Ready to Drop Your Recruiter? Not So Fast. A reader wants to break from the agency that connects it with clients. Our business expert offers some words of encouragement – and caution.
By Dave Lavinsky Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
For the past 7 years, I've run a small independent IT firm. I make decent money and have great relationships with my clients. I'm connected to most of them through recruiting agencies who take a commission from the clients in return for linking them with my services. I don't feel these agencies provide a value to my clients and think I could grow my business by working with them directly and cutting out the middleman. How do I make that transition?
To begin with, it's important to realize the vast value that the recruiting agencies are giving your business: clients. The key question is what percentage of your sales does the agency cost represent? Realize that it's not uncommon for a firm like yours to spend 15 percent of revenues on advertising and 20 percent on sales activities such as commissions. So even if you are paying the recruiting agencies 30 percent, you might be getting a bargain. That being said, your goal should be to find new ways to build your client list until you no longer need to supplement or diversify with the recruiting agencies’ help.
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To do this, I'd start with your current clients. Can you get more work from them without paying recruiter fees? Can you email them, asking them to refer other clients to you? Once you exhaust that route, there are numerous other options to help you build your client base, from cold calling prospective customers, to writing or posting articles on your subject matter and establishing yourself as an expert. You could even pay for pay-per-click ads on relevant keywords for extra visibility. To be sure, such proactive marketing strategies cost time and money, with no guarantees of success. So, while you should diminish your reliance on recruiting agencies, make sure to use the agencies until you no longer need them to gain new clients.
