Are you interested in starting a staffing agency but don’t know where to begin? This 7-step guide on how to start a staffing agency will take you through the key requirements for your new endeavor.
In 2019, the temp staffing market size in the US was estimated at $130.7 billion. The market is huge and the demand for temporary staffing services is growing across certain industries. Now, with the emergence of new workforce software focused on optimizing temp staffing operations, it is easier than ever to start a temp staffing agency as long as you find the right opportunities. Technology has even enabled agencies to staff their people while working remotely. Starting your staffing agency has never been so straightforward. Here are seven steps to getting started.
1. Research your Staffing Niche
Every industry is unique, which is why it is vital to thoroughly research your niche before starting a staffing agency. Become comfortable with your selected niche and try to understand all of the relevant needs in the market. What is the competition like? What is the demand like? What is the supply like? These are some of the questions that you should know the answers to like the back of your hand. Strongly consider writing a business plan in order to formalize your idea and launch strategy. The plan will especially come in handy if you decide to start your staffing agency with a bank loan.
If you’re interested in understanding the areas of specialization that agencies can explore, here are some niches that provide abundant opportunities:
Healthcare industry
Due to the aging population and rising healthcare costs, there is an additional need for qualified nurses, personal support workers, and other medical staff. Healthcare managers are in need of qualified temp staff that can ensure a safe and clean environment for patients. You can help provide these services by starting a staffing agency that focuses on temporary workers for healthcare.
Hospitality industry
In the hospitality industry, managers need specialized staff who are skilled in a variety of areas. This includes front desk and concierge, food prep and delivery, front of house and customer service, etc. Starting a staffing agency that offers skilled labor to help in various areas within hospitality can be a profitable startup.
Construction industry
As population density increases and a housing boom is taking place, there is an increased demand for residential and commercial buildings. In order to meet this demand, construction workers must be deployed to a variety of projects. We can see that this is the trend across the U.S. and building a staffing firm focused on skilled labor in the construction industry might be a good bet.
No matter the industry, there is a certain standard one needs to uphold when it comes to operating a staffing agency, especially one for the shift-based workforce.
2. Prep your Financials Before you Start a Staffing Agency
As an aspiring entrepreneur, it is important to thoroughly analyze the financial opportunities available to you when planning your finances for your startup. There are many options for acquiring financial support before you start a staffing agency. Resources available include different types of grants and loans that can help you launch your startup.
Grants
Grants are funding that does not need to be paid back (unless the terms of the funding have been breached). This financing can be allocated to you by many sources including, governments, organizations, or specific persons. Each grant requires you to apply the funding towards your business in different ways. Below are two resources that include information about U.S. grant programs that are available for establishing a business such as a staffing agency.
Grants.gov:
This U.S. government website includes resources for applying to grants and guides on how to increase your chances of getting them. It also includes a comprehensive database of funds that enables one to search for grants by category.
Small-Business-Forum.net:
This forum is a place where small business owners can post questions and answers on a wide variety of sub-topics, including ways to acquire the funds to start a business. You can learn from seasoned business owners who have gone through similar challenges that you may encounter when starting a staffing agency.
Loans
Loans are funding from a lending organization, such as a bank, that must be paid back within a certain period of time. There are many different loans for those who want to fund projects such as starting a staffing agency and, as with grants, the application process is different for each. We have listed a few opportunities below.
Note: Unlike a traditional bank loan, the loans outlined below require you to apply for a USAID loan guarantee.
Operating grant:
These funds can be provided on a matching basis to aid a project with your own, non-federal share of funding.
Guaranteed loan:
This form of loan is an alternative to a federal grant for fund-raising purposes. It is offered by the USDA to help small businesses start and grow their operations.
Once you have the funds to start a staffing agency, it is time to make sure you understand the legalities of opening up a business.
3. Legalities of Starting a Staffing Agency
The legalities of starting a staffing agency are similar to those of any other business establishment. Make sure you have your legal and financial ducks in a row before starting to operate. Your checklist should cover the following:
Contracts
Employment contracts:
When it comes to hiring personnel, all employment terms and conditions must be outlined in a written document. This is a requirement for any employee/independent contractor you employ/place once you start operating your staffing agency.
General Legalities
Business bank account:
All the money coming in from your staffing contracts should be deposited into a business bank account. Talk to your bank for more information about opening a business bank account.
Taxes:
Your company’s earnings will be subject to taxation. Make sure you register your business with the IRS in order to pay any amount owed.
Health and safety requirements:
Ensure your clients follow the health and safety regulations required by the law. Prioritizing the safety of your temp staff is a requirement when starting a staffing agency.
Customer contracts:
The written agreement you have with your clients should include the scope of the services you provide, the price list for each service, and a clear payment schedule. Don’t forget to add guidelines or restrictions around your clients employing workers that you send to them as temp workers. Outline what happens if there is a breach of contract before you start operating your staffing agency.
Business debit/credit card:
All equipment and software should be purchased using a business card. Mixing these expenses with your personal expenses by using your personal cards will lead to a financial mess come tax season.
Business license:
In order to start a staffing agency, proper paperwork must be completed and required licenses must be obtained from the respective authorities.
4. Technology to Jumpstart your Staffing Agency
Starting to operate your agency can be daunting. Without the use of tools, you get inundated with mismanaged shift orders, complicated and finicky schedules on multiple excel sheets, hundreds of back-and-forth calls and texts with your staffers, costly payroll errors, etc.
Luckily, there are software tools designed to automate your workflow and ensure that you are focusing on customer acquisition rather than operational headaches. The key tools needed to start your staffing agency are an ordering platform, a shift scheduling platform, communication tools, payroll software, and invoicing software. This section will go through each tool in detail.
Ordering Platform
In order to avoid the multiple staffing request calls and emails (at all hours of the night) from your clients—or worse, missing these requests—an ordering platform that allows your clients to submit staffing requests for you to accept or decline is a must! As soon as you onboard a client, get them to input their staffing requests through your ordering platform and you will see your orders come in, on your time, in a manageable manner. Review these orders and Accept them if you can fulfill the request or Decline them if you cannot. Once accepted, your Ordering Platform should display these unfilled shifts on your internal staff scheduling tool.
The transparent and real-time nature of a digital Ordering Platform will save you from communication breakdown with clients, your admin staff, and your temp labor.
Shift Scheduling Software
To operate your staffing agency effectively, you need to automate the entire shift scheduling process. Good shift scheduling software can be customized depending on the needs of your company. Expect to set up what positions you will be staffing, the database of temp labor that you have hired, and their wages.
Note: Look for scheduling software that allows you to input different wages for each staff for each position (not many of them do but it is essential for staffing agencies that supply different types of labor).
Next, you can either create shifts for your temp labor and include the times and durations of the shifts, or, if you have set up an Ordering Platform, assign the accepted shift requests (that already include the times and durations) to the appropriate temp staff through an easy drag-and-drop calendar interface. The software will automatically send reminders to your booked staff of their upcoming shifts through email or SMS, and will notify you if there is a need to reschedule anyone. Some additional features that premium scheduling software should offer include:
Staff availability
Staff should be able to enter their availability so that managers can assign shifts to available team members more easily. Alternatively, managers could use the software to grant staff permission to pick up whatever shifts they are eligible and available for.
Streamlined communication
Staff should automatically be reminded of their shifts. When emergencies happen, they should be able to request to switch with another staff member who is available at that time and should be placed on the newly empty shift.
Time and Attendance
Staff should be able to sign in and out digitally so that managers get the latest updates on attendance, including absences or tardiness.
Data reporting
Attendance can be automatically calculated based on digital entries, including the latest updates for any absences or tardiness. This data can then be used to calculate payments owed with easy integrations to external payroll systems.
Payroll Software
Selecting the right payroll software for operating a staffing agency is vital to ensuring clear and accurate records of transactions with staff. Premium scheduling software should maintain digital attendance records to be submitted directly into the payroll software. For example, Hyre users can download their staffs’ shift information, in the correct format, in order to upload it right into their payroll system.
Payroll software can also help you manage a variety of functions related to the compensation process, including:
Accounting
Use a centralized system for processing financial transactions. The software should come with a step-by-step instruction manual for handling all accounting tasks. All data should be easily stored, retrieved, sorted, summarized, and printed.
Payment details
A good tool will record all of the details related to your payroll such as wage payments, deductions, tax withholding, etc.
Transfer of funds
Enable workers to receive their compensation directly into their bank accounts. Using a payroll solution with a direct deposit feature will help ensure that staff payments are deposited systematically.
Client Invoicing Software
Getting paid is vital but is often delayed due to mismanagement of the invoicing process. More often than not, agencies rely on spreadsheets to calculate the number of hours that their temp staff worked for each client and bill accordingly. They then create invoices manually or use a less than ideal accounting tool—where the template used is not customized to the industry. In both scenarios, the process is inefficient and leads to costly errors.
Collect payments from your clients in an efficient manner by implementing invoicing software that is specific and customized to staffing agencies. Make sure that this tool has the flexibility to bill your clients different rates for each position you staff. Setting up your customized billing rates will save you hours when invoicing your clients. Your Invoicing Software should be able to send each approved invoice directly to your clients so that you can rest easy. Once you automate the invoicing process, you never need to worry about forgetting missed invoices or overlooking any payment errors. Having a streamlined process for collecting payments is an absolute must if you want to efficiently operate a staffing agency!
Recruiting
The internet has played a key role in recruiting today’s workforce. In fact, more than 90% of temporary workers apply for jobs online. There are hundreds of local job boards—even ones specific to your industry. A quick google search will help you identify where you can post your ads to find the best candidates to recruit for your staffing agency. For example, you can post healthcare and hospitality roles here.
Note: Online job boards help companies access candidates more easily. However, because online job portals are so accessible, you may find that your job ads can sometimes be buried in a sea of postings. In order to stand out from the crowd, write your company and job descriptions in a way that will attract top talent.
Vetting
When starting a staffing company, everything hinges on the quality of your temp staff. Create a thorough process to vet your potential pool of temp labor. Conduct in-person or virtual interviews in order to ensure that all candidates are qualified prior to contracting them out to clients. Try using a checklist that identifies the qualifications, soft skills, and other requirements that each candidate must have in order to join your talent pool.
Onboarding
Familiarizing your new temp staff to your agency should be emphasized in your recruitment process. Agencies that don’t onboard their recruits properly often struggle with communication and culture issues in their team. Onboard each new staff by walking them through your operations and processes. This includes your company’s policies, expectations, pay structure, etc. You will see that a strong onboarding process will highly improve your staffing services and the way you operate your staffing agency.
6. Build an Online Presence
When starting your staffing agency, you need to prioritize having a professional online presence. An official website helps establish your business by conveying a sense of legitimacy and allowing potential customers to find you more easily.
Okay, let’s get the technicalities out of the way.
Establish a Search-friendly Online Presence
Get started by putting your agency’s identity on the Internet as soon as possible by registering your domain name. Register a search-friendly domain name through a domain name registrar such as GoDaddy or DreamHost.
Note: There are many domain name registrar sites out there, try to do your research before committing.) You may want to register and redirect domain names that are adjacent to yours in order to catch a wider net of users. Some companies even register misspelt versions of their domain name so that if a potential client misspells their URL, they may still land on their site.
Tips and tricks for choosing a name:
- Conduct research on your competitors’ names for inspiration
- Google search potential names to ensure yours is not already in use
- Aim to stand out from your competitors
Building a Website
There are many options for how to build your website. You can use website builders, such as Wix or WordPress, or hire a team to build each page from scratch. Since the purpose of launching your website would be to be found online, we recommend going with a simple website builder. It is the more practical option as it is much cheaper and faster than developing a site in house. You want to focus your time on operating your staffing agency, not building a website.
Your website should accomplish the following: (1) get as many visitors as possible to your site, and, (2) convert them into paying clients.
Traffic
We can write a whole guide on how to get more traffic to your new staffing agency’s website but for the purposes of this guide, we will focus on SEO, blogs, social media, and ads.
Getting Started with SEO (Search Engine Optimization)
By implementing proper and diligent SEO techniques, your website will rank higher in search engine results. This will improve the external visibility of your site and give your staffing agency a head start. You can improve your website’s SEO by adhering to proper page structure such as ensuring that each page has an SEO page title, meta description, a keyword, proper headers, etc. The content on each page is also important. If you are serious about exploring SEO, there are many online resources that can help you get started.
Blog Essentials
A blog is a great way to grow and connect with your audience. It can be used to educate prospects about the industry and even establish your team as industry leaders, thereby boosting your staffing agency’s clout. There are several tools available that can help you create a professional blog such as WordPress and Blogger.
Create Social Media Accounts
Nearly everyone uses social media to improve the online presence of their business. You don’t want to be left behind. Create business accounts on relevant social media platforms, such as LinkedIn and Facebook to spread the word about your services. Having a presence on social media becomes especially important when potential clients or staff are doing their own investigative work about your staffing agency. If they don’t see any activity, or worse, any business pages, they may think twice about working with you. Avoid the chance of being overlooked and create those accounts.
Pay to Play with Ads
Paid traffic such as buying Google and Facebook ads can be a good strategy when implemented correctly. For example, if you are confident with the keywords that your clients are searching when looking for staffing services, you can bid and show up in the top results on Google. There are a few factors that go into taking that top ad spot, such as budget and website authority, but if you can get there, then a high volume of website traffic will surely follow. Facebook ads involve knowing your audiences’ demographics, hobbies, etc. Overall, ad campaigns can get very technical and expensive. Consider hiring a freelancer or agency if you lack expertise in this domain.
Conversion
Build a website that converts visitors into customers by providing them with the key information that they need to make a decision. The content on each page should speak to your target audience. If a customer lands on your website and can’t find themselves on the page, there is a high chance that they will leave the site (or in other words, ‘bounce’). Misalignment or mixed messaging is a high contributor to low conversion rates on landing pages.
When you are all set up and ready to open your staffing agency and take on business, you’ll need to start exploring a sales strategy that works for you. If you want to get the word out about your new staffing agency, attending networking events where you could run into potential clients could be a great start. Also, don’t forget cold calling as an option.
Try not to rely solely on those in your network. Expanding your network is critical and you should make it a priority to attend as many industry-related events in hopes of meeting others who could become future customers. Nowadays, networking online is just as important as networking in person. Use tools such as LinkedIn to connect with those in your industry. Consider creating a post that people in your industry could find valuable. The more people that interact and share your post, the greater your reach.
Networking
You may already have a black book full of people who are in need of temp staffing services. Reach out to them before you open up shop and inform them that you will start a staffing company soon and would love their support. They may be able to use your services or at the very least, give you a referral. Something like, “Hey Jo, I am about to start a staffing agency that may benefit you” can go a long way.
Cold Outreach
The tried and true method of cold calling/cold emailing should not be overlooked. Make a list of the top 10 – 50 customers that you would like to work with and start emailing or calling them. This can be daunting but once you get into the groove of things, it can be a very effective strategy for winning customers.
Tips and tricks for cold outreaching:
- Include a brief introduction of who you are and why you are reaching out.
- Use social proof early on to gain their trust.
- Follow up regularly. (Many deals are lost simply to lack of follow-up.)
Once you already have a small client base, the best way to generate new leads is by providing outstanding customer service. Your goal should be to get customers who rave about your services and constantly come back for more staffing help. Happy customers are far more likely to introduce you to people in their network who need your services. Don’t underestimate the power of referrals.
The Takeaway for Starting a Staffing Agency
Understanding how to start a staffing agency can seem like a lot of work. Follow these 7 steps in order to start your staffing agency and you’ll be up and running in no time! Some industries are booming and are in desperate need of these services. Starting a staffing agency is a meaningful endeavour that supports your local economy. You will be helping the many skilled workers who are seeking jobs. We wish you the best of luck!
Stay tuned for more in-depth guides on operating a staffing agency.
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