How to Start a Staffing Agency: the Ultimate Guide

Starting a staffing agency, especially if managed properly, can scale exponentially and be profitable in the long run. With more and more organizations in need of their services, it provides great opportunities for many. In fact, “staffing is a $174B industry – and one of the fastest-growing industries in B2B services. There are over 20,000 staffing and recruiting companies in the U.S., operating over 39,000 offices combined” according to Murray Resources. [1] But it all comes down to this question; how to start a staffing agency?

To help make sure that you’re on the right track, here are some good ideas for starting a staffing agency. Let’s dive into it!

How to Start a Staffing Agency 101

Also known as a search or recruiting firm or temp (short for “temporary”) agency, a staffing agency’s main objective is to satisfy the hiring needs of companies and match job candidates as requested. A staffing agency comes in to save its clients’ time and resources.Typically, a staffing agency earns by charging a certain percentage of the employee’s hourly wage. It is highly varied and depends on factors like the number of employees, industry or field, demand, location, etc. For example, when a client says the rate is $15/hour, the firm can pay the employee $12/hour instead.

In some cases, others pay a flat fee for services rendered. An agency can work on a “retainer basis” and charge a monthly fee until the position required is filled successfully. This is often done for specialized industries. Why? Because such roles can be hard to fill and may take some time to acquire the talent ideal for the job.

How to Start Starting a Staffing Agency in 9 Steps

Step 1: Study Recruitment Tech

An era of using spreadsheets, sending individual emails, and so on is long gone. In today's digital age, having recruitment technology at your disposal is one of the keys to your agency’s success. Recruitment technology encompasses a range of tools and platforms designed to automate and enhance the hiring process. From AI-powered sourcing tools to advanced applicant tracking systems, these technologies can streamline operations, reduce time-to-hire, and improve the quality of candidate matches.

Keep in mind that the heart of a recruitment agency is providing superior experience to both candidates and clients. With the right tech, you can offer faster placements and seamless communication. This not only positions your agency as a leader in the field but also attracts top talent and potential clients your way.

So where do you start? You can go with a tool like Applicant Tracking System (ATS.) It is specifically designed to simplify the hiring process and ease your workload in the long run. An ATS like Manatal even comes with a Recruitment CRM feature that can help optimize your sales pipeline as well. Aside from an AI engine, capable of automating the recruitment pipeline like resume parsing, Manatal also offers you the ability to track and manage your clients throughout the sales pipeline as easily as drag and drop. You can also closely and seamlessly communicate with your clients, and share the hiring progress, as well as candidates’ information with them within a few clicks.

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Step 2: Evaluate Your Own Skill & Industry

Right after you laid down the foundation with the right tools, the next step is to take a look at your skill sets and expertise. It’s a good idea to consider the industries you have experience in or are passionate about. It will help you determine the niche market you want to target. Having a background in a specific industry can give you a competitive edge as you already have an understanding of the unique challenges and requirements of that sector.

Once you have identified your strengths and chosen the right industry, conduct thorough research to learn more about the industry trends, hiring practices, and potential clients. Understanding the needs of both employers and job seekers in your chosen industry will help you tailor your services to meet their needs. Also, don’t forget to establish your networking with professionals in the industry to build relationships and gather valuable insights that can guide you in the early stages of your agency.

Step 3: Plan the Costs

How to start a staffing agency without thinking about your cost and cash flow? The answer is it’s impossible. You won’t fly. At this point, you are very much required to carefully plan out your finances. The thing is; initial costs can range from as low as $3,000 to upwards of $250,000, depending on various factors such as location, size, and whether you’ll need a physical office.

You also need to think about one-time expenses like security deposits, furniture, and office equipment, as well as recurring costs like lease, payroll, and marketing activities. Making a detailed budget that covers all potential expenses will help you avoid unexpected financial challenges and ensure your agency has the necessary funds to operate effectively from day one.

Cash flow management is also important for the growth of your staffing agency. So, it’s a must to monitor the money coming in from clients and going out for business expenses and payroll. To maintain a healthy cash flow, consider strategies like vetting new clients for their payment history, offering favorable rates for prompt payments, and actively chasing overdue invoices. Keep in mind that having a cushion to cover at least a few months of operating expenses can provide stability and allow you to take advantage of growth opportunities without the stress of living invoice to invoice.

Step 4: Handle the Legal Matters

You can prevent your agency from being personally liable if it is sued when you create a legal business entity. [2] This has a direct impact on several aspects of your operations like your business name, taxes, liability, and so forth.

That being said, another important thing to remember is choosing the right business name. Be wise and choose well because your business name will be critical to your overall success. This is what people will remember. If it’s not catchy or doesn’t have a good ring to it, that can affect their decisions.

Make sure that your chosen name is not yet trademarked or already used. Only then, can you register your business name and a domain name. Next, ensure that all licenses and permits needed to run your business are acquired. Depending on where you are, the policies vary per country. Do your due diligence and research whatever applies to your recruitment agency.

Step 5: Create an Impactful Website

It’s safe to say that, in this day and age, your website is often the first point of contact with potential clients and candidates. So, it’s important to have an online site that is not only visually appealing but also functional and user-friendly. Start by choosing a template that aligns with your brand identity and is responsive across all devices. Incorporate consistent branding elements, such as your logo, brand colors, and fonts, to foster brand recognition. Ensure that navigation is intuitive with clear menus and calls to action, guiding visitors to the most important sections of your site with ease. Hiring professional web developers can help fast-track and smoothen this part.

Remember, an impactful website is one that engages visitors and converts them into clients or candidates. So, be sure to include high-quality images and videos that showcase your team and the services you offer. Also, utilize SEO best practices to improve your site’s visibility on search engines, making it easier for your target audience to find you. Add a topping to your site with features like a job board, client testimonials, and a blog to keep visitors returning. Don’t forget to regularly update your site with fresh content and ensure it loads quickly to reduce bounce rates and enhance the user experience.

Step 6: Find the Perfect Employees for Your Staffing Agency

Finding the perfect employee is difficult. Before you even begin contacting job seekers, you must ask yourself, “why would they want to work with my company? What makes my company different and better than others?” Once you’ve locked down on which aspect of your agency that you’d like to promote to draw in candidates, think about how you will reach out to them.

You can recruit individuals through the usual methods: job boards, LinkedIn, personal contacts, referrals, etc. The only problem with this is that everybody is doing the same thing. Unless your agency works in a very specialized industry, then you will have serious competition. What you need to do is be creative and use modern recruitment means. Tactics vary depending on the industry you are in. Social media can be a good way to reach a wider audience.

Since you already know about the tools that make things easier, you can leverage an ATS to craft unique job descriptions and spread out your job ads across the online realm. ATS like Manatal allows you to publish job openings on 2500+ channels, including Indeed, LinkedIn, Monster, CareerJet, JobStreet, and more. You can also leverage its ready-to-use job description templates to save your time.

Here’s another tip, finding the right people is all about knowing what you can offer to them and, also, getting to know them better by asking the apprised questions during the interview. These two will reveal a lot and can separate you from other staffing agencies.

Step 7: Find Clients

Just like finding employees, getting clients for your agency is as challenging. You can begin by researching potential clients in various sectors and creating a list of companies that could benefit from your staffing services. Networking plays a significant role in finding clients, so attend industry events, job fairs, and networking functions to connect with potential clients and build relationships. Remember, the goal is to establish trust and demonstrate your expertise in providing top talent that meets their specific needs

Once you have identified potential clients, it is important to craft a compelling sales pitch that highlights the unique value proposition of your staffing agency. Clearly communicate how your agency can help clients streamline their hiring process, find top talent, and ultimately save them time and resources. Consider offering special promotions or discounts for new clients to attract their business and differentiate yourself from competitors. Building a strong reputation through excellent customer service and successful placements will also help attract new clients through word-of-mouth referrals.

Step 8: Get Insured

To run a solid staffing agency, insurance is something that you can’t overlook. It not only protects your business from potential risks but also builds credibility with clients and candidates. So, researching the types of insurance commonly held by staffing agencies, such as general liability, workers’ compensation, and professional liability insurance. Consult with an insurance broker who specializes in business policies to understand the specific coverage that aligns with the unique risks of a staffing business.

When searching for your insurance, you should not only look for the best rates but also for the coverage that offers comprehensive protection. Consider the scope of your staffing services, the industries you serve, and the types of placements you make when selecting your policies. It’s also prudent to prepare for future growth; as your agency expands, your insurance needs may change. So, regularly reviewing and updating your insurance policies ensures that your coverage keeps pace with your business’s development, safeguarding its long-term viability.

Here are some popular insurance examples:

• Business owners policy
• Commercial general liability insurance
• Employee theft and crime coverage
• Employment practices liability insurance
• Key employee insurance
• Liability insurance
• Workers’ compensation
• Property coverage
• Umbrella policies
• Business auto insurance (if you have a company car)

Step 9: Come Up with a Powerful Marketing Campaign

Last, but not least, start marketing your agency both online and offline. Create a powerful campaign that can get your name out there and attract the attention of the right clients and candidates.

Create a well-structured marketing plan and see to it that they are followed through and through. This will guarantee that people know your brand and will be their go-to choice when looking for a reliable staffing agency.

There are many ways to do so, such as:

• Think of a competitive advantage
• Identify and understand the target market
• Use social media and create good content
• Have an appealing and informative website
• Have good ratings on popular websites such as Google, Glassdoor,
• etc.

Conclusion

Starting a staffing agency can be a rewarding and lucrative venture if done correctly. By following the ultimate guide provided in this article, you can lay a solid foundation for your business and navigate the challenges that come with the industry.  As you embark on this journey, remember that success in the staffing agency industry requires perseverance, adaptability, and a strong commitment to providing exceptional service. So, go ahead and take that first step towards building your staffing agency empire, and remember that with the right tools and mindset, the possibilities are endless. Good luck!

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Citations

1. Murray Resources

2. Credit Donkey