Why headhunters fail in 2025 and fuck-up!
There are different reasons why companies crash or headhunters fuck-up. To hear why this happens is always an interesting learning curve. Sometimes just a few indicators let a company crash or stop business to prevent the total crash.
Here are 6 key indicators for our headhunting industry, why headhunters fail you might not have thought of:
I. Bad Sales
As in every business Sales is the most relevant thing for your business to exist. Without sales, no money. But what does this mean for headhunting? In my opinion there are 3 relevant points, which must work or be done well, not to fail.
1. You need always a full sales pipeline, even if you are at the moment full with projects. Having 5 or 10 top clients(who order 5 or more projects per year) and 30 annual clients, that order 1 project per year, is not enough, because sales in our industry means 2–3 appointments after 100 sales calls, if you sell quality and a retainer search and not the success based cheap recruiting packages.
2. If you don’t use retainer fees, you work for nothing and it’s more gambling than work.
3. You need good sales tools and a crm to have a proper documentation and a database for your sales activities. Excel is not enough and time consuming 90ties style.
4. Time & capacity issues. Time for sales & time for executing your projects in a 50:50 split.
II. Bad candidate search & quality
Some companies have great sales consultants, who sell everything and catching a lot of projects but then they fail with executing it, because they have not enough researchers in their company or they are not able to find the candidates by themselves they have promised their clients to find, because they are sales people and not researchers.
They also rely on social media only and advertising, as headhunting was working between 1950 and 1995. I am since 1999 in headhunting and since this time you need a direct search and talk to passive candidates always to fill a position. It’s hard work, if you do it the right way.
Some companies have also the concept of millennial recruiting, having young and cheap researchers like in a school holiday camp and a sales team and try to gamble with this combination. The sales people take every project they can get and the researchers have to work on 25 projects in parallel finding candidates. This works sometimes but the quality is often similar to fast-food, because the researchers don’t have enough time to spend on the research that is really needed.
III. Bad contracts
Another issue are bad contracts that have not the right balance between serving a client and saving your company and the work you have to do. As a headhunter you are not a fortune teller, so you have to make transparent reports and show the work you have done, even if there is no candidate in the end after 200 screened candidates. And this work must be paid for at least 70%.
Also cheap project fees are sometimes an issue, that do not cover all the afford you have put into a project. That’s also why my fees were not under 15 k €, because you pay 50% taxes in Austria, you have company costs and social insurance and you need 70–120 working hours per project to fill a difficult position.
IV. Economic market changes
In times of a recession and lay offs, headhunters are less needed than are available on the market. Companies are fine with in-house recruiting especially if there there is hiring freeze.
Or there are cheep market fees you can’t compete with, because you are not working from Dubai or India with your company. I mean the normal middle fee for a headhunter should be between 15 and 20 k € per project, or maybe 120 k € if your clients order 9 projects at once. And these are prices for a one-man-show without a fancy office in Vienna, so you can imagine how the sales pressure is for the big players, where the consultants have to bring 400 k or 500 k € turnover and earn 80 k € as a salary.
V. Not an entrepreneurial mindset
Some people are coming from an employee position to a entrepreneurial headhunting job and struggle then with business plans, chaotic workflows, not the right tools, bad marketing and bad sales, because they just did parts of it in their company where they were an employee.
They also have a too positive business plan, because they think clients will buy from them again, when they are their own brand. This can happen sometimes, but do not underestimate the brand and their reputation and network you have worked for.
VI. High company costs and bad business plan
This is also a very important point. If you pay a lot for fancy offices in the 1st district of Vienna you can’t afford with your business plan. You do not care about taxes and social insurance costs. You have a bad accounting, a wrong business plan and an employee overload or you do not think about the non-wage labor costs. Especially if you are a founder without nice venture capital money which you can burn and it’s is ok, lol, then this can be challenging. But I think during these times there are maybe only 10–20% of all entrepreneurs that start without VC. For this you need big balls and being the right person.
I did it 13 years ago directly from being unemployed with 2.000 € starting capital, but was a hard way. It’s also better to have 50 k € saved for your business, that you can forget about and you don’t need, so you can survive easier for 6–12 months without any new project.
Savings for 5–6 month might be not enough during these times. When I started headhunting in 1999, there were only 1–2 months without any projects, which can be survived easier.
So, I hope you had fun with reading this and try to make it better or review your own business for not being fucked-up soon!
Greetings from Vienna,
Thomas
