How to Scale a Recruitment Business in the US Market
How to Scale a Recruitment Business in the US Market
In the latest episode of Scale Up Stateside, Marc Cohen shares his first-hand experiences and lessons on how to scale a recruitment business successfully in the US
Originally from the UK, Marc founded ConSol Partners in the midst of the 2008 financial crisis. His journey from launching his business in challenging economic times to achieving a lucrative exit offers invaluable insights for recruitment firms looking to scale their business.
This blog, part-derived from our conversation with Marc delves into critical topics like strategic planning, market alignment, leadership dynamics, and more, offering an insightful roadmap on how to scale a recruitment business in the US market.
Planning Strategically When Scaling a Recruitment Business
“So step one is to understand what you want. Are you looking for an exit? Are you willing to take risks?.... Start with an end goal and then make sure that all the behaviours are driven from that end goal”.
Planning Strategically When Scaling a Recruitment Business
Focus on long-term business goals
For recruitment businesses planning to scale in the US market, it's crucial to focus on long-term investments and strategic shifts. In our conversation, Marc discussed how his end goal was to exit the business and how every decision he made was focused at achieving that end goal.
Marc explained how he or his business partner did not take home a salary in his first two years of founding ConSol Partners as he was focused on reinvesting money in the business.
Strategic investments and networking
When planning how to scale a recruitment business in the US market, leaders should consider investing in relationships and networks that align with their long-term goals.
This may involve setting up local offices, hiring local teams, or forming partnerships with US-based companies. This will help build a sustainable presence that goes beyond initial client acquisition, focusing on deepening engagement and integrating into the local business ecosystem.
Adopting this approach helps ensure that even though the initial phase may be slow, the groundwork is laid for future success. Such investments will likely lead to significant contracts, which are vital for establishing a stable revenue stream and enhancing the company’s credibility in a new market.
Developing a Go-to-Market Strategy to Scale Your Recruitment Business
“A lot of businesses that I've spoken to who have expanded into the US have spoken about really positioning as a talent solutions provider. And part of that is finding out what challenges a prospect client has got, and then feeding solutions in that match the challenge rather than going in with your typical traditional recruitment solutions”.
Have clear messaging when targeting the US market
For recruitment businesses, product development involves refining their service offerings to meet the specific needs of the US market. Marc emphasises the importance of having a clear product and supportive marketing material that explains the solution and how it addresses the needs of the client.
“Cross-sell amongst your clients”
Developing a Go-To-Market Strategy
Marc notes a common mistake he has witnessed recruitment companies with an office in the UK and an office in the US make is creating “two silo businesses as opposed to a really united business”. He suggests that agencies should be having conversations with US clients about European expansion and vice versa.
“Be flexible”
How to Win Clients in Recruitment
Marc comments that the US is dominated by multi-billion dollar companies who are very regimented about the way they work, which is beneficial for smaller recruitment agencies who can be more agile and flexible with how they service their clients. Marc recommends to those seeking methods on how to scale a recruitment business in the US to lean into this aspect.
He quotes an example of a project ConSol Partners had with Verizon. In this example, they worked out a bespoke solution worth $1 million a year in which a number of recruiters worked essentially on-site at the end client, as they previously had issues with making hires and wanted a volume of candidates.
Choosing the Right Leadership Scale a Recruitment Business
"You can have the best plan in the world, but if you haven’t got the right leader to execute that plan, it will fail pretty hard and pretty fast".
In the conversation Marc and Amy emphasis how key it is to have the right leader in place when scaling in the US. We speak with a lot of recruitment agencies and this is a recurring theme we come across which helps determine how successful businesses will be when they expand from the UK to the US.
It is not uncommon for these individuals to be involved in the decision of where to set up in the US and to receive incentives such as attractive relocation packages and shares in the business. Check out our resource to understand salary benchmarks for different levels of recruitment consultants across the US.
Scaling a Recruitment Business in the Right Location
“Everyone loves to jump into New York. And I get asked about Los Angeles and San Francisco. I don't know if you need to be in those big, expensive cities compared to secondary cities which has received huge investment and growth in the last few years”.
Factors to consider when choosing a state to do business in
Choosing the right location is a strategic decision that can significantly affect a recruitment business's success in the US market. Factors to consider include the proximity to key clients, availability of talent, and regional industry strengths.
Consider less saturated states
In our conversation, Marc recommends seeking out secondary markets which are up and coming in comparison to primary markets which may already be over-saturated.
For instance, although tech recruitment firms may benefit from being located in hotbeds like Silicon Valley or Boston, there are many fast-growing tech hubs emerging across the entire US.
If you need additional help on choosing the best state to scale a recruitment business in, PGC’s data backed insights show where our clients place the most contractors and tax rates per state.
Scaling a Recruitment Business in the US Contract Market
“We spoke about having a proper business, a global business. And that means you have to build out contract in the US at some stage.”
We’ve previously discussed why recruiters are tapping into the lucrative US contract market.
In our conversation Marc illustrates that the US perm market is very appealing. He states that the average fees his agency was receiving was upwards of $40,000 in comparison the UK market which was closer to £16,000.
As alluring as the perm market sounds, Marc insists a key factor on how to scale a recruitment business in the US, is to build out a contract offering:
“It’s very different because perm is more high end and involves a little bit more exec search, while contract is much more enterprise focused.
You are coming up against the big players in the US, the billion dollar companies, etc. so then you really have to figure out your contract, go to market strategy, which will be different to perm whether that's working through consultancies, partners, RPOs”.
From Marc’s experience, the contract avenue is not a quick-fix, it requires work and patience, but pays off in dividends once you get the ball rolling
“We needed to start pivoting towards a long-term investment in contract. What does that mean? It might take 6-12 months to get any traction.
That was really tough for us…..it took us a long time to get that US contract traction. But once we did, it was really big and that was a significant part of our exit”.
Navigating Legal and Compliance Challenges When Scaling a Recruitment Business
“Compliance is fundamental. Your deal will die if your compliance is not strong enough.”
Be aware of different employment laws per state
Navigating legal and compliance challenges is critical for recruitment businesses when scaling in the US. Different states have varying employment laws, which can impact hiring practices, worker contracts, and business operations. Ensuring compliance with these regulations is crucial to avoid legal liabilities and maintain a reputable business standing.
Keep record of your employment compliance in the US
In addition to the more acute reasons why compliance is so crucial to the running of a recruitment business, Marc stresses the importance of having a strong record of compliance when looking to exit the business.
“Compliance will bring down your business, if you do not have the right level of documents, H.R laws, engagement with contractors, this is a major reason why somebody will run a mile from your business”
“Even though we thought we had knowledge on compliance, we needed a partner. Working with PGC is really key for compliance. When you go through this exit, companies are looking for a reason not to buy in. They're looking for a skeleton. They're looking for a behaviour that says ‘these guys cut corners’.
How to Scale a Recruitment Business Beyond Borders With PGC
Are you ready to take your recruitment business to the next level across the US or internationally?
As part of Workwell, we can help you with contractor payroll in the US and globally, enabling you to scale a recruitment business without geographic limits. We handle the complexities of state and country-specific payroll compliance, freeing you to focus on growing your business.
We’ve been helping recruitment agencies access the US market for over 24 years. Find out more how we can help you succeed in the globally.
Disclaimer: PGC does not endorse any personal views or opinions of the interviewee. All information here is for general informational purposes only and is not intended to be a substitute for professional and/or legal services.