How to start a staffing agency

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.

If you’re looking into the idea of starting one or are already in the process of establishing your own staffing agency, it would be beneficial to take a look at the steps and guidelines we’ve written below to guarantee that you’re on the right track right from the beginning.

The basics: What is a staffing agency?

However, as usual, let’s begin with the definitions.

A staffing agency is also known as a search or recruiting firm or temp (short for “temporary”) agency. It’s main purpose is to satisfy the hiring needs of companies and match job candidates as requested. You have the ability to connect with various hiring managers who are looking for the right fit for certain job vacancies.

A staffing agency allows such clients to save time and resources, at the same time find opportunities that they otherwise would not have been able to get.

On the other hand, employees benefit from such companies, too. They find jobs and a flexible working set-up as they please. These can be a way for them to land a full-time or permanent position.

The basics: How does a staffing agency make money?

A temporary staffing agency provides employees to organizations that are in need of new staff. They earn by charging a certain percentage of the employee’s hourly wage. It highly varies and depends on factors such as the number of employees, industry or field, demand, location, and so much more.

For example, when a client says the rate is $15/hour, the firm can pay the employee $12/hour instead.

In some instances, others pay a flat fee for services rendered. Temp agencies 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 a staffing agency

With that in mind, here are 11 steps on how to start staffing agencies.

Step 1: Evaluate own skill sets

There are four specific skill sets to develop if you want to be successful as a staffing agency founder. You must know how to:

  • Source employees
  • Acquire clients
  • Match ideal talent to satisfy clients’ needs
  • Manage and train staff or employees

All of these are essential and must not be overlooked. If you lack even just one of them, the chances of failing will be inevitable. That is why you need to evaluate and examine yourself. Determine if there are any gaps that need to be filled.

You can fill this said gap by harnessing yourself or creating partnerships with like-minded individuals whom you can trust.

Step 2: Choose the right industry

One of the determining factors to your success is supporting the right industry to work with. In short, you must be able to find your niche.

You can do this by researching more about your market and ensuring that you will be able to fulfill their needs. Understand the supply and demand cycle of your chosen niche.

Take a look at this from a local perspective. What are the job types available in the area? What are the potential demands for such jobs? Asking yourself this question can help you pick the right industry to work with.

Step 3: Plan startup costs ahead

Of course, funds are needed if you want to start your own business. Remember that startup costs can be divided into two categories: establishment and operational.

Establishment costs are the basics that your business needs. These are usually one-time expenses and must be paid/bought before you officially start. These can be:

  • Legal set-up expenses (entity foundation, contracts, etc.)
  • Hardware (computers, telephone, etc.)
  • Software (HR, accounting, payroll, testing, training, etc.)
  • Office space
  • Insurance

The on-going pandemic may provide more opportunities for you at this time, where you can find such establishment costs lower than normal. You can even forgo some of the expenses above! For example, you might not need an office space because either you don’t need it or work from home is still prevalent. 

Operational costs, meanwhile, are expenses that you pay to source employees and clients and to deliver your first months of work. Especially with senior-level positions, they require higher costs because their salaries are higher, the screening process is more intricate, and more.

Know your business well and you’ll find estimating and planning the initial costs much, much easier.

Step 4: Take note of the firm’s cash flow

One of the most common mistakes that newly-established agencies make is that they don’t understand cash flow very well.

For staffing firms, employees must be paid every week, bi-monthly, or monthly. Your clients, on the other hand, must pay you monthly or every two months. Any delay in this can cause serious issues to all parties involved.

You must manage the situation properly and avoid cash flow problems, missed payrolls, and tax liabilities. If not, it will take a heavy toll on your business.

Step 5: Manage the legal aspects of the business

You can prevent your firm from being personally liable if it was sued when you create a legal business entity. 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.

Guarantee 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 firm.

Step 6: Create an impactful website

After you’ve registered a name for your business and have secured a domain name, it’s time to start the perfect website.

One that is pleasing to the eye and has a smooth UX/UI can give you an edge over other competitors. This is imperative to note because if it’s slow, buggy, or not UX/UI friendly, the chances of people leaving your website will be high.

Think about your specific user experience and the journey the user will go through as they navigate your site. Whatever the fundamental goal of your website is or whatever the focus may be, users should be easily able to achieve it, and the goal itself should be reinforced as users navigate throughout your site,” said Gabriel Shaoolian of Blue Fountain Media.

This also applies to career pages. We wrote a guideline on how to create a compelling career website in one of our articles here.

Step 7: Know where to find the perfect employees

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?”

If you don’t have a good answer for these, then maybe you have to take a step back and rethink your whole plan. Only when you come up with a great answer will you be able to confidently find the right talents to join you.

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 firm 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!

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.

(Related: Need a template for interview questions? We have them here!)

Step 8: Find clients

Like finding employees, finding clients can also be just as challenging. We’ve mentioned how many staffing agencies there are in the US, right? This poses a problem because people might consider your startup as just another one on the list.

As with our point above, ask yourself why clients should work with you and what makes you different. If you have good answers to these, then you’re more than good.

Need help on where to look for clients? Here are some ideas:

  • Internet (social media, forums, online communities, etc.)
  • Newspaper
  • Ads
  • Referrals
  • Events (i.e. networking events)
  • Cold calling

These can help you on your search, but don’t forget to be creative, too. Develop an impactful USP that will entice them to work with you. Give them something that competitors won’t be able to offer. This will propel your chances to the next level.

Step 9: Use technology

Another mistake that companies are making is thinking that they can do things manually. Managing the business and people through outdated methods, using spreadsheets, sending individual emails-- you name it! These will only lead to chaos and disarray in the long run as they will be impossible to track as they pile up.

That is why you need to integrate technology into your operations. For staffing firms, an all-in-one recruitment solution is an incredible choice. Our trusted software, Manatal, can help you be in full control without missing any information and streamline daily business operations seamlessly. 

Manatal: Transform the Way You Recruit

Manatal is a cloud-based recruitment and applicant tracking software designed for human resources (HR) departments and recruitment and staffing agencies. It is very useful on two fronts of the business: one for the clients and one for the candidates.

The solution offers tools for candidate sourcing, customer relationship management (CRM), AI-based recommendations, candidate profile enrichment, compliance (GDPR, CCPA, PDPA,...), team collaboration and communication, reporting and analytics, task management, a complete API, and more.

To elaborate more on how Manatal helps staffing agencies, you can get:

Centralized client data

In more ways than one, a recruitment CRM saves your recruiters valuable time that’s better utilized for the candidate’s side of the process.

In fact, using a recruitment CRM to maintain an up-to-date client profile saves more time than it appears. With all information aggregated, recruiters and sales professionals can collaborate on each project, communicate directly with each other regarding client tasks and even maintain a record of communications so that it may be leveraged in the future.

Improvement on conversion, retention, and ROI

It simplifies the conversion process as it makes tracking leads much simpler. For example, Manatal’s recruitment CRM tool allows users to maintain a record of their active leads in various stages through a conversion pipeline view.

In terms of retention, a recruitment CRM helps your business display progress easily, showcase results, and keep track of client preferences. Though the data is very likely gathered by your recruiters, these are all elements that your sales team can leverage in their communications. 

According to research conducted by Nucleus, a CRM’s average ROI is $8.71 for every dollar spent. On the other hand, other sources state that CRM applications are capable of increasing revenue by up to 41% per sales representative.

There are about a dozen more features that staffing companies will find relevant but instead, we want to mention that Manatal is easy to use, requires no training, and is super affordable. It starts at just $15 per user per month.

Step 10: Get insured

We’ve mentioned insurance as one of your establishment costs, but it deserves a point on its own. Why? You need it for protection. 

This must not be forgotten because you’ll never know what might happen. We’re no experts in this manner, which is why we highly recommend that you consult an insurance agent who understands your business and knows the right insurance to get you covered in relevant areas.

  • 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)
  • …and many more!

Step 11: Come up with a powerful marketing campaign

Last, but not least, start marketing your staffing firm 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 such a recruiting firm.

  • 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.
  • …and others!

If you’re looking for more tips on how to grow your staffing business, our blog offers 11 strategies on how to do just that. 

If you need a recruitment software solution to start your staffing agency on the right note, then you should check out Manatal. Click here to read more of our insights on recruitment and HR technology, or here to explore our 14-day free trial.

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