How much does it really cost to start a recruitment agency?

Most answers to this question are wrong, not because the numbers are off, but because they measure the wrong thing. The setup cost is trivial. The number that decides whether you survive is one almost nobody mentions.

Search this question and you will get a tidy list. Company registration, a laptop, a CRM subscription, a logo, some insurance. Add it up and it lands somewhere between $5,000 and $15,000, depending on how much you spend on a website.

That list is accurate. It is also close to useless, because the money it takes to open a recruitment agency has almost nothing to do with the money it takes to run one through its first year.

The setup cost, quickly

Let us deal with the easy part first, so we can move on to the part that matters.

• Company registration and ABN. A few hundred dollars. Register a company, not a sole trader. The limited liability matters in an industry where you may owe contractors money before your clients have paid you, and a company is the structure you can eventually sell.
• A recruitment CRM or ATS. Somewhere around $150 to $250 a month per user. This is your system of record. Keep it simple and keep it updated.
• Insurance. Professional indemnity and public liability at minimum. More once you place contractors.
• A website and brand. Anywhere from a few hundred to several thousand, depending on whether you do it yourself.
• Contracts. Terms of business drafted by a lawyer, not downloaded. This is the highest-return legal spend you will make in year one.

Call it $5,000 to $15,000 all in. Genuinely, that part is not the challenge. If it were, far more agencies would survive.

The number that actually matters

Here is what the tidy lists leave out.

For the first few months, you are not paid. In permanent recruitment, you place someone, you invoice, and then you wait 30, 60, sometimes 90 days to be paid. In contract and temp, it is worse: you pay the worker weekly, from day one, while the client pays you on their terms.

So the real question is not “what does it cost to start.” It is “how long can I fund myself and the business before the money starts landing.”

What you actually need to cover

• Your own living costs. The single biggest expense in most start-ups, and the one people leave off the spreadsheet because it feels like cheating. It is not. If you cannot pay your mortgage, the business fails regardless of how well it is going.
• The gap between doing the work and being paid for it. Even a perfect first placement does not pay you for two or three months.
• Contractor payroll, if you go down the temp route. This is where it gets dangerous, and it deserves its own section.

The contract trap

Contract and temp recruitment looks more attractive than perm at first glance. Recurring margin, less feast-and-famine, a more predictable business.

It is also where profitable agencies quietly go broke, and here is the mechanic.

That $100,000 is not a loss. The desk is profitable. It is simply the cash you must have available to survive being successful. And it scales: ten contractors, $200,000. The faster you grow, the deeper the hole gets, because every new placement adds another weekly outflow that will not be matched for two months.

This is why agencies fail in their best year, not their worst. Growth eats cash.

So, the honest answer

To open a recruitment agency: $5,000 to $15,000.

To survive one through its first year, you need that, plus enough to cover your own living costs for six to twelve months, plus a buffer for the gap between working and being paid, plus, if you go into contract, a genuine cash reserve or a debtor finance facility to fund payroll.

For most founders, the realistic figure to start safely is not the $10,000 the listicles quote. It is that plus six months of runway, and a clear-eyed plan for the cash gap.

What to do before you start

• Build a thirteen-week cash forecast. Money in, money out, week by week, using real payment terms rather than optimistic ones. If the trough frightens you, the forecast is working.
• Know your personal runway. How many months can you go with no income? That number, more than any other, determines whether you can afford to start now.
• Decide perm or contract deliberately. They are different businesses with different cash profiles. Do not drift into contract because a client asked.
• If you place contractors, sort the funding before the first placement, not after.

Published by ephrams. One-to-one advisory for recruitment agency founders, UK and Australia. General information, current at July 2026. Not legal or financial advice.