How To Start a Staffing Agency — And Stay Alive
Let’s start with 5 must-know facts about staffing agencies:
- Like any other business, your clients are your most important asset.
You need to understand your customers and they in turn need to be able to trust you and feel that there is full transparency.
- You are going to be dealing with A LOT of staff.
Sending more than 10 paychecks a week can be a pain already in itself. You need to be super organized and make sure that no mistakes are being made, that the paperwork is being sent on time, and that you remember to include all of the benefits that you promised.
- Remember that your staff are not your employees.
They can be and are probably working for a few other businesses at the same time. You need to find the best way to keep them engaged — whether it’s by having available jobs all the time or keeping in line with their terms while actively engaging them at the same time.
- Logistics can be an enormous challenge in this line of work.
Managing a business is going to always be accompanied by a heavy load of logistics; but when it comes to managing a staffing agency, the challenge can be tenfold. You need to stay on top of everything, from coordinating, let’s say, 5 people that are in close proximity to the client’s venue, determining the proper attire, having your client agree to those 5 people, to making sure that they arrive on time (and not before or after) that they understand the requirements of the job, and that they are trained. You need to track their working hours while making sure that your client agrees to those hours. You need to send an invoice to your client and send your staff their paychecks. Ahh. Now, imagine doing it all again, only this time with 50 people.
- Find your margin’s sweet spot.
It’s hard to calculate and analyze your profit margin, especially with obstacles standing in the way — payments for travel reimbursement, extra tip, and health care — and let’s not forget the bottom line of making sure that you are running a profitable business. Finding the balance can be tricky, but it’s possible.
When I first toyed with the idea of starting a staffing agency, a lot of people told me I was crazy, and maybe rightfully so. It’s a hard business, they said. You need to find good clients to work with; you need to find good employees to hire. Your employees, although temporary, need to be willing to work and committed to the job. Your events can be anywhere and everywhere, so you need to find the right people from different locations. And the worst part — how do you manage it all?!
So against all odds, I started my business. I had my first client ask for staff even before I had an established business. The client wasn’t huge but I got about five placements a day from him, on a steady basis. In order to provide him with the people he needed, I needed to hire a bunch of people, train them, and make sure that I placed the right team for each event.
So I had my staff and I had a way of recruiting them. Now I needed to track their working hours and pay their salaries. I kept a nicely organized Excel file (I’m an ex-accountant) and I asked them to write their start and end times on a paper, and my HR rep would insert the hours into my Excel sheet the day after.
Every week I would do the payroll process, and that process would entail paying 20 people each week… 20 people!? That’s a lot of paychecks. So now I was an accountant once again, doing endless calculations.
Why is it such a pain, you ask? Well, 1. Each of my staff members earned a different wage 2. I incentivized them to work more shifts by providing bonuses, so that was an additional factor 3. I needed to add in tips, travel reimbursement, and with 20 people each week, it was exhausting, believe me.
I think it was when I reached around 30 employees that I decided to do something about it. I broke down the work that I was supposed to do into smaller tasks, and used my programming skills (yes, I used to be a software engineer as well) to start solving all of my operational needs — hiring, scheduling, timesheet, payroll, client communication, analytics and a lot more.
This is how Ubeya began.
Ubeya today enables companies to grow from ten to thousands of placements a day without a significant change in the back-office team.