We look to each franchisee to build and execute his or her own business plan. How big and how fast your business grows depends on several factors, the most important being how effective you are at generating opportunities with clients in your territory. Your website will generate some client enquiries, but to be successful, the majority of opportunities you’ll generate yourself.
Here are some facts to help you estimate the financial opportunity for yourself:
- Your business will probably have a mix of permanent executive recruitment and interim placements
- For clients where you place people into interim roles, you will earn your fee as the gross margin on their contract. Gross margin is calculated as the difference between amounts invoiced to clients and payments to candidates in interim contracts – the proportion you retain as your fee which is earned over the duration of each interim contract. In our headquarters UK business, which has been concentrated largely in the south, our contracts average £750 per day invoiced to the client, 25% of which we retain as our fee. Executives Online's terms and conditions for interim recruitment are published on this site.
- An average interim contract lasts six months.
- For clients where you place people into permanent roles, you charge an initial engagement fee and the balance of your fee will be invoiced when the hired candidate starts work.
- The fee is calculated as up to 30% of the candidate's guaranteed first year remuneration. Executives Online's terms and conditions for permanent recruitment are published on this site.
- In starting your business, it might be conservative to assume several initial months with no revenue before you make your first placement. How quickly your business grows to generate multiple placements per month is down to the success you make of your market. Our first UK franchisee generated multiple placements within one month of starting. In Australia, it took several months longer to achieve even the first placement.
- Capacity planning should also factor into your planning. There is probably an upper limit to how many placements a single person can generate, because not every project you work on will result in a successful placement and a fee being earned. We would advise franchisees who are generating upwards of two placements per month to consider bringing on additional staff.
Below is a chart that shows several scenarios for the growth of a new Executives Online franchise business. All scenarios show a mix of interim and permanent placements (the permanent fees being the "spikes" in the chart), roughly two-thirds interim and one-third permanent. The minimal scenario assumes no revenues for the first three months, then one placement every second month, rising to three placements per month at Month 22. The possible scenario accelerates this performance by bringing forward the first placement to Month 2, and assumes a higher gross margin per placement. The double scenario doubles and brings forward the minimum scenario.
Please note, these figures are offered only as examples of what might happen, not as guarantees of performance you will definitely experience.