How to start a staffing agency

Starting a staffing agency, especially if managed properly, can scale exponentially and be profitable in the long run. With more and more organizations in need of their services, it provides great opportunities for many.

If you’re looking into the idea of starting one or are already in the process of establishing your own staffing agency, take a look at the steps and guidelines we’ve written below to guarantee that you’re on the right track right from the beginning.

The basics: What is a staffing agency?

A staffing agency is also known as a search or recruiting firm or temp (short for “temporary”) agency. Its main purpose is to satisfy the hiring needs of companies and match job candidates as requested. You have the ability to connect with various hiring managers who are looking for the right fit for certain job vacancies.

A staffing agency allows such clients to save time and resources, at the same time find opportunities that they otherwise would not have been able to get.

On the other hand, employees benefit from such companies, too. They find jobs and a flexible working set-up as they please. These can be a way for them to land a full-time or permanent position.

The basics: How does a staffing agency make money?

A temporary staffing agency provides employees to organizations that are in need of new staff. They earn by charging a certain percentage of the employee’s hourly wage. It highly varies and depends on factors such as the number of employees, industry or field, demand, location, and so much more.

For example, when a client says the rate is $15/hour, the firm can pay the employee $12/hour instead.

In some instances, others pay a flat fee for services rendered. Temp agencies can work on a “retainer basis” and charge a monthly fee until the position required is filled successfully. This is often done for specialized industries. Why? Because such roles can be hard-to-fill and may take some time to acquire the talent ideal for the job.

How to start a staffing agency

With that in mind, here are 11 steps on how to start staffing agencies.

Step 1: Evaluate own skill sets

There are four specific skill sets to develop if you want to be successful as a staffing agency founder. You must know how to:

• Source employees
• Acquire clients
• Match ideal talent to satisfy clients’ needs
• Manage and train staff or employees

All of these are essential and must not be overlooked. If you lack even just one of them, the chances of failing will be inevitable. That is why you need to evaluate and examine yourself. Determine if there are any gaps that need to be filled.

You can fill this said gap by harnessing yourself or creating partnerships with like-minded individuals whom you can trust.

Step 2: Choose the right industry

One of the determining factors to your success is supporting the right industry to work with. In short, you must be able to find your niche.

You can do this by researching more about your market and ensuring that you will be able to fulfill their needs. Understand the supply and demand cycle of your chosen niche.

Take a look at this from a local perspective. What are the job types available in the area? What are the potential demands for such jobs? Asking yourself this question can help you pick the right industry to work with.

Step 3: Plan startup costs ahead

Of course, funds are needed if you want to start your own business. Remember that startup costs can be divided into two categories: establishment and operational.

Establishment costs are the basics that your business needs. These are usually one-time expenses and must be paid/bought before you officially start. These can be:

• Legal set-up expenses (entity foundation, contracts, etc.)
• Hardware (computers, telephone, etc.)
• Software (HR, accounting, payroll, testing, training, etc.)
• Office space
• Insurance

The on-going pandemic may provide more opportunities for you at this time, where you can find such establishment costs lower than normal. You can even forgo some of the expenses above! For example, you might not need an office space because either you don’t need it or work from home is still prevalent.

Operational costs, meanwhile, are expenses that you pay to source employees and clients and to deliver your first months of work. Especially with senior-level positions, they require higher costs because their salaries are higher, the screening process is more intricate, and more.

Know your business well and you’ll find estimating and planning the initial costs much, much easier.

*First published on Manatal.com.

*To read the full article, click here.

Manatal is an end-to-end recruitment and onboarding SaaS platform trusted by thousands of brands in over 135 countries worldwide. It is an AI-powered Applicant Tracking System (ATS) and Customer Relationship Management (CRM) tool that allows companies to hire faster, better and save costs.