10 Helpful Tips for Entrepreneurs on Successfully Starting a Staffing Agency

In a world that’s run by supply and demand, staffing agencies are a win-win for both employees and the company’s utilizing their services. Businesses that use staffing agencies get the types of employees they need when they need them.

Prospective employees find well-paying jobs while also adding to their skill sets. And you, the staffing agency, make a profit. Are you an entrepreneur who’s thinking about starting a staffing agency but aren’t sure where to start?

We’re here to help. Keep reading to discover 10 tips that’ll help you get your staffing agency off the ground.

1. Set Your Rates

The percentage structure for every staffing agency is different. As a small business owner, you’re starting a staffing agency to make money.

This is done by charging your clients more than you pay the employees you provided them with. Margins can vary drastically, ranging between 4% and 10% and averaging 5%. Rates depend on demand, location, and industry.

Companies are drawn to staffing agencies for several reasons, but the main one is that it’s convenient with minimal overhead. Let’s say a business is launching a new marketing campaign or planning a major publicity event.

They can hire an employee for a short period of time (to complete certain projects) and let them go when they’re no longer needed. Sometimes, a temporary employee works so well within a company that they’re offered a permanent position.

2. Calculate the Start-Up Costs of Starting a Staffing Agency

In addition to setting your rates, you also need to consider start-up costs. This is an important component for any small business owner, regardless of the industry.

Two main factors determine start-up costs — establishment and operational. Establishment costs are how much money you need to lay the foundation of your business. This includes basic, one-time fees like computers and software, office space, supplies, insurance, and attorney fees.

Operational costs are the on-going fees and services that keep your staffing agency up and running. These costs include finding and marketing your staffing agency to employees and potential clients.

You may also incur monthly bills for maintaining up-to-date software and data storage. Another thing to keep in mind is that the higher-skilled jobs you fill, the higher employee salaries will be.

3. Evaluate Your Skills

Like any successful small business owner, it’s important you stick to what you’re good at. Starting a staffing agency has a lot of moving parts.

Not only do you need to be skilled at finding both qualified employees and clients, but you also need an eye for matching these two individuals together. A talented recruiter knows which employees are the best fit for which positions and at which companies.

Consider the employees’ credentials, experience, and personality as well as the potential client’s mission and objectives. Don’t be afraid to add experienced employees to your own payroll to fill in any gaps or inconsistencies in your own skills.

Like with any type of business, you can’t do it all. Building a qualified team is all part of starting a staffing agency and experiencing continued success.

4. Research the Current Market and Industry Needs

The purpose of starting a staffing agency is to service those industries in need. Just as the economy relies on supply and demand, so does the staffing industry.

Research what companies are hiring and the most in-demand positions. These are the types of employees you need to attract and hire. Having access to the most talented pool of employees means more companies will be utilizing your services.

Ideally, you should choose a specific industry to focus on. This way, you can better study and understand the supply and demand cycle. The three main industries are:

  • Industrial
  • Technical/Professional
  • Clerical/Office

Avoid trying to master an entire category. Instead, focus on a specific niche within the industry segment.

5. Figure Out Where to Find Qualified Employees

This might be the most difficult part of starting a staffing agency. Finding quality employees can be a challenge — which is why so many companies use staffing agencies in the first place. When it comes to filling your pool of qualified candidates, it starts with you.

Your staffing agency needs to stand out as unique and a cut above the rest. Once you’ve created an attractive agency, you can start recruiting employees. The trick is to use unconventional means.

While job boards, referrals, and resources like LinkedIn are effective tactics, the more specific your industry, the more creative you need to be. The good news is, working in a highly-specific niche also helps your company stand out.

6. After Starting a Staffing Agency, You Need to Find Clients

Now that you’ve created a qualified pool of employees, it’s time to search for potential clients. The problem is, finding clients is just as hard (if not harder) than attracting good employees. Businesses are constantly bombarded by staffing agencies pitching their services and making promises.

Once again, you need to stand out and prove why your staffing agency is different. You also need to offer perks and incentives that your competitors can’t. Figure out what makes your staffing agency unique and then capitalize on it.

You need a “wow” factor, along with effective tools for tapping into potential clients. Common techniques include networking with other professionals, word of mouth, cold calling, online marketing, and paper ads, including newspapers.

7. Calculate Payroll Expenses

One major operational expense you need to consider when starting a staffing agency is cash flow. After all, employees are working for you in the hopes of making a living or bringing in extra money.

Staffing agencies usually pay their temps weekly or bi-weekly, while they get paid by clients 30 to 60 days after the client has received an invoice. This leaves a large discrepancy in expenses and income.

Plan ahead by securing a loan or saving enough money to cover a few months of expenses before opening the flood gates and doing business. You also need to calculate how much payroll services will cost you.

In the grand scheme of things, payroll expenses are the least of our worries. Don’t play games with not paying payroll taxes. Payroll funding can also help by advancing you funds on your unpaid invoices.

This helps cover necessary expenses and helps grow your business without placing financial stress on your bottom line. Calculate payroll expenses and the need for a business loan before hiring your first employee.

8. Don’t Discount Social Media Marketing

It was already stated that to attract both qualified employees and prospective clients, your staffing agency needs to think outside the box. Think social media has no place in starting a staffing agency? Think again!

Not only is it an important part of the growth process, but its also key for maintaining your success. Your staffing agency needs a professional presence on major platforms like LinkedIn and Facebook.

Social media helps you promote your staffing agency while also scouting for employees and clients. Twitter, LinkedIn, and Facebook are hot spots for finding people who are looking for jobs.

With over 2.4 billion social media users worldwide, there’s no better place to network than on social media. Share useful content with clients and employees to help formulate long-lasting partnerships.

9. Starting a Staffing Agency Involves Utilizing Technology

No business in today’s economy is complete without implementing some form of technology. Even in its most basic form, incorporating technology into your daily operations helps streamline and automate daily processes — saving time, money, and aggravation.

Start by determining the types of systems you need and what information you want to track.

There are a few major things you want to track when running a staffing agency. They include:

  • Employee/Client portfolios and data
  • Employee/Client relationships
  • Email accounts
  • Onboarding processes

Applicant tracking systems (ATS) and customer relationship management (CRM) software help you store and manage the relationships between your employees and clients. You can also add a reporting system to evaluate the client and employee experience, as well as store personal information.

Make sure that all of your systems are fully integrated. It’s also recommended you automate the onboarding process for employees. This will come in handy when you’re hiring multiple employees at the same time.

10. Stay Up-to-Date on Relevant Trends and News

The only way to remain ahead of your competition is to stay up to date on changing trends and news. This is especially important when specializing in a specific niche that’s constantly evolving and changing such as technology or medical.

Attending staffing industry tradeshows is a great way to network with other professionals and get a pulse on industry trends. In addition to trends, you also need to stay informed about legislation that might impact your firm. Join your state’s staffing association for the most up-to-date information.

We Make Starting a Staffing Agency Simple

Are you ready to break into the business world as a successful small business owner? Starting a staffing agency can be a lucrative and challenging career choice. Our business loans can help give you the financing you need to get your idea off the ground.

From term loans to small business loans, we have financing options for all your needs. Contact us for more information and browse our blog for more helpful posts on how to run a successful small business.