Starting a staffing agency can create a rewarding business, but it’s important to do your proper due diligence prior to making the plunge. By utilizing the guidelines below during your period of researching the staffing agency industry, you’ll gain a strong understanding of the business that will help lead you to your success.
1. Research the Industry
Your first step should be to do an in-depth investigation into every aspect of the staffing company business model that you can think of. You should ask yourself some questions such as:
- Where does a temp staffing firm generate the majority of it’s revenue?
- What is the average monthly overhead?
- What do typical agreements and contracts between an employment agency and their customer look like?
- What tools or pieces of equipment (such as staffing agency software) are necessary, or will make the business run smoother?
If possible, the best way to learn about a business is to actually work in that industry. Working at an established staffing firm in an administrative role will provide you with the best education you can get. Just be aware of any potential non-compete or similar agreements if you go this route. You may find yourself with a wealth of knowledge that is locked up for a period of time until a non-compete clause expires.
2. Determine the Regulatory and Legal Requirements
You should ensure that you pay particular attention to the potential regulatory and legal requirements when you are learning how to start a temporary staffing business. This can make or break your aspirations if you don’t learn what exactly the law requires of you.
Speaking with an attorney will allow you to create the most suitable entity for your new employment firm. Many regulations vary by state, city, or other municipality. Therefore, it’s best to utilize your local government resources to ensure 100% compliance.
3. Create a Financial Plan
The most important aspect of your new business’s success is without a doubt the finances. After all, it is the main reason that one starts a business. If you figured out what your monthly overhead will look like in step 1, you’ll have a rough idea of how much you’ll need.
Keep in mind that in the staffing agency business, you’ll have to pay your employees weekly while your customers will pay 30-45 days after being invoiced. This means that you may have to cover 6 or more payroll cycles before the revenue actually starts coming in. A good solution to help with staffing firm cash flow is payroll factoring.
4. Carve a Niche
This is the best piece of advice for any new business in my opinion. You should focus on one subset of the industry, and make yourself an expert in that particular subset. You’ll quickly be known as the “go to” resource, and it will position you to be in a strong position to start a staffing agency that prospers.
Many ask how to determine which niche to pursue. It’s simple, you should look at your past experiences and work off of that. For example, maybe you were a nurse at a large medical facility that frequently used an employment company when they were short handed. You’ll have an in depth knowledge of that niche since you experienced working it first hand, and you know what the employers are looking for in their workers, and what can be improved on. You may also still have some contacts that can help you get your first customers.
5. Market your Business
Now you’re at the stage where you need to get your first customers! Unfortunately, this is where most fall flat on their face. The saying “Build it and they will come” doesn’t apply here. You’ve gotta go out and get some business the hard way. While it isn’t glamorous, cold calling local companies or even showing up in person is the best way to do it. You should also reconnect with previous employers or colleagues that may have an opportunity. Maybe they still owe you a favor that you forgot all about?