunters also need good people skills in order to understand and work with personality types of all kinds.
What is the growth potential for a headhunter business?
Job hunting has become extremely complicated today, with an overwhelming number of job listings across many online platforms. Even for the most qualified applicants, finding a position that matches both their skills and personal interests can be extremely difficult. Headhunters who have a good grip on the job market stand to go far in this business.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a headhunter business?
Headhunters may want to begin with their family and friends to get a feel for the business before serving clients. For example, if your cousin hates their job as a stockbroker, you can take it upon yourself to help them find something more appropriate. You may find them a different company to work for, or suggest an adjacent career that still makes use of their experience and education. Many people are averse to leaving the comfort of their job — even if they hate it. A headhunter has to be willing to push their clients to take risks without coming across as overbearing.
You'll also need to decide if you'd rather cater to companies or to employees. An employee will come to you looking for a job change, while a company will come to you looking to fill an open position with the best possible candidate. In both cases, you'll need to be willing to weed through dozens of potential options before pairing two serious parties who can mutually benefit from each other.
It takes a very specific set of skills and patience to spot the person who truly ‘fits’ in a company, so headhunters need to understand the value of persistence. Finding qualified employees who will stick with their employers is not easy to do — especially in an age where company loyalty pales in comparison to the bottom line. A headhunter needs to tap into the frustration experienced on both sides of employment so they can sell their services to the people who need it the most.
Finally, headhunters need to be in-depth experts in what they do. They need to answer detailed questions about both employees and the companies where they hope to work. Ultimately, headhunters should strive to be professional and honest in their careers. Many people will invent stories to reach employees due to the sensitive nature of helping employed people find work. While this can be an effective strategy at the beginning of your career, it may backfire more often than not. A better strategy is being diligent and discreet while remaining honest.
How and when to build a team
Most headhunters will work on their own, though some will hire associates to research positions and track down employees who match a specific set of criteria. An extra employee can make it easier to do the more labor-intensive work of handling the employees and employers.