How to Start and Grow a Staffing Agency

Temporary staffing agencies have the potential to grow fast and become profitable under the proper management. However, they have too many moving parts and to own/manage one, you need to be an expert in a number of areas. 

How Do You Make Money with a Staffing Agency?

Basically, a staffing agency leases employees to businesses that require staff. They pay these employees a percentage of what the businesses pay and the difference is their profit. The margins vary depending on location, demand, supply and industry.

Some companies prefer to work with staffing agencies because they can get employees as needed. Staffing agencies are also beneficial to employees. The work environment is flexible and they get lots of new opportunities. 

Start and Grow Your Staffing Business

Here are nine steps to guide you.

1. Assess Your Skill Set

If you want to be successful, there are skills that you must have. You should be knowledgeable about:

  • Finding clients
  • Finding employees
  • Matching employees and clients
  • Managing employees/personnel

Each of these skills is important. They are all necessary for growing your business. If you are missing one, you should hire someone who is good in that area.

2. Focus on the Right Industry

Evaluate the needs of the market and find a way to fulfill them. Make sure you fully understand the demand and supply cycles of the industry you select. 

A staffing agency generally involves three segments:

  • Professional/technical
  • Industrial
  • Office/clerical

Whatever industry you choose, narrow down to a specific industry. It is wise to start small and go from there. 

3. Calculate the Start Up Costs

There are operational and establishment costs. Establishment costs are for setting up the business. Most of them are one-time. 

Operational costs are those needed to find clients, employees and deliver services initially. 

4. Understand Cash Flow

When you have a staffing agency, you have to pay the employees on a weekly basis or every two weeks. But the clients pay every month or two. If you don’t manage this delay, problems will arise. So this is something you have to know before you start.

5. Know Where to Get Employees

It is not as easy as you might think. Ensure that your business stands out so people will want to work with you. 

You can get employees through referrals, contacts, LinkedIn, job boards, etc. 

6. Find Your Clients

This is another hard task. Why would a client want to work with you and not your competitor? How are you any different? These are questions you have to answer beforehand. 

7. Find a Payroll Service

Most staffing agencies forward or improperly withhold taxes until it is too late. Before you even start finding employees, get a payroll service. You will save yourself a lot of trouble. 

8. Proper Insurance

Sit down and have a chat with an insurance agent in your industry. Some necessary policies include:

  • Property coverage
  • Workers’ compensation
  • Professional liability insurance
  • EPLI (employee practices liability insurance)
  • Employee theft and crime coverage
  • CGL (commercial general liability)

9. Handle the First Cash Crunch

Before you begin the business, get a sufficient cash reserve or cushion. 

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