The lean stack: opening for under $1,000

Buy almost nothing

The permanent-placement model needs a phone, an email address, a way to track people, and a legal wrapper. Everything else is optional or premature. New agency owners overspend on software because spending feels like progress, and it is the cheapest mistake to make and the easiest to avoid.

Here is the full lean opening:

| Item | Cost | Notes | |---|---|---| | LLC formation | $35-$500 one-time, varies by state; about $132 average | Filing fee range across states (LLC University). File directly with your Secretary of State, not a reseller | | EIN from the IRS | $0 | Free from the IRS site. Anyone charging you for this is selling air | | Business bank account | $0 to open | Keeps fee revenue separate from groceries | | Professional email | Around $6 to $8 per month | A paid mailbox on your agency domain; corpus operators used six, current provider pricing runs a little higher | | Applicant tracking system | $0 | Zoho Recruit has a free tier, capped at one active job (Zoho pricing); a spreadsheet works too | | LinkedIn | $0 to start | Free search and messaging limits are real but survivable at first | | Phone | $0 | Your existing cell and number work | | Total to open | Roughly $100-$600 | Within the under-$1,000 band with room for the first months of subscriptions |

Two notes on that table. The one-active-job cap on the free Zoho tier is genuinely limiting once you run three searches at once, at which point the paid tier around $25 per user per month is the natural first upgrade (Zoho pricing). And the email figure is a small monthly cost, not a launch cost. Count a quarter of subscriptions in your runway math from "Working for free: the cash-flow truth."

The tracker matters more than the software

Applicant tracking systems range from free tiers to agency platforms like Recruit CRM, which review marketplaces list at about $100 per user per month, billed monthly, now that the vendor's own pricing page routes you to a demo instead of a number (Capterra), and the difference in what you can charge is close to zero in year one. What decides your revenue is whether every candidate conversation, every client promise, and every follow-up date lives somewhere you will actually look.

Experienced operators keep a manual candidate and client tracker alongside their ATS, a plain spreadsheet with a row per person and columns for stage, last contact, next action, and notes, precisely because it captures the in-between states software misses: interested, resume promised but not sent, waiting on the hiring manager's feedback. Build one spreadsheet with two tabs, clients and candidates, before you buy anything. You will see it in daily use later in the course.

The upgrades, in the order revenue asks for them

Each of these earns its purchase at a specific moment. Buying early just burns runway.

LinkedIn Recruiter Lite, around $170 per month for a single seat (LinkedIn Help). Buy it when free search limits are throttling your sourcing volume, not on day one. Full Recruiter seats are enterprise-priced, and reports put them in the thousands to ten-thousand-plus dollars per seat per year, which is a team tool, not a solo one.

Errors and omissions insurance: recruiters pay an average of about $82 per month, roughly $988 a year, for professional liability coverage (Insureon). You do not need it to open. You need it the first time a client's procurement process asks for a certificate of insurance before signing your fee agreement, which happens with larger companies, and that is the moment to buy it. E&O covers claims that your services caused a loss, like a botched background representation, and a single certificate requirement can justify a year of premium.

A paid ATS: when you are running five-plus concurrent searches or bring on a second person, move from the free tier and spreadsheet to a proper system. Until then the spreadsheet is not a compromise, it is the correct tool.

What you deliberately do not buy

No office. No job board postings in month one, since your clients' postings are free lead sources for you, not products you need. No website budget beyond a simple one-page site, if that, because your LinkedIn presence does the selling early. No incorporated-in-Delaware package, no logo design sprint, no business card print run. Your first client buys from your voice on a call and your knowledge of their role, and none of those purchases improve either. One cost the table deliberately leaves off because it is personal rather than business: if you are leaving a job to run this agency, you still need health coverage, and coverage after leaving employment prices the options as real monthly numbers.

The legal wrapper and the rules around operating are the one place to slow down and be precise, because recruiting is one of the industries states actually regulate.