Start a headhunter business by following these 10 steps:
- Plan your Headhunter Business
- Form your Headhunter Business into a Legal Entity
- Register your Headhunter Business for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Headhunter Business
- Get the Necessary Permits & Licenses for your Headhunter Business
- Get Headhunter Business Insurance
- Define your Headhunter Business Brand
- Create your Headhunter Business Website
- Set up your Business Phone System
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 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 much can you charge customers?
- 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 important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Headhunter Business Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your headhunter business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
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.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
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.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
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
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
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.
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.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2022 to find the best phone service for your small business.
Recommended Business Phone Service: Nextiva
Nextiva is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
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.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
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.
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.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
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.