How I Started A Recruiting Business -Action Economics

I started a small recruiting business in 2022 that has generated a non trivial amount of money. This was a situation where the stars aligned for me to stack several skill sets together in order to make some serious side hustle money.

Why Did I Start A Recruiting Business?

I work for a large private company that hires temporary workers for industrial and construction jobs. The primary job that I work is at our local nuclear power plant during refueling outages. These outages only last for about 5 weeks and they only occur every 18 months per unit. On top of the job being short duration and temporary, it is also in a giant freezer, the ice condenser. This is not an easy position to staff for in today’s economy.

My company has held this contract since the late 90s and initially it was much easier to staff then it is today. When they first got the contract the nuclear plant was shut down for years in order to take care of operability issues in the plant, including removing all the ice in the ice condensers in both units, replacing the ice baskets, and refilling them. People hired during this time frame were working 72 hours a week for years. Many of them after this experience started working as travelling nuclear workers. For the next 5 to 8 years the majority of the staff was made up of people from this initial group. Fewer people were also needed to maintain the ice condenser back then because the ice was all new and the outages were longer.

Our project managers would put an ad in the local paper for a job fair that they would host at a hotel to hire the 20 to 30 people they would need to supplement their core group each outage, and typically they would have far more people show up then they would need. By the time the great recession hit, which started in Michigan in the 2005 to 2006 time frame, these job fairs were turning out several hundred people with no more than a small ad in the paper. Our starting pay was $14 per hour then, which was around twice the minimum wage.

I was initially hired from one of these job fairs in 2006. They advertised it as an all day event. I arrived 30 minutes early and there was a line wrapped around the outside of the hotel parking lot. I was extremely fortunate to have gotten a spot, which was undoubtedly helped by me being referred by a project manager for the utility who knew my mom (who also worked at the plant).

This same process of putting a small ad in the paper and having a job fair has been the standard practice ever since. Turnout had dwindled and around the 2016-2018 time frame we were struggling to fully staff our contract. We might get enough people to show up to the job fair, but we found more people cancelling as more full time permanent jobs were becoming available in Michigan. We may have needed to hire 60 to 70 people and only got 50 we could hire. Then of those 50 only 40 actually ended up working the job. Sometimes we just ended up short, and other times we were able to make it up with employee referrals.

When Covid hit our project was cut back from 150 people to 60. We didn’t need to do any recruiting to fill our slots, but we also lost a lot of people who would normally come back from our core group. Starting in 2021 we needed to hire close to 100 new people, once again we came under the mark. Our job fairs were not turning out people. Our company added radio advertising into the mix, with little success. This culminated in an outage where we were so understaffed it was clear early into the outage that we could not complete our work scope. The plant worked with us and we received about 2 dozen loaned employees from several departments in the plant who had previously worked in the ice condenser to help us accomplish our work scope. We needed a substantial change.

Why Is Recruiting So Difficult Now?

Outages are getting shorter: Shorter duration outages means less total pay. There is a lot of hassle to work at a nuclear power plant and if the job is only for a month, for many people it just isn’t worth it.

Outages don’t line up: It used to be common to be able to work 2 to 3 jobs in a season and have the summers and winters off of work. The plant we work at had shifted from being an early season plant to a mid-season plant. This effectively blocked contractors from getting a job prior to this outage and one at the conclusion of this outage. The reason they did this? So in house plant people could take spring break off.

Marijuana is legal at the state level: In Michigan recreational marijuana is legal. To work at a nuclear power plant you need to pass a drug test, which includes marijuana. Until marijuana is decriminalized at the federal level, we will struggle to find people. At the same time the drug tests the plant uses are getting better and detecting lower PPM. People who did smoke would often stop 30 days before an outage to be good. That no longer works and those people lost their jobs. The penalty for failing a drug test is a 3 year ban from working at a nuclear plant.

The job market has improved: Michigan official unemployment in 2009 was 14%, In 2023 it was 3.6%. This makes it a lot more difficult to hire people. This year it is up to 4.8%.

Pay rates: Our pay rates had changed very little since we originally got the contract over 20 years ago. $14/hr was great money in the early 2000s, but no so much in recent days. In 2021 my son got an entry level full time job at Walmart, with benefits at $16/hr. We marginally increased the rates to $18/hr in 2022, which helped, but was not drastic enough. I did considerable research on pay rates with other companies and convinced our PMs and their boss to go after much higher rates. Part of the data I was able to use was the data from my recruiting, showing the lack of response my ads were getting. At the same time our contract switched departments at the plant and we got a new Project Manager and upper management team above him who pushed for those rates to ensure we could staff this project. We were able to get a new contract with the plant and increased our starting rate to $28/hr. Despite these increased rates, we still had difficulty turning out people to our job fairs.

Our company made the bold move to offer current employees a $750 bonus for every person they refer who the company hires and stays until the end of the outage. Quite a few people brought in 1 or 2 people, but I had grander plans.

What I Did To Set Up My Recruiting Business:

I built a website. This website has a clear landing page that details the job opportunity. It includes several pages that detail what the ice condenser is, what work we actually perform, and what working as a nuclear contractor in general is like. I also included a resources page that has detailed training for plant access, radiation worker, and foreign material exclusion. Having a detailed website has made it easier for people to apply and greatly limited the amount of questions I get asked. Every page leads to a google form where interested applicants can submit their contact information as well as an attachment of their resume.
I set up an email address: The google form submissions go to this email address and google drive. I do all contact with applicants through this unique address, rather than my personal email address. I have access to this email address and google drive from my cell phone.
I created an ad copy in Canva. Canva.com is a free program and I did several iterations on Canva to get the ad copy that I wanted.
I set up a Facebook page. I needed the Facebook page in order to run FB Ads
I ran FB ads: FB ads can be targeted by location. I made 2 separate ads, 1 to distribute locally and 1 to distribute for people 50+ miles from the plant. We offer a per diem for people who live further away.
I spent money. Facebook ads are not inexpensive. I have spent thousands of dollars on ads.
I printed flyers and business cards. I put up flyers at Libraries, Doctor offices, Michigan Works, and Post Offices. I did not get much traction from the flyers. I REALLY like the business cards, they turned out well, but unfortunately did not get much traction.
I iterated: Every outage I reviewed the data and made improvements on the process for each subsequent outage.

First Outage Spring 2022:

During the first outage a recruiting bonus was available we were under the lower rates ($18/hr) and I did not have as good of a response as I got in subsequent outages. In total I did receive almost 100 resumes, but I was also advertising nationally. Most of these people didn’t make it to the interview stage and I ended up with a total of 5 referrals that made it through. I had spent $1,500 on ads and another roughly $250 on the website. A major cost for the website was the SSL certificate. Without purchasing an SSL certificate the site would give a warning message to visitors that it is unsafe. I had a profit of right around $2,000 on this first iteration, if my time was free. I had put hundreds of hours into building the website, setting up the ads, and responding to people, so from an hourly rate, this was certainly not a very profitable endeavor.

Second Outage Fall 2022:

The second outage we had the higher rates in place, going from $18 per hour to $28 per hour. I targeted advertising more closely to our location and received 90 resumes. Of these 90 11 people made it through to the end of the outage. Since the costs of building the website and paying for the security certificate were already complete, this was much more profitable. My only marginal costs were the ads I ran, which cost $1,500, leading to a profit of $6,750 for this outage.

Third Outage Fall 2023:

The Fall of 2023 outage was almost a year from the 2022 outage ending so we had a lower returnee rate and needed to hire around 80 people. The third outage I received 128 resumes and ended up with 24 people making it through. This time I spent $2,000 running ads. I spent virtually no time on the website or ad copies, as I just tweaked the previous ones. I was also more efficient at forwarding resumes to our recruiter by batching them better, thus spending less time. I would say I spent under 60 hours in total on recruiting this time. I ended up with a total profit of $16,000 for this outage. This was my most profitable one by far.

Fourth Outage Spring 2024:

In the spring of 2024 which was only a few months after the Fall 2023 outage ended, we had a strong returnee rate of roughly 120 people of the 185 needed. This brought the total need down to 65 people. We also had a situation where many workers from another plant decided not to work there due to being misled on their pay rates, so our company brought them to our site instead, further reducing the spots available to about 40 needed. Our plant also needed to reduce their budget and cut a total of 16 slots, reducing the number of new hires needed further to around 24. All of this was happening in the moment, while I had ads running (and other people were recruiting too.)

I did not want to spend a small fortune on recruiting for a very limited amount of spaces. In the last outage there was probably a 75% chance of getting hired at the job fair, at this one the odds were closer to 25%. I had found that my earlier ads were not as effective as ads closer to the start date. Rather than running ads for 4 weeks leading up to our job fair, I paused my ads, then I ran them for 17 days. I was going to do just 2 weeks but I wanted to start them on a Friday.

I also targeted my ads tighter than I previously had done. I ran my local ad which doesn’t mention Per Diem, for a radius of 45 miles or less from the plant. I then ran an ad for Per Diem people targeted only at the 2 closest cities to us that are outside of 50 miles. I did not run any ads in Chicago. The ROI I got on these was very low. (Our contract pays $110/day per diem for people who live 50+ miles away and incur dual living expenses).

In total I spent $1,000, received 60 resumes and had 8 make it through to payment, giving a profit of around $5,000.

The End Of My Recruiting Business?

In July of 2024 I became a staff member with my company. I receive a stipend at a rate similar to unemployment benefits when not on assignment, as well as full benefits. I had stopped using the unemployment system right after Covid, so this was a big win. This also decoupled health insurance from income since I have been under Obamacare forever. This saved us around $400/mo in insurance premiums. I also get a 401K match. Long term this move is so that when one of our project managers retires, I will be moving into that role. The only downside? Staff members can not receive the referral bonus.

As part of the deal I agreed to run ads for the next couple outages. I simplified my reporting process so that it would take less time. When I am a PM staffing the project will be a large part of my job. Having this tool available and still in use will be very valuable to me at that point in time. My overall compensation increase for becoming staff exceeds my actual costs for running this system, so I am ok with spending money out of pocket in the now, even though I don’t get an upside on the back end. This also confirms my value to my upper management team, or at least it should. This is measurable. They can see that I provide say 30 employees for this outage. They would have paid out $22,500 for other referrals. This is a massive savings for them and greatly offsets my stipend when not on assignment.

My incentives are also aligned differently now. Previously my incentive was to get as many possible people through as I could. Now that I am not compensated based on the outcome of any person making it to the end of the outage I can be more targeted with my advertising. I am currently running mostly local ads. Why? We pay a $110 per diem to travelers which is a pass through expense to our contract holder. This ads up to about 50% more money that we pay out to someone who lives over 50 miles away. In addition to that the returnee rate for travelers is much lower than locals. Taking a long term view of the project having locals is much more beneficial to the project than travelers, but when I was getting paid per person getting travelers was easier because locally (<50 miles drive) there are only around 600,000 people, but going to even a 100 mile radius and there are several million people. My incentive now aligns more with the long term value I can create by reducing the total Per Diem cost to our client, and building a larger base of consistent returnees.

Results:

I spent $2,000 with roughly $1,450 being on local ads and $550 on non local ads. The data I received did confirm that going forward it does not make sense to continue running non local ads. From this $2,000 of spending I received 143 resumes with 74% being local. We offered positions to 53 of these people and 31 would have qualified for the the bonus. I would have received a bonus of $23,250 if eligible for the bonus structure.

We also came in with 172 people, 8 less than our goal after accounting for all drops. Had I not ran this system we would have ended up with 141 total hires and had a very difficult time reaching our project goals.

Going Forward:

Going forward I plan to:

Continue my system, but only fund out of my pocket for the next one. If my company would like me to continue running ads, they will need to pay for it.
Advertise 100% locally going forward: The cost per hire ended up the same for local and non local candidates and it is far cheaper to hire local candidates for our client.
Run my ads only for the 3 weeks directly around when we are hiring. I ran ads for 7 weeks during this campaign.
Explore options to work with my employer to provide a similar recruiting platform for other projects.

Conclusion:

I profited almost $30,000 from my recruiting side hustle over the last few years. Although my profit potential from this is over, the skills I was able to develop solely because this incentive was put in place will be very valuable to me in the future. I didn’t know anything about Facebook or Tiktok ads before I did this. I certainly had never made an ad in Canva. I refined my web development skills to produce mobile friendly content and learned how to utilize google forms linked to spreadsheets. All of these skills will be helpful going forward.