A Definitive Guide On How to Start a Staffing Agency

Gone are the days when a resume and firm handshake could land a job. Finding a job is a full-time job these days. In fact, many will send hundreds of applications during their search.

For some, it takes 15+ weeks to finally land a job. People turn to a staffing agency as a way to streamline job placement. Staffing agencies hire employees who go on to work for other companies.

These jobs are often temporary but can offer part or full-time work. The agency collects a fee or partial pay when placing an employee — they’re an intermediary. Interested in learning how to start a staffing agency?

You’ve come to the right place since this post covers just about everything needed to get started. So, follow along, take notes, and prepare to explore this great business opportunity.

Part 1: Market Research on How to Start a Staffing Agency

The U.S. staffing industry takes in 144.5bn revenue each year. There are some 20,000+ staffing agencies throughout the U.S., too. These two stats should tip you off as to how much competition you’ll have while you’re learning how to start a staffing agency.

Part 1 shares the preliminary steps you’ll take when starting a staffing agency:

Find a Niche

A niche is a smaller segment of a larger market, topic, or interest. In exploring one, your agency isn’t competing with every other one in the market. Likewise, you get to build a unique brand that will help its longevity and growth potential.

Here’s how to find your niche:

  1. Think of the market and its major friction points
  2. Imagine the ideal client and the problems they face in the job hunt
  3. Determine the unique solution your agency could deliver to a client

Maybe you’re building an agency that staffs pet-friendly businesses. Or, perhaps your agency specializes in working with senior clients.

Look for a way to stand out and you’re bound to find a niche market for it.

Competitor Analysis

You’re not the first person to start a staffing agency, nor the last.

Leverage your competitors:

  • Figure out how they recruit and place prospective clients
  • Create a swipe file of their print and digital materials
  • Read reviews and testimonials or talk with past clients

You want to get as much information about the competition as possible.

The information gained from the analysis gives a better foothold in the market. It also reaffirms your business decisions and goals. Ultimately, it helps you figure out how exactly you’ll stand out and become a player in the industry.

Feedback and Guidance

It doesn’t hurt getting insights, feedback, and opinions about your business ideas.

  • Seek insights from business mentors and consultants
  • Get feedback from trusted peers and potential clients
  • Ask for opinions from the market and industry at large

Use plenty of feedback systems for your ideas to unveil shortcomings and opportunities. Repeat this over and over until your idea is fully vetted.

Part 2: Payroll Funding and Planning on How to Start a Staffing Agency

There is no doubt that you have a lot of questions about starting a business. The biggest of these questions likely come from the early planning stages.

Part 2 shares the essential planning and requirements for setting up an agency:

Write a Business Plan

The business plan outlines the essentials of your business’s operations:

  • Business description
  • Executive summary
  • Type of business
  • Marketing outline
  • Revenue projection

From sole proprietorship to LLC, offering temporary staffing to temp-to-perm, this business plan is your blueprint to success. Start with the free resources offered by SBA.gov. Later, you can work with an attorney when setting up the legal entity.

Get Business Payroll Funding

The startup costs of a staffing agency need to cover:

  • A professional location for an office
  • Payroll covered for a few weeks up to a couple of months
  • Ad and marketing expenses

A professional location for an office is a must because many clients will come through those doors. It’s important to present the business as professional vs a fly-by-night business running out of your kitchen.

Payroll funding is the heftiest startup cost and is necessary in order to cover payroll and payroll taxes. You will need to be able to cover payroll for however long it takes for your clients to begin paying their invoices. This could be a few weeks or up to a couple of months.

Capital must be budgeted for ads and marketing, too. Your sales team will hit the road every day, drawing interest to the agency. Meanwhile, ads and marketing campaigns will build the agency’s brand, and funnel prospective employees and clients to the business.

Expect to cover double your projected costs when starting up. Consider a payroll services company who also offers payroll funding as a way to manage your payroll and to help cover these early expenses.

Operational Essentials

Set aside time and money to visit the operational essentials:

  1. Register the business
  2. Get an employer identification number (EIN)
  3. Apply for licenses and permits
  4. Set up business accounts
  5. Apply for trademarks

SBA.gov offers a handy legal requirements checklist that’ll cover items 1-3. As for the others, talk with your accountant to set up proper business accounts. Then, swing by www.uspto.gov to register your staffing agency’s trademark.

Part 3: The Business Launch of How to Start a Staffing Agency

Ideas and everything before this point is worthless without action. By now you’ve done the research and got the paperwork sorted. The idea is sound, funding is there, and the market shows opportunity.

Part 3 shares how to take the ideas/concepts and launch the physical business:

Find a Location

The location of your staffing agency will depend on:

  • Budget
  • Market
  • Niche

Take into consideration the importance of a professional appearance and covering months of payroll during startup. These two are your budget’s top priorities.

You’ll want to consider the following for the budget:

  • Local business types
  • Clients and talent
  • Logistics and accessibility

Think of the big picture for your staffing agency. If needed, get a small business loan to help capitalize on a potential great real estate deal.

Hire Employees

The success of your new staffing agency ties to quality clients. Quality clients are found by the tireless effort of your sales and support team. So, bringing on talented individuals is paramount for the success of your staffing agency.

How do you hire employees? The simplified overview is this:

  1. Determine your needs, requirements, and expectations
  2. Create detailed job advertisements, placed locally and online
  3. Bring in candidates and conduct an interview
  4. If necessary, but more than likely, run background checks or an employment verification
  5. If hired, have them file new employee paperwork

Set the new hires up with seasoned professionals to aid in the onboarding. Or, you could use training courses if these individuals are the first hires.

Note: The SBA offers an extensive overview of hiring requirements. Though, you could also refer to paid services to navigate this area.

Attracting Clients

You and the sales team will spend considerable time during its startup attracting leads. Attracting clients (business and workers) work the same in a lot of ways.

Try the following to attract clients:

  • Ask for referrals
  • Attend networking events
  • Attend trade shows
  • Cold call or use a vetted list of potential clients
  • Scope the competition
  • Post listings on job sites
  • Leverage social media

Commit to a schedule of lead generating tactics during those early weeks of the launch. Continue these actions well past the first few clients, so there’s a steady stream of talent and opportunity. In time, the agency will have enough talent to sustain its operations.

Part 4: Sales, Growth, and Success is Why it Helps to Know How to Start a Staffing Agency

Competition is incredibly tough and cutthroat in the staffing industry. You’ll need to continually explore proven advertising and marketing strategies. Growth and longevity should become major, daily goals and metrics you’ll want to meet.

Part 4 outlines how to see the business thrive and build a legacy:

Growth Tactics

All good things come to an end. Clients and employees move on and new competitors enter the market.

Investing in sales and growth tactics are a must:

  • Automate client checks and placement
  • Invest in employee retention strategies
  • Use smart ads to lower campaign costs
  • Let recruiters own their efforts unabated
  • Expand into new, enticing markets

Budget for growth investments or turn to business funding when appropriate.

Longevity and Legacy

As seen, major happenings spike layoffs and unemployment claims. This could mean more opportunities in finding clients. Yet, who knows how these events impact your business’s operations and if you could place clients into work?

Thriving and building a legacy is built on:

  • Great customer service
  • A memorable brand
  • Strong, adaptive leadership
  • On-going, competitive campaigns

Don’t get stuck in old ways if you wish to thrive and build a legacy. Adapt to the markets by staying up-to-date with trends. Take a few risks while you’re at it, and leverage feedback and fresh ideas even if they have you scared.

This is Only the Beginning of How to Start a Staffing Agency

Most businesses fail to ever see their first year anniversary. Even fewer businesses reach the 5-year mark. As for 10 years of success? Well, that’s something you’ll have to see for yourself if you get there.

This post merely scratched the surface of how to start a staffing agency. There are many more challenges that lay ahead. There is a lot of great information out there.

You’ll find many great websites, staffing associations, and networks to support your staffing agency. Tap every resource you can!

We, at Your FundingTree, are here for when you need us. We’ll do our very best in finding the appropriate financing to help you meet business demands. And, we could tell you a thing or two about business success.

Let’s collaborate on seeing your staffing agency reach its 1, 5, and 10+ year mark! Get in touch with our experts, today, and learn how to apply for staffing business funding!